OBAMA’S BIG LIE

By Dick Morris on July 27, 2011

Published on TheHill.com on July 26, 2011

I hate to accuse a president of lying, but President Obama is selling a massive fraud to the American people by warning of a catastrophe if the debt limit is not increased. There will be no catastrophe unless the president goes out of his way to will it and create it.

Federal spending averages about $300 billion per month. Federal tax collections run to about $180 billion. Our vital obligations are a lot less than that: Federal debt service is about $25 billion per month. Social Security is about $58 billion per month. The entire defense budget also is about $58 billion per month. Tax revenues are more than sufficient to fund each of these items if the president chooses to allocate federal tax money to this purpose.

Confronted by a congressional refusal to raise the debt limit, the president will have a choice as to where to allocate the tax revenues that will continue to flow in. If he wishes to cause a catastrophic crisis by deliberately routing the money to purposes other than debt service, he can do so. If he wants to trigger a massive political crisis by withholding tax revenues from Social Security or military pay, he can do that, too. But these decisions are his to make. He could do the responsible thing and make sure these vital expenses are paid and withhold money from the run-of-the-mill federal bureaucracy, closing or restricting the activities of the departments of Labor, Agriculture, HUD, State, Justice, Commerce and the various boards and commissions. American can do very well without an FCC or an FTC or an NLRB for a few days or weeks.

The real political threat to Obama is that the debt limit is not increased and few people notice any change in their lives and nobody much cares. So some will have to wait a few more weeks for passports. So what?

The president is likening the government shutdown that would follow failure to raise the debt limit to that which took place in 1995-96. But in those years, there was a prohibition against spending money Congress had not yet appropriated. Now it’s perfectly legal to spend any money that comes into the Treasury; there just won’t be as much of it, because the debt limit will preclude further borrowing. The president still can fund any 60 percent of the government he wants (the proportion that comes from tax revenues).

In his speech to the nation Monday night, Obama used tricky words to camouflage these obvious facts. He no longer spoke of defaulting on money we owe, but instead used the more vague phrase “defaulting on our obligations.” By that he means our obligations to the bureaucrats, not to our creditors.

Since when are we obliged to fund the bureaucracy? The Congress voted the money, but if it rescinds the borrowing authority, the money won’t be there and it won’t be spent.

Obama’s entire strategy is to conceal his real goal: protecting every last desk in the bureaucracy behind a facade of threatening to close the most popular and fiscally necessary programs. He’s like a local mayor who knows that nobody is going to get hot and bothered if the commercial licensing bureau gets closed for a few days, so he warns that teachers and police will have to be laid off if there are budget cuts.

The House and Senate are close to a deal. They both agree to raise the debt limit without tax hikes. The Senate wants it raised by two years, the House for one. The Senate is pushing to include accounting gimmicks like ending the wars as a savings; the House is resisting. But these all are bridgeable gaps. None of these differences are causes for a breakdown. The only player who is holding out for tax hikes is the president, who has staked out a position to the left of his senators. It’s time for him to come in from the cold.

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Please leave a comment below - I would love to hear what you think! Thanks, Dick
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