Published in the New York Post on February 5, 2010
As he tells us he wants to reduce the dangerous budget deficit, President Obama brings to mind the hapless engineers at Toyota who find that their vehicles accelerate whether or not the driver wants them to. It appears that no matter how hard Obama jams on the brakes with his newfound commitment to deficit reduction (after almost doubling the deficit in one year), the level of red ink just seems inexorably to rise. The House voted yesterday to raise the federal debt limit another $1.9 trillion.
Obviously, more fundamental change in the budget’s engineering is needed. But, unfortunately, it is easier to recall a car than a president.
Obama’s announced intention to freeze 13 percent of the budget for three years is a relatively minor cut. It will trim the deficit by only 3 percent over the decade.
But if the president really wanted to get serious about reducing the deficit, he’s got two easy steps to take:
1) Stop the remaining $500 billion of last year’s $800 billion stimulus package.
2) Refund to the Treasury the $500 billion in TARP funds repaid by the banks.
Instead, he’s merrily spending the remaining stimulus cash — even though the first round failed to curb the recession, doing little more than protecting the jobs and pay of state and local government employees. The remaining money would do more of the same — while also funding pork-barrel projects all over America.
But only $300 billion of the stimulus has been spent. Why not call back the remaining $500 billion? Because Obama is still committed to the expansion of government spending. His promise of a (minor) freeze next year brings to mind an overweight friend’s talk of the diet he’ll go on — even as he starts another banana split.
Then there’s the TARP funds. Most of the money laid out under President George W. Bush is being repaid by the banks that borrowed it — but Obama is intent on intercepting the cash before it lands in the Treasury and sending it out the door again.
He wants these funds for his second stimulus, relabeled as a “jobs bill.” Some $30 billion is to go to small businesses for job creation, $30 billion for consumer credit and yet another $100 billion for more state and local aid — that is, more protection for government workers.
And none of that cash will ever come back — even though it’s TARP money that was initially appropriated for short-term lending, spending that the government would quickly recoup.
When will the president learn that deficit spending isn’t the way to stimulate the economy? That by adding to the deficit, he is stopping business from borrowing to create jobs and blocking consumers from getting the capital they need to make purchases?
Treasury debt is up 41 percent over the last year, while commercial and consumer lending is down by more than 20 percent: The government is hogging the loan window. Doesn’t the president realize that this is blocking, not catalyzing, job creation?