Cameron Smith: President’s budget tests resolve of American people

  On February 14, 2011, President Obama delivered to Congress a $3.7 trillion budget proposal for fiscal year 2012 (FY2012). Rather than respond to the American people and demonstrate lessons learned from the stinging rebuke of the last election cycle, the President asked for more deficit spending and continued to avoid politically difficult choices.

  The Washington debt culture depends on many Americans misunderstanding the relationship between a deficit and the national debt. A deficit or surplus is the difference between what the government takes in and what the government spends IN ONE YEAR.  If the government takes in more than it spends, the government has a surplus. When the opposite is true, the government has a deficit. When the amounts are the same, the government has a balanced budget. The national debt is basically the accumulation of repeated deficits.

  Consider President Obama’s $2 trillion in deficit reduction over the next decade or the nearly $4 trillion in deficit reduction recommended by his National Commission on Fiscal Responsibility and Reform. Both proposals operate on Washington’s debt versus deficit sleight of hand. Even if the President had exceeded both proposals and requested $5 trillion in deficit reduction over the next decade, Americans would still be required to shoulder the burden of the remaining $4 trillion in projected debt. In order to pay down the national debt, the United States must either produce a surplus or budget for meaningful debt retirement. The President’s FY2012 Budget fails in both of those categories. 

  The budget also fails to project the President’s recently found optimism. Like weather forecasts, the President’s budget becomes increasingly unreliable the further it reaches into the future. Just consider President Bush’s budget proposal for FY2009. That budget proposal, only three years old, called for a surplus of $48 billion in FY2012. But the economic downturn and political changes resulted in President Obama now requesting yet another trillion dollar deficit for the same fiscal year.   

  If the passage of three years can throw off positive predictions by more than $1.1 trillion, how can the American people place any confidence or optimism in a budget that forecasts our national debt will be larger than the total value of goods and services produced in our country each year from FY2011 forward?

  Like an Adjustable Rate Mortgage that lures the debtor in with low rates, the President’s budget offers a “teaser rate” by reducing federal outlays for one fiscal year (2012) before increasing spending every single year for the foreseeable future. Under the President’s plan, the national debt will balloon from slightly more than $14 trillion to more than $26 trillion within the next decade.

  Unfortunately, this budget also continues the trend of the President and much of Washington squabbling over reductions in discretionary spending, while mandatory and entitlement spending programs consume massive portions of the budget. In FY2012, mandatory and entitlement spending will total around $2.14 trillion. With anticipated tax receipts of $2.627 trillion, this spending, which includes Social Security, Medicare and Medicaid, will account for more than 81 percent of the revenues received by the federal government.

  The President and Congress have routinely agreed to wage war over how best to engage in optional deficit spending while offering only general platitudes regarding their plans to reduce the out-of-control spending required by law.

  The President’s budget is a blueprint for continued fiscal chaos. Most importantly, the numbers are a direct challenge to those Americans who created massive electoral change in 2010. The President has wagered that the American people do not have the intellectual ability to understand the fiscal changes they are repeatedly calling for or the resolve to see them enacted into law.

  For generations, the American people have shown their capacity for self-sacrifice to ensure a better future for their children and this great nation. This generation’s response to the President’s budget will determine which legacy continues: the noble self-sacrifice of the American people when confronting a crisis or leaving a bankrupt and crumbling nation to our children.

  About the author: Cameron Smith is general counsel and legislative liaison for  the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.