by John Hendrickson
Congress has recently approved President Barack Obama’s $3.4 trillion budget for fiscal year 2010. This budget comes after the billions already spent on bailouts and the federal stimulus bill, which contributes to higher deficit and debt. The main objective of the President’s budget is “to boost spending on health care, energy subsidies, college aid, refundable tax credits, and other items.” (1) In a March column, Patrick J. Buchanan wrote that “[President Obama’s] budget calls for the radical restructuring of the U.S. economy, a sweeping redistribution of power and wealth to government and Democratic constituencies.” (2) Charles Krauthammer recently wrote that President Obama’s “real agenda: his holy trinity of health care, education, and energy…will become a radical extension of the welfare state, social and economic leveling in the name of fairness, and a massive increase in the size, scope and reach of government.” (3) The recent policies initiated by the administration and the majority are taking the nation further away from constitutional principles. A more prudent and constitutional approach to solving this economic recession is needed, rather than embarking on a second Lyndon Johnson-style Great Society.
Brian M Riedl, who is the Grover M. Hermann Fellow in Federal Budgetary Affairs at The Heritage Foundation, recently broke the Obama budget down and its effects on taxpayers, government, and the economy. Some of the main results of the President’s $3.6 trillion budget are to:
•increase spending by $1 trillion over the next decade;
•include an additional $250 billion placeholder for another financial bailout;
•increase in discretionary spending by 12 percent;
•expand the federal government by nearly 3 percent of the gross domestic product (GDP), over pre-recession levels;
•raise taxes on all Americans by $1.4 trillion over the next decade;
•leave permanent deficits averaging $600 billion;
•double the publicly held national debt to over $15 trillion. (4)
Chris Edwards, Director of Tax Policy at CATO Institute, wrote that the President’s budget “plan builds on spending precedents set by President George W. Bush, and would boost nondefense outlays to a record share of the economy.” (5) This is one reason why many Republicans have lost credibility on the side of fiscal prudence. Rep. Ron Paul, (R-TX) wrote that “there has been too much bipartisan consensus on expanding government far beyond the bounds of the Constitution which we all swore to defend and uphold.” (6)
The Republicans have responded to the President’s budget by proposing an alternate and more prudent budget. The GOP budget was orchestrated by Rep. Paul Ryan (R-WI) who is working toward finding constitutional solutions to a variety of issues from entitlements to the economic recession. Riedl’s analysis of the GOP budget actions include:
•borrowing $3.6 trillion less than the President’s budget;
•keeps federal spending just above 20 percent of the GDP,
•avoids all tax increases and even simplifies the overly complex tax code;
•begins reforming entitlements (Social Security, Medicare, and Medicaid). (7)
“Our budget applies our country’s enduring first principles to the problems of our day,” wrote Rep. Ryan in describing the GOP budget proposal. (8) The GOP proposal addresses the deficit, debt, spending, energy, entitlements, and tax reform. (9) Although full details of the GOP plan cannot be justly covered in this Brief, it does provide a more constitutional direction for the nation’s economic future. Some of the features of the GOP plan include:
•freeze non-defense and non-veterans discretionary spending;
•reform entitlements by reforming Social Security, Medicare, and Medicaid;
•extend the Bush tax cuts, reforming the tax code, reducing the corporate tax, and suspending capital gains taxes through 2010;
•bring in revenues averaging just 18 percent of GDP and keep federal spending at just 20 percent of GDP. (10)
Riedl correctly stated that “none of this will be easy,” because “freezing programs and reforming entitlements are not popular ideas in Washington.” (11) The President’s budget is not only reckless, but it goes against constitutional government. The administration and the majority is moving the nation into new unchartered waters toward European-style socialism. With this historic $3.6 trillion budget and the debt that is projected, repercussions will be felt in the near future. “Certainly, no country has ever prospered when their public sector spent half or all of the nation’s GDP. Yet we are saddled with leadership that seems unwaveringly convinced that the key to prosperity is public spending,” noted Paul. (12) The nation must seriously consider that the nation is held accountable for our debt as well as the economic effects on the economy and the value of the dollar. (13)
“The government must begin to withdraw from a whole series of programs outside its constitutional mandate — from social welfare programs, education, public power, agriculture, public housing, urban renewal and all other activities that can be better performed by lower levels of government or by private institutions or by individuals,” wrote Senator Barry Goldwater. (14) The federal government must return to its original constitutional design. In the late 1940s and early 1950s former President Herbert Hoover chaired two Hoover Commissions, which studied and recommended ways to cut government spending and provide greater efficiency from government. We need another Hoover commission today to make bold suggestions and recommendations to reduce the size and scope of the federal government. Such actions will require leadership as well as a recommitment of the American people to the principles of the Constitution.
1 Chris Edwards, “Obama’s Budget Builds on Bush Precedents,” Tax & Budget Bulletin, No. 55, March 2009,CATO Institute.
2 Patrick J. Buchanan, “Pitchfork Time,” American Cause, March 3, 2009, <http://www.theamericancause.org> (April 8, 2009).
3 Charles Krauthammer, “Constitutionally Suspect,” The Burlington Hawkeye, <http://www.the hawkeye.com> (April 6, 2009).
4 Brian M. Riedl, “The Obama Budget: Spending, Taxes, and Doubling the National Debt,” Backgrounder, The Heritage Foundation, No. 2249, March 16,2009.
6 Ron Paul, “Budget Expands Government as Economy Contracts,” Texas Straight Talk: A Weekly Column, April 6, 2009, <http://www.house.gov/paul/> (April 8, 2009).
7 Brian M. Riedl, “House Republican Budget Would Confront Hard Choices and Rein in Budget Deficits,” WebMemo, The Heritage Foundation, No. 2377, April 1, 2009.
8 Paul D. Ryan, “The GOP’s Alternative Budget,” The Wall Street Journal, April 1, 2009, <http://online.wsj.com/article/SB123854083982575457.html> (April 6, 2009).
10 Riedl, “House Republican Budget.”
14 Barry Goldwater, The Conscience of a Conservative, MJF Books, New York, 1990, p. 53.
John Hendrickson is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa.
Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute. The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.