In a Friday news dump, the Obama administration revised upward its deficit projection for the next 10 years by $2 trillion. The old figure was $7.108 trillion, which was awful enough, but the new projected budget shortfalls over the next decade is a whopping $9 trillion. Such a massive disparity is unsustainable if ignored or, as seems to be the case here, increased by more irresponsible spending.
Does the Obama administration have a point when they say they inherited a $1.3 trillion deficit from Bush? Of course they do – Bush was no fiscal conservative by any stretch of the imagination. But it’s hard to point the finger of blame at the previous administration when your own does the same thing on a larger scale.
The information has obvious implications for the health care debate as any sort of public option will be a massive increase in the size of government with the requisite cost and inefficiencies that come with it. Estimates of its cost are between $1 trillion and $2 trillion over a stretch of years, depending on who you ask. Either way it’s hard to sell that such a program will be deficit-neutral or that any supposed savings on health-care costs would outbalance the cost of the program itself. Never mind that it’s a bit odd to claim that spending more taxpayer money on health care will actually result in less money being spent on health care, but that’s a different story.
And in any case, the revised projections don’t inspire much faith in the administration’s ability to forecast. As Ed Morrissey notes, they got the unemployment figure wrong on the stimulus, they figured the initial Cash for Clunkers would last three months and it lasted a week, and now they reveal they’re off by $2 trillion in deficit forecasting. But yet their plans for health care reform will be so beneficial for us that we need not question their necessity or cost?
In the bigger picture, there are really only two options for anyone who wants to solve the troubling deficit problem: either raise taxes in a move that will further harm the economy and paradoxically further reduce revenues, or cut entitlement spending. No, cutting military spending won’t ever by itself solve the problem, as it’s Medicare and Social Security that are the major liabilities on the federal books.
Neither choice will be particularly popular, but politicians may end up thinking that it’s easier to simply tax more than to risk the wrath of the various groups currently receiving benefits. In a saying that has been attributed to Benjamin Franklin and may be sadly prescient, we come to learn the following:
When the people find they can vote themselves money, that will herald the end of the republic.
Entitlements and bailouts are adding to the inevitability of that statement, but let’s hope it doesn’t come to that. In any case, the focus now should not be on adding on more, but getting the economy back on track and getting our government back to a responsible financial posture. Neither appears to be much of a priority now.