By
updated 1/27/2010 6:37:47 PM ET 2010-01-27T23:37:47
analysis

President Barack Obama and Congress want to have it both ways.

  1. Other political news of note
    1. Animated Boehner: 'There's nothing complex about the Keystone Pipeline!'

      House Speaker John Boehner became animated Tuesday over the proposed Keystone Pipeline, castigating the Obama administration for not having approved the project yet.

    2. Budget deficits shrinking but set to grow after 2015
    3. Senate readies another volley on unemployment aid
    4. Obama faces Syria standstill
    5. Fluke files to run in California

Obama is signaling budget cutting will be a major priority, yet he's putting most spending off-limits. Congress talks belt-tightening, too, but its votes tell a different story.

Obama is proposing a partial three-year spending freeze. It's a relatively modest gesture intended to show he's serious about deficit reduction. It comes partly in response to rising public fury over fiscal irresponsibility in Washington, anger that was reflected in last week's costly Democratic loss in a special Massachusetts Senate election.

Since then, nearly all politicians in Washington, especially those up for re-election this year, are sounding like deficit hawks.

Even though they talk the talk at the White House and in Congress, there is no sign of strong action anytime soon to begin seriously filling the government's $12 trillion-plus fiscal hole.

Two wars, a deep recession that has depressed tax revenues, and federal bailout and stimulus spending have resulted in a debt that is mushrooming well past $1 trillion a year. The debt is equivalent to nearly $40,000 a year for each man, woman and child in America.

And while other major economies, from Japan and Britain to Italy have even bigger proportionate debts and manage to muddle through, the deficits can't be ignored. At some point, worries about inflation or possible default will push up interest rates. Meeting interest payments on the national debt will squeeze out other government spending, sap business confidence and leave trillions of dollars in unpaid bills to future generations of Americans.

On Capitol Hill, despite emotional calls for spending restraint from both parties, the Senate on Tuesday rejected a White House-backed plan for a bipartisan commission that would send Congress a package of recommendations on combined spending cuts and possible tax increases. The deficit-cutting recommendations were to have been voted on after this fall's midterm elections.

Lining up in opposition was an unusual coalition of liberals and conservatives — the liberals arguing that the group's recommendations could lead to cuts in Social Security and Medicare benefits, and the Republicans complaining that they would mean higher taxes.

No magic solution
"You can get locked into these positions that guarantee gridlock and a rising deficit," said Robert Bixby, executive director of The Concord Coalition, a bipartisan fiscal watchdog group. "Everybody's looking for some magic solution that isn't there."

After the vote, the Senate returned to considering a proposal that would increase the government's borrowing authority by an additional $1.9 trillion. "We have to pay the bills for what we've already spent," White House spokesman Robert Gibbs said in seeking to explain how the president could be for both reducing the deficit and increasing the debt limit.

Obama's spending freeze, to be outlined in his State of the Union address Wednesday and in the budget he submits Feb. 1, would apply to only about one-sixth of overall spending, mostly domestic programs over which Congress has discretion.

Not touched is spending on national and homeland security, veterans and international affairs. Also exempted is Social Security, Medicare and other "entitlement" programs.

Members of both parties agree the present course is unsustainable.

The late Herbert Stein, who was chairman of the Council of Economic Advisers under Presidents Richard Nixon and Gerald Ford, liked to say that "unsustainable trends tend to come to an end." Nobody can say when and how the present unsustainable spending spree will end.

As if to drive home the bleak math, the nonpartisan Congressional Budget Office on Tuesday said this year's budget deficit would be $1.35 trillion, down only slightly from last year's record $1.4 trillion shortfall. The accumulation of annual budget deficits adds up to $12.1 trillion, the nation's national debt. The CBO later said in a separate report that last year's $787 billion economic stimulus bill actually is costing $75 billion more.

The CBO numbers underscored what many deficit-minded economists and lawmakers have been saying for some time: Without action by the White House and Congress to alter its course, the river of red ink will continue to flow even after the economy recovers and stimulus spending to prop it up ends.

"For the first time in our nation's history, we risk undermining U.S. economic and military strength, and becoming a second-rate power," said former Sen. Pete Domenici, a Republican from Arizona who once chaired the Senate Budget Committee.

Domenici is now teamed up with economist Alice Rivlin, budget director in the Clinton White House and vice chairwoman of the Federal Reserve from 1996 to 1999, in heading a private-sector debt task force sponsored by the Bipartisan Policy Center, a Washington think tank.

Domenici dismisses efforts by the White House to blame much of today's government debt on the previous administration as well as GOP attempts to blame Obama and his congressional Democrats. "We don't know how much of the debt is Republican or how much is Democratic, and it doesn't matter," Domenici said.

Part of the problem of finding a bipartisan solution is that there's a scarcity of senators like Domenici able to reach effectively across party lines, said Ross Baker, a political science professor at Rutgers University. "People are just frozen in their positions and just reacting to the loudest noises that they're getting from the base of both parties."

He said a fuller economic recovery, and the return of job creation, will help some.

"In the long run, things are going to get better," Baker said. "But as Franklin Roosevelt once noted, we don't eat in the long run."

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments