President Obama's real proposal (and why it's risky)(Read article summary)
Obama said that his budget proposal would cut $4 trillion over the next 12 years. It's difficult to plan for a budget one or two years away, and it's downright unreasonable to plan one for 12 years from now.
Carolyn Kaster / AP
Paul Ryan says his budget plan will cut $4.4 trillion over ten years. The President says his new plan will cut $4 trillion over twelve years.
Let’s get real. Ten or twelve-year budgets are baloney. It’s hard enough to forecast budgets a year or two into the future. Between now and 2022 or 2024 the economy will probably have gone through a recovery (I’ll explain later why I fear it will be anemic at best) and another downturn. America will also have been through a bunch of elections – at least five congressional and three presidential.
The practical question is how to get out of the ongoing gravitational pull of this awful recession without cow-towing to extremists on the right who think the U.S. government is their mortal enemy. For President Obama, it’s also about how to get reelected.
(Yes, we also have to send a clear signal to global lenders that America is serious about reducing its long-term budget deficit. But in truth, global lenders don’t need much reassurance. Bond market yields in the U.S. are now lower than they were when the government was running a budget surplus ten years ago.)
Seen in this light, Obama’s plan isn’t really a budget proposal. It’s a process proposal.
Stage 1, starting now and ending in June, requires that Republican and Democratic leaders devise a budget for 2012. Apparently they’ve already agreed to try.
That budget would also include a “framework” for deficit reduction over the longer haul. But that framework will be mainly for show. It will give House Republicans enough cover to vote to raise the ceiling on the amount the U.S. government can borrow. (The vote has to occur before the Treasury runs out of accounting maneuvers, in early July.)
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