Government Spending

Obama's Numbers

The president-elect has promised to make his math add up. Therein lies a glimmer of possibility.

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I never quite understood libertarian enthusiasm for Barack Obama. Yes, his early and forceful opposition to the Iraq war made anti-interventionists swoon, but candidate Obama was, if anything, more belligerent than John McCain toward Pakistan, Afghanistan, and Sudan. The drug war? The former pot smoker has said he'd call off the Drug Enforcement Administration's raids on legal medical marijuana facilities, but that's about it. (Recall, too, that he'll have as vice president the very senator who created the odious position of "drug czar.") Executive power? He's been strangely silent about rolling back the excesses of George W. Bush and Dick Cheney, and he voted in 2008 to expand federal snooping into the affairs of innocent Americans. Property rights? Free speech? Capitalism? Guns? Surely you jest. (For a look at what Washington libertarians expect out of the new administration, see David Weigel's "Beat the New Boss," page 18.)

Only one pro-Obama—as opposed to anti-Republican—argument ever really resonated with me, and that was the notion that, unlike McCain and most Republican presidential nominees of recent vintage, Obama did a relatively credible job of making sure his budget figures "added up." There was, I repeatedly read and heard from economic number crunchers such as The Atlantic's Megan McArdle, a genuinely impressive attempt to translate the hot air of campaign promises into the cold reality of a plausible balance sheet. "What I've done throughout this campaign is to propose a net spending cut," Obama said in his final pre-election debate with McCain. "I have been a strong proponent of pay as you go. Every dollar [in spending] that I've proposed, I've proposed an additional cut so that it matches."

You should never take a politician at his word. But you should listen to what he campaigns on day after day, especially if he goes on to win big. Amid Obama's host of illiberal campaign ideas—"fair" trade, centralized energy policy, New Deal–style infrastructure projects, more federal dollars into the sinkhole of public schools—the Democratic candidate also spiced his daily stump speech with a firm-sounding nod to fiscal responsibility. Coupled with a sorry budget situation that's certain to get worse as a result of massive income tax losses from Wall Street, this commitment to fiscal sobriety may strangle many of Obama's more expensive fantasies in the crib and crack open the door for ending or privatizing any number of inefficient federal programs.

This may sound like wishful thinking, but is it any more unrealistic than the expectation that a Republican administration will push for markets and limited government? As economics columnist Veronique de Rugy details on page 24, the outgoing Bush administration has increased the size of the federal government by just about every meaningful metric, to an extent not seen in several decades. Despite all the Democratic rhetoric to the contrary, this expansion includes a sharp growth in regulation. (For more on Wall Street regulation in particular, see Katherine Mangu-Ward's "Is Deregulation to Blame?," page 36.) It may be hard for Republicans older than me to accept, but voters who have known only the Clinton and Bush presidencies have little reason to believe that Republicans are preferable to Democrats on limiting government and keeping budgets halfway sane.

Somewhere along the way, making sure the numbers added up ceased to be a Republican virtue. The 2000 presidential election was fought largely over what to do with all those marvelous budget surpluses, which were estimated then at more than $4 trillion and assumed by all major candidates to stretch out past the horizon. Bush swore that "the best way to…make sure that the federal budgets don't become bloated and don't grow" was to cut taxes by more than $1 trillion. When his unified Republican government proceeded to bloat the federal budget in ways not seen since Lyndon Johnson, turning record surpluses into record deficits almost overnight, Bush just shrugged, holstered his veto pen (until late in his second term), and made halfhearted promises in every State of the Union address to "reduce" the deficit and really crack down on spending this time around. It was only slightly more believable than his fabled mission to Mars.

Today's deficit (currently estimated at $1 trillion for fiscal 2009 alone) is tomorrow's tax liability, in the form of ever-increasing debt service payments. It's also a broken windows–like symbol that government has all but given up trying to live within any kind of budgetary discipline. Many Republicans during the Bush era stopped even pretending to care about any small-government notions aside from tax cuts. "The one mistake that could cripple a second Bush term," Grover Norquist of Americans for Tax Reform told me just after the 2004 elections, "is to accept the campaign promise to 'cut the deficit in half in four years' as a central goal of the administration." That way "tax cuts are a problem," Norquist said, "and Democrats have an equally valid solution: raise taxes."

Turns out there was more than one mistake capable of crippling Bush, without his lifting a finger on the deficit. And Republicans' singleminded pursuit of tax cuts as the only meaningful manifestation of limited government has ended up undermining public support for both.

Obama is perfectly capable of telling economic policy whoppers of his own. In addition to seconding every last bit of financial fear mongering that the Bush administration shamefully deployed to sell a deeply unpopular and ill-advised bailout (see Mike Flynn's "Anatomy of a Breakdown," page 26, and Tim Cavanaugh's "Houses of Pain," page 40), Obama in his victory speech on election night nonsensically described the current economic situation as "the worst financial crisis in a century," while continuing to perpetuate the myth that America's "middle class" is embattled, dwindling, and poor. He has missed few opportunities to bash trade with China, is fond of such absolutist non sequiturs as "we cannot have a thriving Wall Street while Main Street suffers," and he's threatening to usher in the most left-bent economic program since at least the final year of George W. Bush.

But to paraphrase Bruce Springsteen, the president-elect has bills no honest man can pay, balanced against a campaign pledge to deal with budgeting honestly. "We're not going to be able to go back to our profligate ways," Obama said in the final debate. "We need to eliminate a whole host of programs that don't work. I want to go through the federal budget line by line, page by page."

Actually, that level of detail isn't required. Obama could save more than $20 billion a year just by eliminating farm subsidies (subsidies that help keep the truly poor mired in poverty by blocking their ability to sell farm products to the world's largest economy). There's at least another $60 billion worth of federal corporate welfare out there begging to get snipped. Earmarks squander $20 billion a year.

There are bigger fish to fry in the military budget. Withdrawing from Iraq, Obama has estimated, will bring in $150 billion, and there are many billions more of potential savings being thrown every year to places such as the Korean peninsula. Real budgetary discipline would mean that we stop funding the Iraq war, the Afghan war, and any number of unvetted weapons systems through the deceitful and unprecedented "emergency supplemental spending" process.

All over the country, state and local governments are facing blown budgets and untenable pension obligations tied to plummeting stocks. New York Gov. David Paterson came to Washington just before the election rattling the cup for a federal bailout of his own. He won't be alone. The good news, if there is any, is that Obama won't be able to deliver medicine for everyone who ails. And if he's serious about his campaign pledge to be fiscally responsible, Washington may even be the source of a little long-overdue pain.

Matt Welch is editor in chief of reason.