Economics

Obama's Empty Cost-Containment Rhetoric: Should We Call Him Out on It?

|


Matt Welch already zeroed in some of the more b.s.-laden aspects of President Obama's Braveheart-level brave pledge to freeze a tiny wafer-thin aspect of federal spending. To use Obamaesque rhetoric: Let's be clear. This freeze is likely to be as effecfive in curbing spending as cryogenic freezing of Ted Williams' head was for keeping the Splendid Splinter in good shape for the baseball draft in the year 2525.

Another point to note on Obama's three-year freeze on discretionary non-defense, non-homeland-security spending: The part of the budget that Obama is chilling is responsible for a whopping one-eighth of annual federal spending. By the prez's own accounting, the action (which I guarantee won't hold up anyway) would save at max a whopping $15 billion in fiscal year 2011.

To put that in perspective: The budget deficit in 2009 was $1.4 trillion. Which will likely be matched, or nearly matched, in 2010. The budget in 2009 was a hair under $4 trillion and was first figured at around $3.5 trillion for 2010 (expect that to rise, as it normally does).

To talk about possibly trimming $15 billion (and that's only in foregone increases to whatever is already being spent) on a budget this size is like an already-broke dinner companion foregoing his third appetizer. It's not gonna help much when the bill comes due.

But you know what? There's an even bigger trend that's sweeping the "developed countries" (by which I mean to say: the countries that will soon be totally busted) that is the start of a true Maalox moment that may never end.

The chart at the right is from an Economist story about the resurgence in big government throughout the OECD nations (basically, the wealthier nations of the world). After a pretty stunning, across-the-board reduction in government spending as a percentage of GDP even among most Western European nations famous for their lavish welfare spending starting in the mid-1990s (hey, you read about it in Reason first), big government is back with a vengeance.

As The Economist notes, the easy 'xplanation for this is the financial crisis. But in fact, the drive skywards started "even before Lehman Brothers collapsed" and "George Bush did not even go through a prudent phase." Nor did his European counterparts, who had started hiking spending long before any credit freeze had given the economy anything approaching an ice cream headache.

If Obama is being intellectually serious (as opposed to simply bowing to political pressures in the wake of the Coakley defeat, the thank-god failure of a terrible health-care "reform" bill, and the lead-balloon-like drop of his overall ratings), he wouldn't be diddling around with a minor freeze on tiny spending. He'd be acknowledging forthrightly that out-of-control government spending (at all levels) is indeed the problem that's driving instability and lethargic markets. And he'd be taking serious action to make it clear that what he once called a "new era of fiscal responsibility" is actually upon us.

That's a big "if," of course, especially coming from a pol who sprinted from his laudable (and, in retrospect, laughable) campaign pledge of a "net spending cut" even before he took office.

Hat tip to Economist article: Alan Vanneman.