Hey, it's a day of the week with a y in it, so it's time for another presidential address about the economy. This time, President Barack Obama will be talking from the White House Rose Garden:
President Barack Obama will lay out a plan on Monday to cut the U.S. deficit, striking a populist tone aimed at galvanizing his Democratic Party base ahead of the November 2012 election.
Obama will vow to veto any cuts proposed for the government-run Medicare health program for the elderly unless Congress agrees to raise taxes on companies and the wealthy.
The president's recommendations to a congressional "super committee" would deliver deficit savings of more than $3 trillion over the next decade, his aides said, with roughly half of those savings coming from higher tax revenues.
This is the equivalent of switching from foreign to domestic champagne. While upping the amount we drink.
To put that $3 trillion into perspective consider the following:
- $3 trillion over a decade works out to $300 billion a year. If Obama expects to realize "half of those savings" via higher taxes, then we're looking at trimming just $150 billion a year in spending. And not from today's baseline, either, but from a series of budgets that will increase every year. About $1 trillion of the spending "cuts" come from draw-downs in Iraq and Afghanistan.
- This year's deficit alone is expected to be $1.3 trillion.
- This year's budget (never actually finished) will come in somewhere around $3.8 trillion.
- Under Obama's proposed budget plan released earlier this year, he would like to be spending $5.7 trillion in FY 2021. Under the draconian (read: lavish) budget proposal pushed by the GOP and authored by Rep. Paul Ryan (R-Wis.), we'd be spending $4.7 trillion in 2021.
- "Obama's proposals left out a number of cuts to Medicare, Medicaid and Social Security that he had put on the table during summer negotiations on a so-called 'grand bargain' with Republicans that ultimately went nowhere."
Is this any way to get spending under control? No. Is it any way to create conditions of political certainty that might actually help business create jobs? No. Is it any way to seriously grapple with either the immediate or long-term fiscal problems of the government of the United States? No.
Here's a plan to do all three, cooked up by me and Reason economics columnist Veronique de Rugy late last year, using Congressional Budget Office numbers (that have been slightly revised since). We called it "The 19 Percent Solution" because it keeps federal spending at roughly the historic average of federal revenue. By taking a decade to correct our spending course, it allows for small, consistent year-over-year cuts to be made from current spending patterns. That would allow for long-term planning and a sense of continuity and avoid massive disruptions to existing situations. Of course, expecting Congress to do anything over a period of time (other than spend spend spend) is a real problem. But if the folks in Washington, D.C. are indeed looking for a grand bargain, they could do worse than take a long look at "The 19 Percent Solution."
Here it is, explained in video form, in a fake kitchen, with a real piece of pork: