Posts Tagged ‘the economics of vote seeking’

Jeffrey Sachs identifies Obama’s federal budget hypocrisy

March 1, 2013

Jeffrey Sachs, in yet another excellent column in the Financial Times, pin-points the hypocrisy in President Obama’s approach to the U.S. debt problem. While Obama criticizes the sequester that he actually proposed, on the ground that it cuts discretionary spending in the federal budget, Dr. Sachs notes that, from the start of his presidency in 2008, Obama has planned a deep reduction in such discretionary spending as a percentage of gross domestic product. His policy has panned out almost exactly as he so planned:

“The squeeze on domestic programmes dates to the start of Mr. Obama’s first term. In July 2009, he presented the details of his 10-year budget framework. Discretionary outlays (defence and non-defence) would rise from 7.9 per cent of GDP in 2008, the final full-year of George W Bush’s presidency, to 8.8 per cent in 2009, and 9.8 per cent in 2010, mainly because of stimulus spending and the surge in Afghanistan. But then would fall to 8.7 per cent in 2011, 7.8 per cent in 2012, 7.4 per cent in 2013, and to just 6.3 per cent in 2019, the final year of the 2009 10-year budget framework. These cuts are now taking hold, and they will hurt. Mr. Obama’s supporters will be puzzled; many will doubt that these cuts have long been ordained by the president, at least in general terms, though not exactly as they will now occur. Why would a progressive leader plan for deep cuts in discretionary spending relative to GDP…?” Jeffrey Sachs, ‘Progressive Obama planned deep budget cuts all along’, Financial Times, March 1, 2013

Sachs explains this apparent paradox in terms of a Faustian bargain entered into by Barack Obama both in 2008 and in 2012, in order to take and retain the White House. Obama decided to champion the Bush tax cuts except for a small number of rich Americans although these cuts were scheduled to expire in 2010. He did so to counter Republican promises to extend the tax cuts to all Americans. In order to replace the lost revenues, he silently planned for deep cuts in discretionary outlays as a percentage of GDP.

In effect, Obama determined to allow rising outlays in electorally popular entitlement programs, such as Medicare, Medicaid and Social Security, to crowd out public investments vital (in progressive eyes) for America’sa long-term economic future. And indeed, on January 1, 2013, the President made the Bush tax cuts permanent for 99 per cent of all Americans.The sequester outcome is now all but inevitable:

“Now the Bush tax cuts are permanent, Mr. Obama lacks the political leverage to achieve a boost in revenues. After years of deflecting public attention from the coming budget squeeze, he will now preside over sharp cuts in public services and investment that are the opposite of his stated goals.” Jeffrey Sachs, ibid.

Although Jeffrey Sachs does not draw the ultimate conclusion from unmitigated fact, I shall scorn the compromise. When a hypocrite actually achieves his underlying, but hidden goal, all that he has to shed are crocodile tears. Ignore those tears as they splash falsely down the face of a self-serving hypocrite. Obama secretly delights in an outcome that has provided him with eight years in the White House. The more distant future is for others to confront, while Obama extends his personal fortune on the lucrative lecture circuit.


Get every new post delivered to your Inbox.

Join 77 other followers