A Triple-A Country and Its Triple-F President

Imagine that George W. Bush had responded to 9/11 with a speech criticizing “gridlock in Washington”, denying the terrorism posed any genuine threat, assuring us that “modest adjustments” would be enough to deal with it, and promising “to present my own recommendations over the coming weeks on how we should proceed”. Osama bin-Laden would to this day be comfortably ensconced in Kabul, while al-Qa’eda ranged at will through America, Europe and the Middle East.

President Obama’s response to the S&P downgrade was on that level. Jen Rubin captured the body language that accompanied the President’s dismal presentation:

He was a half hour late. His head turned from side to side as if he were attending a tennis match. He practically never looked in the camera, as if he were averting our gaze. And those were the strong parts of President Obama’s disastrous speech.

It was a bit like a slow-motion car crash. After a while, one stopped listening to the blather and simply watched the stock ticker go down and down. And down some more.

A few of the lowlights:

• The President said that it was true “the day I took office” that “we need a balanced, long-term approach to deficit reduction”. That perception must, however, have come to him very recently. There was no hint of it during his first two years, when he and Democratic majorities in Congress could have enacted deficit reduction measures if they’d wanted to, nor in his aborted budget proposal earlier this year. “We knew last year that the dam was going to break, but there were all these other things we wanted to do instead of repairing it.”

• The root cause of our economic woes, from the President’s point of view, is “a prolonged debate over the debt ceiling – a debate where the threat of default was used as a bargaining chip. . . . That threat, coming after a string of economic disruptions in Europe, Japan and the Middle East, has now roiled the markets and dampened consumer confidence and slowed the pace of recovery.” Leaving aside the fact that not raising the debt ceiling would have led to a partial government shutdown rather than a default (unless the Administration deliberately chose to stiff creditors), and that plenty of Democrats were openly yearning for a rerun of 1995’s shutdown confrontation, this analysis defies the arrow of time. Economic growth has been near zero all year (0.4% in the first quarter, 1.3% in the second). It slowed before the “string of economic disruptions” and well before the debt ceiling became a visible issue.

• Don’t worry, though: “Our problems are eminently solvable.*” (The asterisk is from the White House transcript. What it refers to, I have no idea.) All that’s needed is to “ask those who can afford it pay their fair share” and make “modest adjustments to health care programs like Medicare”. Fairness is naturally in the eye of the beholder, but let me repeat, immune though progressives are to the fact, that the top one percent of taxpayers, earning 20% of all income, pay nearly 40% of all income taxes. Sure, there are other taxes, but rich people pay them, too. Progressives must, for instance, believe that estate and corporate taxes fall mainly on the wealthy (whether that’s really true is unclear); otherwise, they wouldn’t be so enamored of them. As for Social Security taxes, they are indeed capped, but so are benefits, and the benefits-to-taxes ratio declines sharply as one’s income rises. There are, in short, solid arguments for the proposition that it is the lower income brackets that aren’t paying “their fair share”. I doubt, though, that the President is making that argument.

  The best way – the only sure way – to increase tax revenue is through economic growth. No economist of any school believes that the way to spur growth is to raise taxes when the economy is barely moving. The President belatedly realized that last year, when he signed the extension of the Bush tax rate reductions. A pity that he can’t remember all the way back to last December.

  One wishes, too, that he would disclose those “modest adjustments” that will suffice to bring Medicare’s nearly-12-figure unfunded liability under control. The budget resolution passed by the House this year proposes to do that – and has been vehemently denounced by the Obama apparat. The House budget identifies that order of magnitude of the needed cost reductions. If the Obami have a “modest” way to reach the same figure, they’ve strangely neglected to tell anybody what it is.

• The President avers, “Last week, we reached an agreement that will make historic cuts to defense and domestic spending. But there’s not much further we can cut in either of those categories.” One might infer that he opposes the huge automatic cuts that are supposed to go into effect if the new “super-committee” can’t come up with a deficit reduction plan. Somehow I doubt the inference. This morning I heard his faithful ally Barney Frank on the radio calling for reducing defense spending by another $200 billion a year, i. e., retreat to Fortress America, then tear down the fortress wall.

  We can, however, be sure that the President means it when he rejects additional non-defense trimming, even though federal outlays are replete with “green energy” boondoggles, duplicative programs and useless subsidies (such as the temporarily ended – over Democratic caterwauls) funding of airports that nobody flies to).

• The speech has two concrete proposals: to extend unemployment benefits and the current year’s two percentage point FICA tax reduction. Even if those measures are beneficial, they are surpassingly trivial. Less concretely, the President wants to fight the deficit with – more spending. “We should also help companies that want to repair our roads and bridges and airports, so that thousands of construction workers who’ve been without a job for the last few years can get a paycheck again.” Ah, the good old “shovel ready projects” that worked such wonders in the first “stimulus” package!

Bringing the economic portion of his speech to a close, the President indulged in some of his familiar gaseous rhetoric, the gravamen of which was to shift blame for the current malaise to “economic factors that we can’t control – earthquakes, spikes in oil prices, slowdowns in other parts of the world”. No, the fault, dear Barack, lies not in the stars but in ourselves, that we are debt-ridden. If Japan were earthquake-free, oil prices half as high and Europe prospering, perpetual trillion dollar deficits would be – if I may use the nonce word – unsustainable. There’s not a scintilla of evidence that Barack Obama realizes that.

The Dow was already down 430 points when the President began talking. It finished down 634. Somebody has already said – but I can’t find the link now – that the Administration line is predictable: If not for the speech, the decline would have been 1,000, so the One has “created or saved” nearly 400 points.