President Obama and House Speaker Boehner both gave speeches last night on the debt ceiling and the ongoing negotiations on how to raise it responsibly. This is the link to the text of the President’s speech. This is the link to the text of Speaker Boehner’s speech.
First a few comments on the President’s speech. My comments on Speaker Boehner’s speech will be in the next article. When President Bush left office, spending was less than $2 trillion a year–it is now almost $4 trillion a year. That is spending–it has nothing to do with tax cuts or corporate jets and wars are not a major part of that spending. It has to do with the fact that the House of Representatives, which initiates spending bills, has been out of control since 2006. The elections of 2010 have begun to correct that.
The President stated:
“…the recession meant that there was less money coming in, and it required us to spend even more — on tax cuts for middle-class families to spur the economy; on unemployment insurance; on aid to states so we could prevent more teachers and firefighters and police officers from being laid off. These emergency steps also added to the deficit.”
Tax cuts are not spending–a tax cut allows people to keep more of THEIR money–that money never belonged to the government. If the problem is the recession (it partially is), then why not loose regulations on companies, give everyone (including companies) a tax break, develop American energy sources, and set the economy free?
The President also stated:
“Now, what makes today’s stalemate so dangerous is that it has been tied to something known as the debt ceiling — a term that most people outside of Washington have probably never heard of before.
“Understand — raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up. In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it seven times. And we have to do it by next Tuesday, August 2nd, or else we won’t be able to pay all of our bills.”
I suspect at least 70 percent of voters have developed a good understanding of the debt ceiling in recent weeks.
Regarding the claim that raising the debt ceiling only pays for past expenditures, Bill Kristol pointed out in the Weekly Standard last night:
“That statement might be true about a rise in the debt ceiling that would take us only through the rest of the current fiscal year, for which funds have already been appropriated by Congress. It is simply not true about the increase Obama is asking for, which is designed to cover the next fiscal year and a bit more. The fact is, Obama’s $2.4 trillion increase (a number that never appears in the speech) does precisely what Obama says it doesn’t: it “allow[s] Congress to spend more money.” It is not the case that Obama’s debt ceiling hike “simply gives our country the ability to pay the bills that Congress has already racked up.””
There was no indication in this speech that the President is willing to cut spending. There is also no indication that his goal of increasing taxes has changed. There is a basic philosophical divide here. The goal of the conservative Republicans now in control of the House of Representatives is to reduce spending to approximately 18 percent of the Gross Domestic Product (GDP). Traditionally tax receipts are about 18 percent of GDP. The goal of the Progressives (liberals) in Congress is to increase taxes to bring in 25 percent of GDP to pay for their expanded government programs. There are some genuine questions as to whether tax revenue can reach 25 percent even if taxes are raised significantly. There is a tipping point where people simply stop producing because their efforts do not bring sufficient rewards to justify the work.
The President’s speech did not help bridge the gap between the two sides. It seems as if all President Obama did was dig his heels in on positions that have already been discredited.