Over the weekend in Toronto, Obama dug his hole even deeper. As the Wall Street Journal reports, by the end of the conference, “the wealthiest of the Group of 20 countries said they would halve their government deficits by the year 2013 and ‘stabilize’ their debt loads by 2016, a signal to international markets and domestic political audiences they are taking seriously the need to wean themselves from stimulus spending.”
Now, this seems superficially like a significant positive for U.S. taxpayers and the young adults who will inherit the fiscal excesses of the administration, especially given that “a White House statement said that government debt in the fiscal year ending Sept. 30, 2015, would be at an ‘acceptable level.’” Yet several questions stem from his analysis of the U.S. fiscal future. First and foremost, one must ask how he is budgeting, given that his party has decided not to fulfill its Constitutional duty of proposing a budget, and the budget proposed by the Republican Study Committee does not balance the budget before 2020, and the $20 trillion in publicly-held debt would then clock in at a similar percentage of GDP as Greece’s. Moreover, while he asserts that the debt in 2015 would be at an “acceptable level,” 2015 is the year in which Moody’s expects that the US will lose its AAA credit rating.
To explain the inexplicable, “President Obama said that next year he would present ‘very difficult choices’ to the country in an effort to meet deficit goals.” Moreover, “the President cited his disappointment with the U.S. tax code. ‘Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, ’cause I’m calling their bluff,’ Mr. Obama said.”
He will be calling more than his opponents’ bluffs; he has already called his own on not raising taxes for any family making less than $250,000 per year. And whereas all of the U.S.’s peer nations like the U.K., France, and especially Germany have pushed for strong austerity measures made with spending cuts and no or minor tax increases, Obama’s outdated, neo-Keynesian policy consists of higher taxes and more spending. Moreover, the U.S. remains the last of the major economies to enforce worldwide taxation of all U.S. corporations and individuals, doing so at higher rates than U.S. peer nations.
Perhaps this is why the German Finance Minister Wolfgang Schäuble articulated the rest of the developed world’s frustration with the U.S. during an interview with the French paper Le Monde, “Mr. Obama’s giant stimulus spending has had little impact on the country’s jobless rate, which remains well above 9%.”