Tax Analysts Blog

Obama Needs to Say 'No' to Congress

Posted on Apr 17, 2009

Now the Obama Administration is running on hope. This is not Republican propaganda. No matter what you think of the President's program, you can't escape what the numbers are telling us. The federal government's finances are headed down the tubes. Our only hope is big entitlements cuts or tax increases. Our so-called leaders are in denial.

Here's the best case scenario. The economy recovers. Interest rates stay low. Gas prices stay low. The Dow hits 10,000. Obama's prestige surges. Then he uses his built-up political capital and his Reagan-Roosevelt charm to deliver the bad news to the public and to bully Congress into making the hard choices. The problem is that Obama shows absolutely no signs of getting tough. On the contrary, his inclination is to cry "uncle" at the first hint of arm-twisting by members of his own party.

As usual, Ruth Marcus of the Washington Post hits the nail on the head. In her latest piece ("Where's the Backbone?") she points out that Obama has already caved on a whole bunch of major proposals he was counting on to slow the increase of the federal debt: limiting itemized deductions for high-income taxpayers, getting the banks out of the student loan business, shifting some costs of veterans' care to private insurers, and cutting farm subsidies. In addition, Marcus points out many Senate Democrats want to cut the estate tax rate from 45 percent to 35 percent, and she doesn't expect the cutbacks to Defense's budget suggested by Secretary Robert Gates to go far.

The President's current budget and its Congressional variants are fiscally unsound. Even Obama supporters will tell you this in private. So here's the trillion-dollar question: How will this President, who is having trouble passing an "easy" budget this year (with a 60 percent approval rating) pass a much tougher fiscally sound budget next year?

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