Tax Analysts Blog

Obama is a One-Term President

Posted on Apr 30, 2009

Looking over the list of Republican presidential hopefuls — Mitt Romney of Massachusetts, Mark Sanford of South Carolina, Newt Gingrich of Georgia — it is hard to imagine President Obama not being re-elected in 2012. Add to that the President’s approval rating of 63 percent, a Republican party divided, and recovery from a deep recession peaking at about election time, and it is easy to start imagining Obama will be unbeatable. Yet the seeds of defeat are being sown right before our very eyes.

The reason: the federal debt. The federal debt is spinning out of control. (See the figure below.) Obama is a man who just can’t say no. But he keeps smiling and spending more to support education, environment, and healthcare. Some people think sticking to your pre-election promises is admirable. That would be alright if we could afford it. Unfortunately, we can’t.

Deficits for fighting recessions are A-OK. Spending for other long terms objectives are only OK— if you pay for them. Obama is prancing forward as if he will never have to bear the cost.

If he can get past the 2012 election, there will be no problem. On January 1, 2013 he will announce — with great remorse — that higher taxes are unavoidable and despite all his efforts to cut spending, root out earmarks, close loopholes, and punish tax evaders, a broad-based tax increase, like a national value-added tax, is necessary.

The political question is: can Obama tread water until 2012? Can he give Americans everything they want — more healthcare, more education, more environmental investment — without tax increases and without a financial crisis?

My bet is the answer is no. My bet is the gimmicks packed into the 2010 budget resolution (passed on April 29) will look like child’s play compared to the lying and deceit that will be packed into the pre-election FY 2013 budget. If he presses congressional Democrats, they will revolt. If he refuses, Obama’s lies will grow like Pinnochio’s nose. And the American public will start to realize hope is not helpful when the situation is untenable.

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