This may have been a low point for the Obama administration. Testifying before the House Budget Committee back in February, Treasury Secretary Tim Geithner told Chairman Paul Ryan the following: “We’re not coming before you to say we have a definitive solution to that long-term problem. What we do know is we don’t like yours.”
No solutions, but plenty of gimmicks. Lots and lots of gimmicks. Here are a few of the most egregious:
1. The Buffett rule. The U.S. federal government is $11 trillion in debt and may rack up another $11 trillion over the next decade. The U.S. labor market is 15 million jobs short of getting things back to where they were before the Great Recession. Yet the Obama White House (and campaign) is focusing valuable political capital on a millionaires tax that would create zero jobs and make, at best, a rounding-error contribution to deficit reduction. As Warren Buffett himself once put it, “A public-opinion poll is no substitute for thought.”
2. The Bowles-Simpson debt reduction panel. At the first meeting of Obama’s National Commission on Fiscal Responsibility and Reform in April 2010, the president said he was “going to be standing with them as they come up with the recommendations.” But he didn’t endorse the panel’s recommendations the following December or ever push a budget that reflected them, making the whole affair look like a political stunt to create the appearance of fiscal probity.
3. The CLASS Act. The Community Living Assistance Services and Supports Act was supposed to a) provide a self-financing, long-term care insurance program and b) reduce the budget deficit. Of the $210 billion in ten-year deficit reduction that the Congressional Budget Office originally said Obamacare would generate, more than a third came from the CLASS Act. Of course, the CLASS Act surplus was a budgetary mirage since participants had to pay five years of premiums before they became eligible to participate. HHS Secretary Kathleen Sebelius eventually conceded that she “did not see a viable path forward for CLASS implementation at this time.”
4. The Volcker rule. After Scott Brown’s stunning upset in the Massachusetts U.S. Senate race, a panicky White House decided it needed some splashy, populist-sounding policy ideas. So using former Federal Reserve Chairman Paul Volcker as a prop, it proposed a ban on proprietary trading by commercial banks. This would be Obama’s version of the Glass-Steagall Act. Yet it was a solution in search of a problem since such a prohibition, as a Council on Foreign Relations study put it, “would have done nothing to mitigate the worst financial crisis since the Great Depression.”
5. The Council on Jobs and Competitiveness. Obama’s jobs council, led by General Electric boss Jeff Immelt, hasn’t made out much better than the Bowles-Simpson debt commission. On January 17, it released a report that said the U.S. needed to “optimize all of its natural resources and construct pathways (pipelines, transmission and distribution) to deliver electricity and fuel.” The next day, Obama killed the Keystone XL pipeline. Much of the group’s advice on tax and regulatory reform has also been ignored. And according to reporter Charles Gasparino, Immelt will be voting for Mitt Romney in November.
6. The Framework for Shared Prosperity and Shared Fiscal Responsibility. A year ago, Obama gave a big speech about a new budget proposal that was his answer to Bowles-Simpson. But it was a black-box budget that didn’t reveal its economic assumptions, budget baselines, or annual spending and revenue levels. Even for seasoned budget experts, it was a puzzlement. At the time, I predicted it would never get submitted to the CBO, and so far I have been proven correct. A couple of months after the speech, at a House Budget Committee hearing, Chairman Paul Ryan and Congressional Budget Office Director Doug Elmendorf had this exchange:
Ryan: “We got your re-analysis of the President’s budget. I won’t go back into that. But the President gave a speech on April 13th where he outlined a new budget framework that claims $4 trillion in deficit reduction over 12 years. Have you estimated the budget impact of this framework?”
Elmendorf: “No, Mr. Chairman. We don’t estimate speeches. We need much more specificity than was provided in that speech for us to do our analysis.”
7. Going after oil market manipulators and speculators. Instead of drill, baby, drill from Obama, it’s investigate, baby, investigate. The president, speaking at the White House yesterday: ”We can’t afford a situation where some speculators can reap millions while millions of American families get the short end of the stick.” Such charges are constantly investigated with little result. But every time gas prices go up, it is the same old story from Washington. As AEI’s Ken Green explains:
Setting aside conspiracy theories about oil-company collusion – a perennial favorite of politicians of all stripes – the primary reason for high gasoline prices, as any economist will tell you, is very simple: world demand for oil (from which gasoline is made) is high, and the available supply is limited. In 2005, the US Federal Trade Commission attributed about 85 percent of the surge in gasoline prices over the previous twenty years to increases in the price of crude oil.
Meanwhile, the debt increases, incomes continue to fall, and workers continue to struggle to find jobs…