Obama's "Balanced Approach"

President Barack Obama and his partisans in the Congress say they want a "balanced approach" for deficit reduction. They want to use a combination of spending cuts and tax increases ("tax expenditure reductions") to bring down the deficit. They absolutely do not want to reduce the deficit through budget cuts alone. (President Barack Obama said "We can't simply cut our way to prosperity.") In fact, the Obama Administration and its partisans don't want to have any budget cuts at all. (Treasury Secretary Tim Geithner said "We have to raise taxes on small business so government programs don't have to shrink.") But they may accept some budget cuts as a necessary evil. If they're forced to.

Let's step back and take a look at the problem. Tax rates haven't changed in the last eight years. Only spending rates have. With the current tax rates, tax collections increased rapidly from 2003 through 2007. That only changed when the economy went into the toilet in 2008 thanks to the bursting of the housing sub-prime mortgage bubble. The deficit came down through 2007, too, but went up somewhat in 2008 (slightly, by comparison to later values).

But things changed in 2009. With Barack Obama in the White House, there was no longer any restraint on the profligacy of the Pelosi-Reid Congress. Tax rates did not change, but spending rates did. The deficit exploded, tripling from what it had been before. And the reason was the spending increases, since there were no tax cuts.

The problem we now have with the deficit and the debt ceiling has been created by out of control spending, not by insufficient tax revenues. The solution to the problem is to roll back the spending increases that created the problem.

But the secondary problem is that President Obama and his Congressional partisans, independent of anything else, just want a massive, and unnecessary, tax increase as part of any debt ceiling increase deal. Since that insistence does not really address the deficit problem's cause, it may be that Obama and his partisans simply want to maintain his principle that the answer to deficit reduction (as all other questions) is raising taxes. If he fails, and if it is proven that we really can "cut our way to prosperity", then he is done and his presidency will rest among the other failed presidencies. Right alongside that of Jimmy Carter.