Fiscal cliff talk intended to bewitch
Sunday, December 9, 2012
Even Jonathan Swift, who said promises and pie crusts are made to be broken, might have marveled at the limited shelf life of Barack Obama's promise of a "balanced" deficit-reduction plan -- substantial spending cuts to accompany revenue increases.
Obama made short shrift of that promise when he demanded $1.6 trillion in immediate tax increases and mostly unspecified domestic cuts. He also promised to cut $800 billion from 10 years of war spending that will end in two years, which is like "cutting" $800 billion by deciding not to build a ski resort on Mars.
Year after year, the Democratic-controlled Senate, ignoring the law, refuses to pass budgets. Year after year, Washington makes big government cheap by charging Americans only $6 for every $10 of government services, borrowing the difference. And the biggest purchaser of U.S. government debt is not China but … the U.S. government, largely through the Federal Reserve.
Democrats insist the manufactured unpleasantness due Jan. 1 is a crisis of insufficient revenues. But Jeffrey Dorfman, a University of Georgia economics professor, thinks arithmetic says otherwise. Writing for RealClearMarkets, he says possible tax increases and spending cuts would reduce the current deficit by less than a third, leaving a deficit larger than any run by any president not named Obama.
At the end of the Clinton administration, when the budget was balanced (largely by revenues generated by commercialization of the Internet), annual federal spending was $1.94 trillion and revenue was $2.10 trillion. "Adjusting for inflation and population growth since the start of 2001," Dorfman writes, "today's equivalents would be $2.77 trillion and $3.00 trillion," and a $230 billion surplus.
What is to blame for today's huge imbalance? The Bush tax cuts? The recession? Obama's spending? Dorfman answers yes, yes and yes -- but that "spending is the main culprit" because: Today federal revenue is $2.67 trillion (slightly less than "the Clinton equivalent") and spending is $3.76 trillion, so we are spending $987 billion more than we would be if we had just increased Bill Clinton's last budget for inflation and population growth.
"Philosophy," said the philosopher Ludwig Wittgenstein, "is a battle against the bewitchment of our intelligence by means of language." In unphilosophic Washington, bewitchment is cultivated. Notice how quickly and thoroughly a phrase used intermittently for more than 50 years -- "fiscal cliff" -- was made ubiquitous by one of Washington's least flamboyant speakers (Ben Bernanke). This melodramatic language encourages the supposition that plunging off the (metaphorical) cliff is unthinkable. But as this column has hitherto noted, the cliff's consequences -- huge tax increases and defense cuts -- are progressivism's agenda. And Obama needs to restock the pantry where he stores his excuses for his economic policy failures. The tax increases would augment his policy of enlarging government's control of the nation's economic output, and he could henceforth blame continuing economic anemia on Republicans who supposedly should have averted what progressives desire.
Given Obama's "principled" stance against "obdurate" Republicans, the cliff can be dodged only by imposing tax policies that further darken the nation's future, and government spending would continue to rise even under the sequester-imposed "austerity." More bewitchment of intelligence by language.