Obama’s Deficit Reduction Plan Tomorrow: A Prediction

Is the country broke? Chicago Sun-Times columnist Jacob Sullum thinks so, even though the New York Times thinks otherwise. Sullum writes:

The New York Times says it’s “obfuscating nonsense” to declare that “we’re broke,” as House Speaker John Boehner (R-Ohio) likes to do. “A country with a deficit is not necessarily any more ‘broke’ than a family with a mortgage or a college loan,” the Times explains.

Suppose the mortgage is twice the home’s current value, the college loan was used for an unfinished degree in anthropology, and the family cannot make payments on either without borrowing or stealing because it has no income of its own. Now this family looks more like the federal government.

I believe the New York Times’ mortgage analogy to be even more absurd than Sullum suggests. Prudent homebuyers deliberately take out fixed-rate mortgages so that they can plan around their monthly payments. The U.S. national debt, by contrast, is rocketing higher every year. It’s as if we took out a mortgage every year only to refinance it for a larger mortgage the very next year. Except that no bank would ever let us refinance annually for more.

Tomorrow, the President will apparently reject the New York Times mortgage analogy, and concede our nation faces a debt crisis. He will tell us how we are to reduce, not increase, our deficit. This will be tricky, however. Every specific proposal to reduce spending Obama offers is highly likely to succeed if Republicans accept it.

So if Obama is to refrain from alienating his progressive, big-government-loving base and the New York Times, he has to stay away from specifics. There are two exceptions: 1) he can safely propose tax increases of any variety, and 2) he can recommend defense cuts. Republicans won’t easily support any tax increase, even as part of some overall reform, and Republicans don’t think we spend too much on national security.

If Obama is to come across as at all serious about debt reduction, he must deal with out-of-control entitlement expenditures. We hear he will discuss how to lower Medicare and Medicaid costs. But to seem serious without actually doing anything, Obama must ask for changes Republicans cannot accept.

Bottom line: Look for sizzle, no steak.