Second Obama Budget: More Radical Than First

Written by David Frum on Tuesday February 2, 2010

President Obama's second budget puts the U.S. on a path to even higher taxing and spending than his first - a path that will continue long after this recession ends.

Read Keith Hennessy. President Obama's second budget puts the U.S. on a path to even higher taxing and spending than his first - a path that will continue long after this recession ends. Under the president's budget, the U.S. will spend over 24% of national product by the end of the decade, as against a 30-year average of 21.1%. This higher spending path implies an equally radical higher taxing path. And note that this surge begins before very many of the baby boomers have entered their retirement years. When the baby boomer tsunami hits after 2020, spending will surge again. The U.S. is well launched toward European-size government: feds at maybe 30% of GDP, states an additional 10-15, total verging on the 50% crisis zone.

These numbers cast an ominous back-shadow on President Obama's show of super reasonableness in his encounter with the House Republican caucus. President Obama is a reasonable man doing unreasonable things.

The Paul Ryan budget is a fascinating and important start of a Republican response to Obama's step toward collectivization of the economy. Let me suggest more refinements to how Republicans should be thinking.

1) We face a short term and long term emergency: short term, the after-effects of the financial crisis, long-term, the baby boomer retirement for which the U.S. has so poorly prepared.

2) Emergencies allow for emergency responses: there is nothing wrong with a temporary spike in spending to respond to a recession, a flood, or a war. (That's why Obama's attacks on George Bush's profligacy should ring hollow. Wars cost money - but if you win, they are worth the cost, even in financial terms. WWII repaid every penny and then some. Ditto the Marshall Plan.)

3) These emergencies cannot be allowed to become excuses for permanently higher baseline spending. To that end , it might even be helpful to find some separate line to count their costs - and some separate mechanism for financing them. (That's the merit of war bonds. There'e only one borrower of course, the public fisc, but it helps the borrower to keep separate track of what he's borrowing for.)

4) Goal: a U.S. government that is no bigger as a share of the economy in 2050 (after the departure of the last of us baby boomers) than it was in 2000, before the baby boomer claims began to arrive.

5) For sure health reform has to be part of this story. But so does real restraint everywhere else in the budget line - and a date certain for the termination of all stimulus spending.

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