President Obama has released his first budget and the Times editorial board is thrilled, for it "recognizes what most of Washington has been too scared or ideologically blind to admit: to recover from George W. Bush’s reckless economic policies, taxes must go up."
Why were Bush's economic policies reckless? The deficit was too high, as the Times explains:
Mr. Obama’s blueprint, released on Thursday, commits to cutting by more than two-thirds, by 2013, the $1.75 trillion budget deficit that Mr. Bush dumped on the nation.
A credible pledge to reduce the deficit is imperative. Without it, foreign lenders — who financed the Bush-era deficits and are now paying for the stimulus and bailouts — could lose faith in the nation’s ability or willingness to repay in anything other than rapidly depreciating dollars. That would send interest rates up and the economy down, the worst-case scenario. Controlling the deficit is also necessary to sustain a recovery — when it comes.
Bush didn't dump all $1.75 trillion of the current deficit on the nation. The recently signed stimulus package will contribute a significant chunk to that figure. But, I won't spend too long quibbling over who is responsible for hundreds of billions in deficit spending. Let's assume Obama meets his startling unambitious goal of cutting the deficit by two thirds in 2013. That would still leave a shortfall greater than all of the Bush years except for 2009. So, Obama's goal would be Bush's second worst year.
How can this be if deficit reduction is so important and Obama has pledged to raise taxes? The answer is because Obama's proposed spending increases are enormous. Deficits are a two-figured equation: revenues minus expenses. If you only look at one half, as the Times has, you miss the bigger picture. The Times praises Obama for raising revenues, and ignores the explosion in spending.
This year's deficit was an aberration due to the recession, the bank bailout, and the stimulus. Obama is turning the aberration into a permanent expansion of spending that the tax hikes won't even begin to cover. The Times is willfully ignoring this by focusing on this year's deficit and not what the norm was earlier in the Bush years (average deficits of $250 billion).
When you get into this sort of doublespeak, you have a tendency to outright contradict yourself, as the Times does:
The collapse of the Bush-era economy is ample and awful evidence of the folly of unconstrained debt-fueled growth. The Obama administration has acknowledged the need for deficit spending to stimulate the economy but has vowed that unpaid-for government will not become the norm. Judging from the blueprint, Mr. Obama is not just talking the talk.
Obama's blueprint ends in 2019 and pledges increasing deficits starting in 2014. There is not a single projected surplus. If that's not "unpaid-for government" becoming the norm, what is?
Furthermore, the ten year projections are exceedingly optimistic. They assume economic recovery in 2010 and growth significantly higher than the Bush years despite a carbon cap being imposed, which is itself a hidden tax increase.
Back to the Times on income taxes:
The proposed increases signal a serious attempt to tame deficits in a way that restores fairness to a tax code that has for too long been tilted in favor of the wealthiest Americans, resulting in budget shortfalls that disproportionately burden everyone else.
Forty percent of Americans don't pay any income taxes. Would any rational person describe our tax code as "tilted in favor of the wealthiest"?
The Times concludes:
No one who really believes in fiscal responsibility could object to the proposed tax increases. And yet, each one presages a political fight. At issue is not only the tax burden on the wealthiest Americans or election-year debates, but the real-life difficulty of weaning people hooked on unsustainable debt — whether it is unpaid-for tax breaks or over-leveraged buyouts or junk mortgages. It’s a challenge avoided for too long.
If the Times truly believes what it wrote in this paragraph, why won't it look at the spending increases being proposed? The answer, of course, is that the Times does not believe what it wrote. Neither reducing the deficit nor exercising fiscal responsibility are its true priorities.