Barack Obama ran for president on a long list of program proposals, many of which addressed issues neglected (or perceived by liberals to be neglected) by George W. Bush. But with the financial turmoil and projected record deficits, will Obama have to scale back or abandon many of his planned initiatives?
Hereâ€™s the problem with the Obama budget:
The national debt, the CBO calculated, would go from 41% of the size of the nation’s economic output in 2008 to 82% of the economic output in 2019. In other words, if the CBO estimates play out without a change in policy, Obama is on track to accomplish exactly what he promised to change during the campaign, creating a massive burden for the next generation to fund politically popular policies in the short term, like tax cuts and spending programs.
I know Iâ€™m a big killjoy for harping on such things as national debt in the midst of a recession. But even the spendthrifts have to admit that swelling the debt to 82% of our output is probably a bad 10-year plan. Even if the CBO is off by a good bit, Obama will have to make adjustments to his proposals.
White House aides say that the president has already made significant sacrifices by scaling back his campaign promises in the current budget. â€¦ Those measures created a budget that was arguably sustainable once upon a time, with deficits that were smaller than the projected annual growth in the economy, while Obama still managed to make significant investments in education, energy and health care. But the economy appears to be shifting. And unless Obama finds a way to shift as well, or the economy recovers in a way some economists now think unlikely, Obama’s new “Era of Responsibility” may be viewed by historians as no more than another predictable attempt by a political leader to repaint the sides of a sinking ship.
Simply put, while many economists arenâ€™t concerned about spending a lot of money during a recession, we canâ€™t put so much permanent spending in place that we create an unsustainable deficit after the recovery. Thereâ€™s a balancing act to be done and the success or failure of the Obama presidency may rest on how well the administration balances their priorities with economic reality.