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President Barack Obama responds to a question during a news conference in the James S. Brady Press Briefing Room of the White House on the status of efforts to find a balanced approach to the debt limit and deficit reduction, July 11, 2011.
Dr. Peter Morici: US budget deficit;
President Obama hardly needs more taxes to slash the federal deficit but
Congressional Republicans do need new taxes to survive politically.
Puzzled? Be not!
Washington is a city of paradoxes, where economics may define what is good but
politics defines virtue.
Since 2007, when Democrats took control of Congress, federal spending is up
$1.1trn--$900bn more than was needed for inflation. The federal deficit has
jumped from $161bn to $1.6trn.
Surely, President Obama could cut the additional spending in half, and save the
country $450bn each year and $4.5trn over 10 years. Congressman Paul Ryan is
right—the county has a spending problem, not a taxing problem.
Republicans took control of the House in the last election on a cut federal
spending and deficit platform. Americans were disgusted with the President’s
bailouts of banks and auto companies, and Democrats big spending, and they want
an adjustment to the center—perhaps the center right-- but Republicans don’t
have a mandate to impose a severe conservative agenda.
The Tea Party remains a minority of House members, and the Republicans must
strike a balance between fiscal austerity and voters aspirations on health care
and the like to create a sustainable majority.
The strongest evidence I can cite is that the President’s approval ratings have
improved through these budget negotiations, even as economic news gets darker
and darker. In daily tracking policies, since June 20, his approval rating has
improved and the ratio of approve-disapproval has gone from negative to
Americans may hold the President accountable for the bad economy and even worse
jobs market, but they don’t hold much malice toward his position that some
increased taxes—a contribution from the wealthy and closing abusive business
deductions—has some merit.
Voters do vary on where they draw line in defining the wealth and tax abuse, but
hardly any national politician can play a winning hand completely rebuking the
President’s fairness argument.
Saturday evening, Speaker Boehner pronounced that a grand deal on
deficit—slashing it by $4trn dollars over ten years—was not possible, because
the President insists on higher taxes as part of the package. He was giving in
to pressure from his right wing, led by Majority Leader Cantor.
The hard reality is that Cantor is politically tone deaf, Barack Obama is
not—that explains why the former is a Congressman and the latter is a President,
and the 2012 elections are not like to change that.
Just as President Obama and Speak Pelosi mistook their 2008 victory as a mandate
for a hard left agenda and got shellacked in 2010, Cantor and company, with
their severe conservative agenda, are taking Republicans down the same well trod
path of hubris and defeat.
If the Republicans were smart, they would recognize giving the President some
tax measures in a package that is overwhelmingly spending cuts is the best path