‘Investing’ Our Way to the Poor House

The Heritage Foundation

Ka-thump. That sound you just heard was President Barack Obama throwing 95% of all Americans under the bus. In his opening remarks during last night’s press conference, President Obama said of his budget: “This plan will provide a tax cut to 95 percent of all working families that will appear in people’s paychecks by April 1st.” But pressed later by ABC News’ Jake Tapper about compromises he was willing to make to get his budget passed, Obama said: “When it comes to the middle-class tax cut, we already had that in the recovery. We know that that’s going to be in place for at least the next two years. … The bottom line is, is that I want to see health care, energy, education, and serious efforts to reduce our budget deficit.” Translation: enjoy your extra $13 a week while you can, because Obama is not going to fight for your tax dollars.

What Obama is going to fight for is massive increases in government spending; or, as he likes to call them, “investments.” Obama said the words “invest” or “investments” 22 times last night. He is staking his entire presidency on the belief that government-made decisions are a wiser and more efficient allocator of resources than the millions of individual decisions Americans make every day through a functioning free market. Obama believes massive new federal spending and control of the health, education and energy sectors will lead to better economic growth.

He is wrong. Between 1984 and 2004, real government per pupil expendi­tures increased by 49% and yet reading scores and high school graduation rates have either remained flat or declined. The federal government has been subsidizing “alternative” energy since the 70s and yet, alternative energies such as wind and solar power contribute only 1% of our nation’s energy needs. On health care the only thing sure about Obama’s plans is that they expand coverage in ways that explode costs, while his cost reduction measures fall short of the fundamental reforms needed to contain costs. If government controlled health care were such an economic life saver, then why is all of Europe in the same economic mess we are in?

Obama’s massive spending explosion will do nothing to create economic growth, but it will grow our federal deficit. Again, last night, President Barack Obama claimed that his budget would cut the deficit by half by the end of his term. But as Heritage analyst Brian Riedl has pointed out, given that Obama has already helped quadruple the deficit with his stimulus package, pledging to halve it by 2013 is hardly ambitious.

Finishing his opening remarks last night, Obama said: “At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led us to a narrow prosperity and massive debt. It’s with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and invest.”

There is no saving in Obama’s budget. Only an acceleration of the borrow and spend policies that got us where we are today.