Keep up with the news by installing RT’s extension for . Never miss a story with this clean and simple app that delivers the latest headlines to you.

 

Dead budget walking: Obama abandons hope, gives up on change

Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.

Published time: March 11, 2014 09:00
US President Barack Obama (AFP Photo / Mandel Ngan)

​After some bruising budget disputes, President Obama has abandoned any pretense to run the country’s economy.

His latest budget is a political manifesto instead of the economic reform the US desperately needs. Or as US pundit Stan Collender put it, this budget is “more dead on arrival than most…”

On the current trajectory, by 2020 US taxpayers will be paying more on government debt interest than on the military (and the US armed forces don’t exactly come cheap). President Obama murmurs a mantra about tackling the roaring US budget deficit but then again he also promised “hope” and “change” when first elected… His promises remain empty while overseeing a government whose signature policy has been shambolic health “reform” demonstrating government at its most incompetent.

Delving into the mumbo-jumbo of politics, economic reality is usually the first casualty. Hence it is commonplace to mix up debt and deficit. Think of the deficit as how much money the government spends on its credit card every year. Meanwhile the debt is the total amount government owes (which accrues interest with gusto, of course). Thus when big budget deficits arise, (a trillion per year in Obama’s first term), the political mantra is that the president has slashed the deficit in half (it is projected to be merely $564 billion in 2015). Given this “improved” deficit is still more than three times the size of the Ukrainian economy, it may strike readers as being a lot of money to add to the debt annually.

Alas, President Obama is simply unable to contain his eagerness to propel the US toward being an EU-style socialist big state. This remains a challenge, given that the EU’s most “advanced” economies are all suffering from prolonged massive government overspending, even in the UK where some allege an austerity government, yet debt is continuing to balloon.

Reuters / Adrees Latif

With this budget, the White House has abrogated any responsibility for the long term fiscal health of the US government. They propose closing some tax loopholes, including “carried interest,” which is a sensible way to even out taxes between hedge and private equity fund managers with high earners in other fields. However, the whole feel of the budget is just a bit of political tinkering to get certain voter groups out to the polls for the mid-terms, as opposed to being part of any genuine coherent vision for the country to spend within its means.

Sadly, President Obama has consistently demonstrated an acute lack of management ability. His aloof treatment of Congress exemplifies his foibles. When he came to power I thought he would be another Jimmy Carter-style micromanager. Rather he has been much worse – exemplifying an arrogant liberal tendency: he knows better than his citizens but finds himself unable to countenance actually communicating with the democratically elected representatives of the people. Ultimately successful presidents such as Reagan and Clinton demonstrated national leadership by working with opposing politicians to reach consensus. Rather Obama has ridiculed his opponents, instead of engaging with them and the ultimate loser has not merely been Obama’s reputation (his current approval rating stands at an unhealthy 43 percent). It has been the American people.

With military budget cuts, today’s $612 billion line will reduce to $583 billion by 2020 at which stage annual interest on the deficit will be $600 billion. Even with low interest rate expectations, US government debt is increasingly out of control. Too many US politicians (Democrat and Republican) are unwilling to tackle the pork barrel’s relentless rise and now the president has turned his back on leading the national economic debate.

Ultimately Obama’s 2015 budget doesn’t bother with the niceties of seeking bipartisan agreement. It confirms the US electorate’s pragmatism in withholding Democrats or Republicans the mandate to run federal government in isolation. Thus President Obama proposes a budget of purely Democratic aspirations which is a lightning rod for Republican dissent in Congress. This budget demonstrates his stubborn weakness, which has been the watchword of his presidency. He secures the base, but cannot secure progress for the nation when it urgently needs government to live within its means. The US desperately needs a better deal for taxpayers to secure future growth. With three years remaining in office, the president has abandoned his responsibility for leading the world’s largest economy.

Second terms are usually about securing the presidential legacy. In the case of Obama, hope and change are giving way to debt and despair.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.