Every White House has, for a long time, had an office occupied by a “senior advisor” whose sole task it is to make sure the President gets re-elected. We certainly have no problem with that. After all, politics is to Washington as air and water are to the planet. Judging from the decisions that have emanated from this White House, however, it appears that politics and the next election constitute the primary business being conducted at 1600 Pennsylvania Avenue.
Where to begin? Let’s start with the so-called budget the White House has forwarded to the Senate. The reader is reminded that the United States Senate, under the leadership (or lack thereof) of Senate Majority Leader Reid, has refused to consider a budget for over three years. Even when the Republican minority last year introduced in the Senate the identical bill sent to it by the White House, the Majority leader refused to schedule it for a vote. Why? Because the White House never intended it to be voted upon. The year before, the Senate (with its Democratic majority) voted 97 to 0 against the White House budget proposal. Why?
Once again, because the President didn’t send his budget proposal to the Senate to be acted upon. The White House merely has used the budgeting process (or lack thereof) for campaign fluff. US law actually requires that the Congress enact a budget each year. The House of Representatives, following the 2010 mid-term elections, has been sending a budget to the Senate, and, in our judgment, a well-reasoned budget at that. It then becomes the Senate’s responsibility to enact a budget and for the two legislative bodies to iron out the differences in conference. Not with this Senate.
The President’s so-called budget proposal is largely a platform for his tax-the-rich campaign mantra. It’s a great re-election strategy. He, essentially, ignores the nation’s primary imperative, which is to bring some sanity to our entitlement mentality before the weight of our entitlements quite literally breaks the bank. The non-partisan Congressional Budget Office (CBO) now forecasts that in just another eight years the combined Social Security Old Age and Disability Trust Funds will be about $800 billion short of what the Social Security Administration projected it would be just last year. This is very serious stuff with dire implications for those workers who are fast closing in on their retirement years.
The President claimed in his budget address about $850 billion in savings from ending the wars and then says he will steer some $230 billion of that to highways.
Well, with all due respect, there is no dividend from ending wars for which the government borrowed to pay. Common sense tells us we would have to keep borrowing that amount of money in order to spend it somewhere else.
Counting the end of wars as a dividend is like a student coming out of college loaded with debt and aching to buy things, says Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “When you finish college, you don’t suddenly have thousands of dollars a year to spend elsewhere — in fact, you have to find a way to pay back your loans.’’
MacGuineas says, “Drawing down spending on wars that were already set to wind down and that were deficit-financed in the first place should not be considered savings.’’ We should hasten to add that President Bush had his own bag of accounting tricks to obfuscate the cost of the wars.
Perhaps, most disingenuous was the President’s assumption of healthy growth in years ahead, with GDP growth predicted to reach 4 percent in 2014 and 4.2 percent in 2015. He really had no choice, as all of his deficit and debt reduction projections fall apart without strong economic growth. A strong pro growth message is essential for a president seeking re-election, but this is, of course, a remarkably growth averse administration. The President talks growth but pursues policies that are antithetical to growth. Reputable private forecasts are not nearly as rosy as the administration’s assumptions, and their track record tends to be better. They are generally forecasting a percentage point lower or close to that, a huge difference, and they don’t see reaching 4 percent growth in the foreseeable future.
Last year, the administration built its proposed budget on a projection of 2.7 percent growth in 2011; it turned out to be 1.7. The forecast for 2012 was 3.6 percent, which the White House lowered in the new budget to 3 percent. IHS Global Insight, a leading forecaster in Lexington, Massachusetts, projects 2.1 percent.
With the nation’s debt to GDP ratio now exceeding 100%, Washington’s habit of simply borrowing whatever it wishes to spend (in excess of its revenue) to fund its profligacy is headed for involuntary rehab. According to President Obama, the country isn’t spending too much; it’s simply a matter of the wealthy not being taxed enough. It’s all about everyone paying his or her fair share. Really? The top 1.0% pays 37.0% of all federal income taxes and the top 2.0% pay just under 50.0% of all federal income taxes, while about half of all tax filers pay no federal income tax at all. Daniel Henninger in his February 16, 2012, Wall Street Journal column stated:
“No more certain sign exists that a nation has chosen to step off its historic upward path than the creation of wealth taxes. A nation imposes a wealth tax when it wakes up one day to conclude that it has become embarrassed, rather than proud of, its wealth, which is to say, its national success.”
The strongly pro-growth Simpson-Bowles Commission (appointed by President Obama, apparently as window dressing) addressed our need for tax reform in a sensible and thoughtful way. We imagine the President’s reaction to the Simpson-Bowles recommendations was somewhat akin to the famous “Scream” image used to promote the horror film by the same name.
Could any decision have been more politically motivated than the decision to reject action on the Keystone pipeline until 2013 or beyond? Yes, there are environmental considerations that would have been accommodated, but for an administration desperate to find shovel-ready projects, this would be the granddaddy of all shovel ready projects. It involves thousands of jobs, and an attractive, abundant source of crude oil from our next-door neighbor to the north. Labor strongly supported the project, but environmentalists said “no” as they so often do whenever industry, in general, and Big Oil in particular support something. Better the Canadians should pipe it to tankers that will ship the crude to China.
The Keystone Pipeline is not some new project being foisted upon the American public. According to the TransCanada Corporation, the $13 billion Keystone pipeline system would play an important role in linking a secure and growing supply of Canadian crude oil with the largest refining markets in the United States, significantly improving North American security supply.
In June 2010 TransCanada commenced commercial operation of the first phase of the Keystone Pipeline System. Keystone’s first phase was highlighted by the conversion of a natural gas pipeline to a crude oil pipeline and construction of an innovative bullet line that brings the crude oil non-stop from Canada to market hubs in the U.S. Midwest.
Keystone Cushing (Phase II), an extension of the Keystone Pipeline from Steele City, Nebraska to Cushing, Oklahoma went into service in February 2011. The 36-inch pipeline connects to storage and distribution facilities at Cushing, a major crude oil marketing/refining and pipeline hub.
The proposed Keystone Gulf Coast Expansion Project is an approximate 2,673-kilometre (1,661-mile), 36-inch crude oil pipeline that would begin at Hardisty, Alberta and extend southeast through Saskatchewan, Montana, South Dakota and Nebraska. It would incorporate a portion of the Keystone Pipeline (Phase II) through Nebraska and Kansas to serve markets at Cushing, Oklahoma before continuing through Oklahoma to a delivery point near existing terminals in Nederland, Texas to serve the Port Arthur, Texas marketplace.
We understand that pipelines are serious undertakings, and that there are serious environmental issues that must be responsibly addressed. So are tunnels, highways, bridges, airports and every variety of so-called shovel ready projects. There are untold thousands of miles of pipeline throughout the country including every metropolitan area in the nation. Some are very old. Some require repair and replacement, and they are routinely repaired and replaced when necessary. Pipeline construction is something we can do, have done and are doing every day. There was no legitimate reason to reject this project, except that it caused waves at Campaign Central at 1600 Pennsylvania Avenue.
Political imperatives have dictated policy at the Obama White House throughout the President’s first term.
That’s why we had the spectacle of Boeing being sued in Federal Court by the NLRB to stop production in South Carolina of the Dreamliner Jet after Boeing had already built a multibillion-dollar plant to construct the plane.
And then there is the Patient Protection and Affordable Care Act (Obamacare) that the President famously proclaimed, “would not add one dime to the deficit…I’ll veto the bill if it adds one dime,” he told us. It may not add a dime, but according to the CBO it will add between a half trillion and a trillion dollars to the deficit by the end of the decade. That’s more dimes than we care to compute.
And who can forget the President’s eloquent sales pitch when selling his healthcare plan, “if you like your existing health insurance plan you can keep it,” he assured a skeptical public. Right. Tell that to the thousands of employees who work for Catholic Charities, hospitals and other church sponsored community service organizations. Hopefully, the United States Supreme Court will relieve us of Mr. Obama’s major first term signature piece of ill-conceived, poorly understood, ever-encroaching legislation.
By Hal Gershowitz and Stephen Porter
Big Government
