David Frum June 28th, 2009 at 12:01 am
A veteran of Washington wheeling and dealing told me this story from an administration long ago:
At the mid-session budget review, the staff had to present the president with some bad news. The budget deficit would be much bigger than anticipated. The president answered firmly: No it won’t.
So the staff resumed work. What if we adjusted the inflation number? Raising the estimate for inflation in years five through 10 of the budget plan makes future revenues look much bigger. And if the raise is small enough — say from 1.6% to 1.64% — nobody will notice: 1.64 rounds down to 1.6 after all….
After a few such devices, things had been massaged into much better shape. The president got his number.
“So what lesson did you learn from this experience?” I asked the veteran.
“Never trust numbers,” he answered. You can describe numbers as very big or not so big, scary or benign, but when you see all those decimal places — you are being conned.
Just remember that as you listen to the news from Barack Obama’s Washington. Money is being spent and debt incurred at a staggering pace. On June 15, the Congressional Budget Office estimated that the Democrats’ new health plan, known as Kennedy-Dodd, would add perhaps $1.6-trillion to the budget deficits for 2010-2019 — $1.6-trillion!
Once upon a time that was real money. Now it’s explained away as less than 1% of GDP on an annual basis.
And yet that $1.6-trillion number is based on optimistic — really heroic — assumptions. It’s assumed that the plan will slow the rate of growth in health-care spending, that all kinds of savings will be discovered, that the savings are not mere gimmicks, etc., etc., etc.
So remember the advice of my friend, the budget veteran. We cannot estimate the cost of the Obama administration’s plans with any real accuracy. What we can say is this: The U.S. under Barack Obama and the Democrats is planning to spend astounding amounts of money, colossal amounts, and to pile up debt on a scale never previously contemplated in peacetime. If these plans are all enacted, the U.S. will end the next decade approximately as deeply in debt as it ended the Second World War — and this time without being able to say that the money saved the world.
Or maybe more deeply in debt — who knows?
On the other hand, the plans to spend the money may never be enacted after all. Already public opinion is balking at the Obama administration’s spending spree. The Gallup poll released June 8 reveals an ominous decline in support for the administration’s economic plans.
Between February and June, disapproval of the administration’s economic plans rose from 30% to 42%. While the administration remains popular, when asked about Obama’s record on the budget deficit, Americans disapprove 48-46. On controlling spending, they disapprove 51-45.
Americans still express optimistic hopes that this steep, deep and prolonged recession will soon yield to a strong recovery. More Americans say that the country is on the “right track” today than in the spring of 2008, before the recession started. But bad economic news keeps arriving. On Thursday, the U.S. Department of Labor announced that 6.74 million people are now receiving unemployment insurance.
At recession’s end, the U.S. will be forced to raise taxes heavily just to pay the interest on Obama’s debts; Canada will be positioned to maintain and even reduce taxes. Obama’s indebtedness will exert unending downward pressure on the U.S. dollar, while higher energy prices and superior economic management cause the Canadian loonie to rise.
A decade ago, incomes per capita, even in wealthy Ontario, trailed those of every U.S. state except Mississippi. Obama’s poor economic management offers the opportunity for a stunning reversal of fortunes.
And maybe that’s the issue Prime Minister Harper should be sharpening as he prepares for his ultimate contest against Michael Ignatieff. Ignatieff’s goals as prime minister are hazy and maybe non-existent. Perhaps Harper could counter with one national goal: simple, clear and confident:
Canada will avoid reckless spending, avoid accumulating debt, hold the line on taxes and reduce the burden of government regulation, all to achieve, for the first time in Canadian history, higher average incomes on the Canadian side of the border than the American.
Originally published in the National Post.