Saturday, March 07, 2009

Obama: Republican budgeting = Wall Street risk management

As Republicans scream "socialist" at Obama, he is outflanking them by tying Republican stewardship of the economy to Wall Street's reckless mismanagement -- and dramatically contrasting his own budgeting practices and priorities.

While Obama spent two years as a candidate contrasting his proposed menu of investments and tax hikes on the wealthy with "the failed policies of the last eight [seven, six] years," his own budget enables a new level of sophistication in the contrast. Now, the Republicans in his telling are poor risk managers -- while Obama is a long-range planner and investor. From today's weekly address:
My administration inherited a $1.3 trillion budget deficit, the largest in history. And we've inherited a budgeting process as irresponsible as it is unsustainable. For years, as Wall Street used accounting tricks to conceal costs and avoid responsibility, Washington did, too.

These kinds of irresponsible budgets -- and inexcusable practices -- are now in the past. For the first time in many years, my administration has produced a budget that represents an honest reckoning of where we are and where we need to go.

It's also a budget that begins to make the hard choices that we've avoided for far too long -- a strategy that cuts where we must and invests where we need. That's why it includes $2 trillion in deficit reduction, while making historic investments in America's future. That's why it reduces discretionary spending for non-defense programs as a share of the economy by more than 10 percent over the next decade -- to the lowest level since they began keeping these records nearly half a century ago. And that's why on Wednesday, I signed a presidential memorandum to end unnecessary no-bid contracts and dramatically reform the way contracts are awarded -- reforms that will save the American people up to $40 billion each year.
While the budget itself proposes huge outlays for stimulus, health care reform, education, alternative energy and infrastructure, Obama here emphasizes so far rather theoretical and distant planned spending cuts and spending-as-percentage-of-gdp projections dependent on optimistic growth predictions. He has skillfully hedged ambitious spending plans with commitments -- and rhetorical emphases --on long-range budget planning. If promises of future frugality seem a bit easy, it's also true that Obama has laid down a marker, imposing ambitious deficit reduction targets on himself by which he will be measured before his term is out.

Meanwhile, he is only too happy to help Republicans tie themselves to the crony capitalism that enabled the bubblenomics of recent years.

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