You want to know what a budget debate looks like in 2010? Here is it, in a nutshell. Step one: The administration wants to reduce the deficit, but it can’t cut spending dramatically without risking a double dip recession and drawing the ire of liberal Democrats. So it’s stuck with a $1.6 trillion dollar deficit, and it goes to Congress to sell its budget. This is where the nightmare begins:
The Obama administration knows that a $1.6 trillion deficit figure scares
the bejesus of out Americans. So the White House seeks ways to reduce the deficit by
either increasing taxes on companies and rich Americans, or eliminating subsidies.
But wait!
Congress complains that these tax changes hurt employers and create
“uncertainty” among businesses that would otherwise hire. So to
offset the tax changes and encourage hiring, the administration wants to put
together a jobs bill to offer loans to small businesses and $5000
checks to employers who add workers.
But wait!
The administration can’t put together a decent jobs bill without
violating their self-imposed PAYGO rules, which require one dollar
saved for every dollar spent. So they find a loophole: They’ll use the
$30 billion of bailout money that banks have paid back, and sprinkle
those funds among small businesses to make jobs grow.
But wait!
Deficit hawks in Congress blast the plan, because the money
recouped from TARP was supposed to go into the Treasury’s general fund
to (of course!) reduce the deficit. And we’re back at square one, with
everybody being generally concerned about the red ink. We can’t cut spending dramatically. So cut federal subsidies,
right? But that will kill jobs! And around and around we go.
The Obama administration is stuck between a rock and a hard place. The
rock is an immovable Congress and the hard place is a trillion dollar
deficit that is as terrifying to contemplate as it is impossible to
change. Everybody acknowledges that we need
more jobs, but key senators won’t vote for the money to incentivize
hiring. The White House can’t spend the deficit up without expecting more blowback, but Congress won’t
let them bring the deficit down. This is what a budget debate looks like.
