Obama’s Budget Proves He Should Not Be Reelected
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The Fiscal Times
February 14, 2012

President Obama does not deserve to be reelected. By refusing to address the greatest challenge this nation faces – our financial security – Mr. Obama has failed the American people. Despite warnings from the IMF, the credit ratings agencies, China -- our principal foreign creditor -- and the American people, the president continues to offer up budgets and programs that ignore the dire trajectory of Medicare and Social Security spending, putting the future of this nation at risk. 

RELATED: Obama’s 2013 Budget Forecasts Increasing Debt

Let’s get specific. This week Mr. Obama set forth a budget calling for yet another trillion-dollar deficit, the fourth in four years. Through certain spending cuts, some gimmickry (counting not spending on two wars as deficit reduction) and $1.5 trillion in tax hikes, the budget gap is projected to shrink to $575 billion in 2018, comfortably beyond the range of the country’s political telescope.

Each of the proposal’s major provisions scratches a partison itch: raising taxes on the wealthy, imposing new fees on banks, eliminating tax cuts on oil companies, spending $476 billion on transportation projects (mollifying construction crews teed off at the Keystone veto),  allotting $30 billion for (guaranteed voting blocks) police, teachers and fire department workers, and so on. As the Committee for a Responsible Federal Budget summarizes, the president’s budget stabilizes our debt at 76 percent of GDP – “roughly double historical debt levels.” This is not acceptable.

To be fair, Mr. Obama proposes to save $364 billion over ten years in Medicare and Medicaid, mainly through slicing payments for prescription drugs ($156 billion), taking money from skilled nursing facilities and long-term care hospitals ($63 billion)  and changing the way the government compensates doctors and hospitals for bad debts ($36 billion). The budget assumes the fantasy 30 percent cut in pay to healthcare providers contained in earlier projections. If you believe that these proposals will be adopted, please send me a certified check of $1,000 to claim your million-dollar lottery prize.

The budget is as cynical an affair as last year’s offering, which was defeated 97-0 in the Senate – an act of rare bipartisan cooperation. Before we celebrate that moment of sanity, however, we recollect that the Senate has not passed a budget in more than 1,000 days, though they are required by law to do so. The White House blames this dereliction of duty on intransigent Republicans (a charge most recently leveled by Budget Director Lew over the weekend) but in reality all that is needed is a simple Senate majority to pass a budget, which the Democrats have.

All this skirmishing is but B-rated play-acting. Informed citizens should be furious that the real issues clouding our future are not even addressed by our president. The crisis in our country is two-fold: a rising number of people receive ever-increasing assistance from the government. At the same time, fewer Americans are paying taxes. The inevitable outcome is a widening gap between revenues and outlays: the deficit.  The recession has accelerated the problem. Here are the facts:

Last year, the first of the 78 million Baby Boomers reached retirement age. Between now and 2050, the number of people over 65 will more than double -- from 40 to 89 million. This huge population will receive increasing funds from Social Security, Medicare and Medicaid, and if nothing is done, it will be crippling. Social Security outlays, according to the annual Trustees report, will advance from 4.2 percent of GDP in 2007 to 6.2 percent in 2035. The program, which ran in the red the past two years for the first time since 1983, will have exhausted its trust assets in 2036. Thereafter, the board projects, tax revenue will only pay for about three quarters of scheduled benefits. In short, Social Security as we know it will not survive the Baby Boom bulge.

Medicare, too, is a menace, gobbling up 3.6 percent of GDP in 2010, 5.5 percent in 2035 and an increasing share thereafter. The trust fund for Medicare dies in 2024. This is the rosy projection. The real numbers for Medicare deficits are likely to be far worse that the agency projects. They assume Obamacare-related productivity that even the Trustees deem “debatable” and that Congress will chop doctor payments, “notwithstanding experience to the contrary.”

While our mandated spending on health and retirement benefits will continue to sprout like weeds (fertilized by Obamacare), the portion of the country paying for this tab will shrink. According to the Heritage Foundation, the portion of the country that pays no income taxes has climbed from 15 percent in 1984 to 49.5 percent in 2009, or from 35 million people to 152 million. While the recession bears some responsibility for this increase, the trend was well underway before the financial crisis hit.

These trends threaten not only our economy but our country. Even now, the president is proposing cuts in our military that paste over his inaction on entitlement programs; some think he may soon gut our future preparedness.  President Obama argues that he is delivering what the country needs – more stimulative spending in the near term while laying the groundwork for long-term deficit reduction. He knows better. Our entitlements programs demand structural overhaul; he is afraid to light that fuse.

After more than two decades on Wall Street as a top-ranked research analyst, Liz Peek became a columnist and political analyst. Aside from The Fiscal Times, she writes for FoxNews.com, The New York Sun and Women on the Web.