September 20, 2011

September 20, 2011 | Commentary on Taxes

Obama’s ‘Glut the Beast’ Tax-Hike Strategy

The liberal dream has long been to build the size and scope of government, sustained by high taxes, in big steps like “Obamacare” and many little steps that often go unnoticed.

From the start of his presidency, Barack Obama began a concerted, sustained campaign to realize this dream. The goal: supersize government. The strategy: “glut the beast.” The occasion: the recession.

Mr. Obama’s most recent budget proposal is just the latest, and perhaps the ultimate, expression of that strategy. He claims it’s a balanced program of shared sacrifice — a reflection of “the math,” not “class warfare.” In truth, Mr. Obama’s latest plan defies the math and reflects little more than tax hikes and class warfare. The plan certainly is not about the budget deficits he continues to embrace as essential to achieving the liberal dream.

Liberals recognized long ago the rhetorical usefulness of the reported Reagan doctrine of “starve the beast.” Reagan conservatives understood the enduring desire to return to an era of smaller government was often inadequate to force Washington to give up big spending. However, the era of big government often led to big budget deficits — deficits the American people opposed. Thus, combining the political support for smaller government with the political support for smaller budget deficits became a more effective coalition for restraining government spending.

Taking a page from their adversaries, liberals found they could turn this doctrine on its head with a new glut-the-beast strategy. The idea is to use the occasion of a deep recession to justify massive spending increases and even bigger government, intentionally leading to massive budget deficits. The next step in the strategy is to acknowledge that the resulting budget deficits are unsustainable, and then to repeat incessantly the mantra that spending reductions alone cannot close the deficits sufficiently, thus leading to the inevitable conclusion that higher taxes are inescapable.

Early in his administration, President Obama signed a huge government stimulus bill into law. He has since signed multiple lesser efforts. Not surprisingly, these bills have successfully stimulated government spending, but not the economy, which two years after the recession’s end continues to languish.

Mr. Obama recently took one last shot at glutting the beast by proposing yet another stimulus plan. He has now followed this up with his proposal to bring the strategy full circle. Having glutted the beast to bursting pulchritude and pushed deficits to stratospheric levels, he now proposes a $3 trillion deficit-reduction plan that includes roughly $1.6 trillion in real tax hikes and nearly $1.5 trillion in mostly phony spending cuts — e.g., claiming credit for the phasing down of military operations in Afghanistan and Iraq and the ever-popular assault on Medicare waste, fraud and abuse.

Excuse us, Mr. President, but is the wind-down in war fighting a new policy? Is your attention for Medicare overpayments really a new policy some three years into your administration?

America’s economic future faces a dire threat in the current and projected budget deficits. That, at least, is a point on which there is broad agreement. Had Mr. Obama defended his latest plan as $1.6 trillion in new taxes on upper-income Americans who already pay most of the taxes, and a couple of hundred billion dollars in additional spending reductions, the plan would at least have been a serious plan for a serious problem. It would still be the wrong plan for America, but it would at least be credible.

Instead, the president’s latest plan is not credible, it is laughable. That, and the folly to think that even a majority of congressional Democrats would vote for this plan, mean that perhaps no budget plan in modern history was more surely dead on arrival than the latest Obama offering.

No wonder America’s credit rating, having been already downgraded once, is at risk of a further downgrade. When serious leadership is needed, the president offers up a campaign document. At the very least, though, it likely represents Mr. Obama’s vision for America’s future if he is re-elected: higher taxes, fewer jobs, bigger government, more budget deficits, and another round of “glut the beast.” The American people can't say they weren't warned.

J.D. Foster, Ph.D., is the Norman B. Ture senior fellow in the economics of fiscal policy in the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.

About the Author

J.D. Foster, Ph.D. Norman B. Ture Senior Fellow in the Economics of Fiscal Policy
Thomas A. Roe Institute for Economic Policy Studies

First appeared in The Washington Times