Following a Walter Cronkite editorial report during the Tet Offensive that the Vietnam War was unwinnable, President Lyndon Johnson is reported to have said, “If I’ve lost Cronkite, I’ve lost middle America.”
Today one of President Obama’s “propaganda arms, the Washington Post complained about the size of the federal deficit.” It warned the President that a credible solution to the deficit must be developed or the economy will stagnate. Wow the Washington Post disagreeing with Obama. Is this President Obama’s “losing Uncle Walter” moment? Or has it begun to snow in hell? But no fear because David Axelrod may have a solution, breaking another campaign promise:
Now comes the CBO with yet more news of the sort that neither Capitol Hill nor the White House is likely to welcome: its freshly released report on the federal government’s long-term financial situation. To put it bluntly, the fiscal policy of the United States is unsustainable. Debt is growing faster than gross domestic product. Under the CBO’s most realistic scenario, the publicly held debt of the U.S. government will reach 82 percent of GDP by 2019 — roughly double what it was in 2008. By 2026, spiraling interest payments would push the debt above its all-time peak (set just after World War II) of 113 percent of GDP. It would reach 200 percent of GDP in 2038.
This huge mass of debt, which would stifle economic growth and reduce the American standard of living, can be avoided only through spending cuts, tax increases or some combination of the two. And the longer government waits to get its financial house in order, the more it will cost to do so, the CBO says.
The CBO’s new long-term forecast is considerably more pessimistic than the one it issued 18 months ago, mostly because of the recession, which has driven the budget deficit above 12 percent of GDP. But the report makes clear that the recent economic downturn did not cause the government’s predicament and that the situation will not necessarily improve once the economy does. The principal cause of long-term fiscal distress is the aging of the U.S. population, coupled with rising health-care costs — which, together, will drive spending on Medicare, Medicaid and Social Security to new heights. Unchecked, federal spending on Medicare and Medicaid combined will grow from almost 5 percent of GDP today to almost 10 percent by 2035 — and to more than 17 percent of GDP by 2080.
Like his predecessors, Mr. Obama is aware of this issue. Like them, he has promised a plan to deal with it. And like them, he has not come up with anything credible yet. It’s time for that to change.
But the President does have a plan he just has to ease into it. All he has to do is break a campaign promise. Do you remember that little ditty about not taxing the bottom 95% of wage earners. Well he has already “sort of” broken it with the Cigarette tax (most smokers are in the lower income strata), and if that cap and trade program gets through the senate, it will be a tax on all Americans, but the President may be looking to break that no tax pledge more directly by enacting a tax that he blasted John McCain for suggesting.
David Axelrod appeared on the Democratic Party’s George Stephanopoulos show on ABC this morning and refused to commit a presidential objection to a middle-class tax on health benefits:
The White House seems to be retreating from President Barack Obama’s campaign promise that he would not raise taxes on families making less than $250,000.
Under persistent questioning from ABC’s George Stephanopoulos Sunday, Obama senior adviser David Axelrod declined to restate the vow and left open the possibility that the president might sign health care reform legislation that taxes high-cost, employer-provided insurance plans which some middle-class families currently receive tax free.
“The president had said in the past that he doesn’t believe taxing health care benefits at any level is necessarily the best way to go here. He still believes that, but there are a number of formulations and we’ll wait and see,” Axelrod said on ABC’s “This Week.” “The important thing at this point is to keep the process moving, to keep people at the table, to the keep the discussions going. We’ve gotten a long way down the road and we want to finish that journey.”
When Stephanopoulos asked why Obama hadn’t drawn a “line in the sand” over his tax pledge, Axelrod suggested that kind of ultimatum is at odds with the president’s effort to being a new tone to politics.
“One of the problems we’ve had in this town is that people draw lines in the sand and they stop talking to each other. And you don’t get anything done. That’s not the way the president approaches this,” the White House adviser said. (source)