Manhattan Moment: President Obama's bait and switch

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Originally published on January 24, 2013 by the Washington Examiner

Some commentators have seen President Obama's second inaugural speech as brazenly confrontational, pushing a liberal social agenda without regard for what Republicans (or anyone else) thinks. But another interpretation hits closer to the truth: President Obama's second inaugural was a bait and switch, throwing red meat before the liberal base to distract them from his looming fiscal failures. 

Whatever you think of civil rights or climate change -- issues that the president put center stage Monday -- they aren't among the most serious issues confronting the nation at the moment. America's crippling debt and deficit -- $37 trillion for Medicare alone -- is the defining issue of our time.  

Here, the president has been content to attack Republicans and offer no serious solutions of his own. This is what the president had to say Monday about the entitlement programs that are crippling our ability to invest in every other national priority: "The commitments we make to each other through Medicare and Medicaid and Social Security, these things do not sap our initiative. They strengthen us. They do not make us a nation of takers. They free us to take the risks that make this country great." 

The president makes one good point. A viable safety net for the old and infirm does help us take more risks when we're young, knowing that we can count on at least some assistance when we are old. Health care programs for the disabled and poor can improve America's human capital, keeping our population healthier and more productive and reducing the enormous strain on families. 

On this, all Americans can agree. 

But instead, the president builds a hog-tied straw man and then demolishes him. Republicans and conservatives don't object to these programs per se. As House Budget Committee Chairman Paul Ryan and others have argued, these programs are vital, but they have deep structural flaws. They must be reformed so that they can serve future generations without crashing the economy today. 

While Medicare and Social Security technically have trust funds, these programs and Medicaid effectively operate as "pay-as-you-go" programs. Money that comes into the Treasury today is spent today. There is no real "trust fund," unless you count IOUs from the government to itself as a trust fund. 

This approach shifts resources from younger working people -- still trying to raise families, pay for their children's education and start businesses -- to older people with savings and fewer ongoing financial obligations. Over the next several decades, an increasingly small portion of the American public will be working to sustain themselves, save for their own retirements, and simultaneously pay for the retirement and health care of a growing cohort of retiring baby boomers. (Medicaid is a slightly different story, but its most expensive component is spending is for the aged and disabled.) 

Consider that in 1945, there were more than 40 workers for every retiree collecting Social Security. In 2009, there were three. In 1965, there were 4.5 workers for every Medicare recipient; by 2020, there will be fewer than three. And in 1966, there were nearly 18 workers supporting each Medicaid enrollee; today, there are about 2.5. If we don't reform entitlements, the federal government's size will grow relative to that of the economy by more than 40 percent. In the long run, all discretionary spending -- for every conservative or liberal priority -- will shrink. 

Obama's favorite president is Abraham Lincoln, so he knows well that a house divided against itself cannot stand. Today, America's priorities are divided against themselves, promising trillions to a handful of programs and beggaring everything else. 

Knowing all of this, the president diverts the energies of his base toward issues they care about -- like civil rights or global warming. 

So far, his bait and switch appears to be working.

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