Immoral or Great Negotiator

President Armageddon

The Washington Monument ploy and other Obama gambits.

WSJ Editorial, February 19, 2012

President Obama returned from a long weekend with his golfing buddies on Tuesday to take up his by now familiar political stand: If Republicans don't raise taxes in return for more spending, the world will end. We wish he'd stayed on the putting green.

Flanked by emergency medical personnel, Mr. Obama made his usual threat of Armageddon if automatic spending cuts go forward on March 1. Americans can expect more such melodrama in the coming days, so as a public service we thought we'd break down the President's three biggest political tricks.

• The Washington Monument ploy. "If Congress allows this meat-cleaver approach to take place," he moaned, "it will jeopardize our military readiness; it will eviscerate job creating investments in education and energy and medical research." His parade of horribles went on for several minutes. All of this wreckage from a 5% cut to domestic agencies and a 7% cut to the military.

Americans need to understand that Mr. Obama is threatening that if he doesn't get what he wants, he's ready to inflict maximum pain on everybody else. He won't force government agencies to shave spending on travel and conferences and excessive pay and staffing. He won't demand that agencies cut the lowest priority spending as any half-competent middle manager would.

It's the old ploy to stir public support for all government spending by shutting down vital services first. Voters should scoff at the idea that a $3.6 trillion government can't save one nickel of every dollar that agencies spend. The $85 billion in savings is a mere 2.3% of total spending. The agencies that the White House says can't save 5% received an average increase in their budgets of 17% in the previous five years—not counting their $276 billion stimulus bonus.

• The recession scare. Mr. Obama warned that the sequester will "hurt our economic growth [and] add hundreds of thousands of Americans to the unemployment rolls." But hasn't Mr. Obama been telling us that the economy is coming back and the stock market is up?

Mr. Obama just whacked the economy with a roughly $160 billion tax increase in 2013 that he says will do no harm, but he wants us to believe that $85 billion in spending cuts will trigger a recession. The sequester shaves the equivalent of about 0.25% of GDP when offsetting it against the extra money the feds are spending on Sandy relief.

After World War II federal spending fell from 42% of GDP to 14.8% in two years, yet the private economy and employment roared back to life. In the 1980s domestic spending fell by about two percentage points of GDP and in the 1990s it fell by more than three. Those were decades of government austerity but rapid growth in private output and wealth. Mr. Obama has taken government spending from 21% to 24% of GDP, yet we've had the weakest economic recovery in three generations.

• A tax increase disguised as "tax reform." Mr. Obama isn't proposing to substitute other spending reforms for the blunt instrument of the sequester. He is actually demanding another tax increase on top of the one he just beat out of Congress. His trick is to pretend that this is "tax reform" that would eliminate loopholes, but this is the same President who insisted on more than $30 billion in tax breaks for big business (including $12 billion for the wind industry) in the fiscal-cliff deal.

For 30 years bipartisan tax reform has meant lowering tax rates in return for closing loopholes. But having already raised rates, Mr. Obama now wants fewer loopholes for those he dislikes while keeping the higher rates. This is nothing but a grab for more revenue so he and Democrats can keep spending.

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The sequester is far from ideal and it would make much more sense to work with Congress to set priorities. But Mr. Obama has rejected every meaningful reform in entitlements that Republicans or his own Simpson-Bowles commission have offered. ObamaCare will add more than $1 trillion in new costs and add some 17 million people to Medicaid, but he says this can't be touched. In his State of the Union address Mr. Obama proposed $83.4 billion in new spending, according to a tally by the National Taxpayers Union.

If Mr. Obama really wants to eliminate the sequester, Republicans are ready to negotiate. But if he won't drop his tax increase and negotiate in good faith, as he hasn't during his Presidency, then the sequester is the only way that any spending is going to be cut. The economy will be better for it.