Debt Default Lies

A liar is a person who makes a statement knowing that it’s not true. Simple enough.

How about a person who makes a statement that is superficially or partially true but made in the spirit of misleading others to believe something not true? Well, I’ll let God sort that one out.

The good book says that liars have their place in Hell so there should be a lot of politicians there.

Obama, Reid, Pelosi, Treasury Secretary Lew, and the media have been a Greek chorus of late, warning of the perils ahead if the limit on Congress’ credit card is not immediately and unconditionally raised. They falsely claim that the federal government will default on its debt unless the debt ceiling is raised, they falsely claim that King Obama can raise the debt ceiling on his own authority if he chooses, and they falsely claim that entitlement programs are constitutionally protected. All lies.

Let’s take them in order.

A debt default means that a contractual obligation to service a debt was not performed at the time required. If the debt ceiling isn’t raised, it means our government, which borrows 40¢ of every dollar spent is going to have to make some choices. But servicing the national debt is not one of them. The revenues taken in as taxes are ten times the interest on the national debt – ten times! About $250 billion per month is received as government revenue and about $23 billion in interest is paid to the holders of the national debt. Maturing obligations that require the redemption of debt principal are simply rolled over into new debt using the proceeds to redeem the maturing debt without a net increase (or decrease) in debt.

The assertion that a debt default will occur unless the debt ceiling is raised is laughable. The money is there and there’s no choice – payment of national debt obligation is a constitutional compulsion. It’s called the 14th Amendment, Section 4.

Let’s just check that Section out for the benefit of the Greek chorus, shall we?

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned …

Hmm. Not a lot of wiggle room there.

The 14th Amendment was adopted in 1868 as part of post-Civil War Reconstruction. The “debt shall not be questioned” clause was put in to assure that if the new Southern members of Congress were to gain a majority, they couldn’t repudiate the Northern war debt. In other words, “shall not be questioned” meant a Southern legislator couldn’t challenge that his constituents shouldn’t be paying taxes to reduce a debt that was created to defeat the South, kill Southerners, and destroy their property. Taken as a generalization, it means debts must be paid.

So, why do you think the Greek chorus is lying, claiming that a failure to raise the debt ceiling is tantamount to a debt default? I’ll give you three guesses and the first three don’t count. To scare the pants off of a public that is marginally literate in how its government works – of course!

Conceivably, the debt ceiling might have to be raised in the future to pay obligations on the national debt. Let’s hope that day never comes. The country would be in economically sad shape. Thankfully that isn’t the case today because there is sufficient cash coming in to pay the debt with a lot left over. But not enough is left over to pay all of the obligations at the current level of spending. So, excluding debt payments, spending obligations must be prioritized. Gee. Isn’t that what families do until they can reduce their spending to align it with income?

Establishing a debt ceiling was one of the few intelligent things Congress has done. It forces the issue to the forefront periodically, usually grabbing the headlines for a few weeks and rousing the public from its slumber. The people’s representatives are forced to do combat over what price will be exacted and how much will the ceiling be raised. But the ceiling always gets raised.

Raising the debt ceiling simply allows Congress on both sides of the aisle to run up new debt, which lately they’ve been able to do pretty quickly, and then the hogs are back at the trough and locked in another debt ceiling fight. But eliminating the debt ceiling altogether and allowing Congress to spend as it wishes, which some have suggested, is sheer folly. There are no adults in Washington and giving kids a credit card with no limit is stupidity on stilts.

As much as I hate this periodic kabuki theater of closing public parks and pretending the economic sky is falling, it fills a useful purpose. Who knows? Maybe one day the public will wake up, realize debt default isn’t possible, and that spending reductions are a more sensible way to reduce the frequency of these charades. The Left is terrorized that this might happen.

And the Left says, “Well, if you're going to get “constitutional” about this, show me where in the Constitution a debt ceiling is established.” Can’t. It’s not in there. The debt ceiling is a congressional procedure, not a Constitutional provision.

So, why can’t King Obama raise the debt ceiling on his own authority, the Left whines? Because he doesn’t have the Constitutional authority. The power of the purse resides exclusively in the House – not the President, not the Senate. The power to tax the credit of the United States with debt was meant by the Founders to rest with the people’s representatives, who could throw those representatives out of office every two years if they disagreed with the Representative. (Oh, that we might have an electorate so informed.)

The debt ceiling is the step-child of a bygone era in which every issuance of public debt had to be voted on and its purpose challenged. Laziness and expediency have rolled the individual obligations into a general “debt ceiling” number that gets fought over when Congress spends itself to the limit. We would be better off if every bill funded by debt had to be fought out on its merits. The fact that we have to raise the debt ceiling so often suggests rolling all borrowing into one ball isn’t working.

King Obama apparently looked into the possibilities of by-passing Congress on the debt ceiling debate several years ago. His lawyers told him that taking over the role of Congress wasn’t a winning play. Hmm. Just when he was considering Congress irrelevant.

This brings us to the third false claim by the Greek chorus – that entitlements are Constitutionally protected, presumably under the 14th Amendment mandate to service the public debt. Ahh. Nice try. But the Constitutional wording says “debts” not obligations. The original draft of the Amendment used the word “obligations,” but an astute Congressman replaced it with “debts” which not only zeroed in on the real intent of Article 4, but also narrowed the focus specifically to debts – transactions that involved borrowing and repayment.

Entitlements never involved borrowing and are not debts. They represent a future liability – unfunded mostly, such as Social Security, Medicare, and Medicaid – but never transactions with Constitutional protection. The debts incurred by one Congress bind future Congresses under the 14th Amendment. Not so with entitlements, which are political programs. Entitlements passed by one Congress can be repealed by a future Congress, defunded, expanded, or modified in scope. Each Congress may have its way with entitlements because they aren’t debts, even though they are implicit promises.

FDR knew Social Security lacked Constitutional protection and he may have had enough foresight to know future Congresses would try to repeal or diminish the program. Responding to a critic who questioned the economic soundness of the program, he said,

I guess you’re right on the economics, but those taxes were never a problem of economics. They are politics all the way through. We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions … With those taxes in there, no damn politician can ever scrap my social security program.

Well, notwithstanding the fact that payment on the national debt was never in doubt by the shutdown, the Republicans led by McConnell the Dinosaur and Boehner the Weak caved and gave the Democrats a new credit card until early next year. They are busy running up its balance to the limit.

Twenty-seven Republicans signed the surrender document in the Senate along with 87 House members. I hope they can explain their perfidy to the folks back home. Of course, all House and Senate Democrats voted “aye” before rushing for their Committee checkbooks.

Not so subtly hidden in the voting stats is this: 40% of McConnell’s caucus and 62% of Boehner’s voted against their leader. I’d say both have cause to worry when they stand for reelection as the Senate and House leaders – assuming they have the gall to run.

How the “Cliff Deal” Was Done

As I argued in last week’s blog, this country is facing a life-threatening spending problem that has piled up a national debt exceeding the value of goods and services we produce annually. There is no painless way out of this mess. The American people’s addiction to government services will make it very difficult for self-serving politicians to ignore constituent whining, put their careers at risk, and do the right thing for the country not just their home districts and states. Since the core of the American addiction is entitlements it’s hard to be sanguine that this mess can be cleaned up before an economic Armageddon compels it.

Entitlement programs – Social Security, Medicare, Medicaid, Welfare and other entitlements – represent 62% of federal spending, programs. They have always been taken off the table in previous spending negotiations. Obviously no meaningful reduction in spending can happen without shrinking entitlements significantly. Add in defense spending (19%) and interest on the national debt (6%), and a total of 87% can’t be cut immediately or without shrieks and howls from citizens and their Washington representatives. Solutions exist, like privatizing all or part of Social Security, giving Medicare recipients greater choices and incentives to be wiser healthcare buyers, and allowing states more flexibility to manage Medicaid delivery. But these programs have strong advocates who are curiously less concerned with their unsustainability in the long term than with continuing them in their original and outdated incarnations.

Couple the impending entitlement spending train wreck with Obama’s my-way-or-the-highway negotiating style and it’s hard to see how the current congressional make-up and White House could agree on anything regardless of the consequences. The art of political negotiation must involve some degree of compromise so that a win/win outcome is possible even if neither side is particularly happy with it. In Obama’s world, only he is allowed to win. A Wall Street Journal op-ed this week summarized its writer’s interview with Speaker Boehner after the cliff deal was inked sans spending cuts. Boehner revealed that during his negotiations with Obama, at one point Boehner made an $800 billion new tax concession and asked Obama, "What am I getting?" Obama responded, "You don't get anything for it. I'm taking that anyway."

While negotiations were going on between Boehner and White House aides, Obama relentlessly demagogued Republicans in his speeches. He mocked their proposals for spending cuts, asserting that the country had no spending problem, as Republicans claimed, and that they were just trying to protect their rich friends from higher taxes. Boehner told Obama that “… we have a very serious spending problem,” to which Obama replied, "I'm getting tired of hearing you say that." Aside from his abrasive negotiating style, by denying that a spending problem exists, the man apparently believes in an alternate universe.

Obama’s remarkable lack of conciliation has won him no friends among Republican Senators and Representatives who see him as a partisan extremist. This is going to make any agreement in resolving our fiscal crisis almost impossible as long as he occupies the White House.

At some point during their Christmas negotiations it became apparent to Boehner that he couldn’t make a deal with Obama. The Maximum Leader’s round trip back from Hawaii cost taxpayers $3 million and all he contributed to the negotiations was to say “no” to every Boehner proposal. In hindsight everyone would have been better off if he’d stayed in Hawaii and had the final cliff deal FedEx’d for his signature. Negotiations with the White House were broken off when it became apparent that there would be no spending cuts.

Negotiating with Senate Majority Leader Reid wasn’t much different. As the clock wound down and the cliff approached, Boehner made repeated offers to Reid who, instead of responding promptly as the urgency of the situation demanded, often took 24 hours before sending a counter offer. Finally, Reid’s aides called Boehner’s aides to tell them Reid would not be sending a counter offer. Reid seemed to work harder at poisoning their relationship than reaching an agreement. After learning that Reid had given a Senate speech in which he called Boehner a dictator and other uncomplimentary terms, the Speaker became so frustrated that the next time he saw Reid at a White House meeting he told him to “go f--- yourself.”

Only when Minority Leader McConnell became concerned that going over the cliff could roil the US economy, if not the world’s, did he decide to contact Joe Biden directly and ask if he wanted to do a deal. The two veteran negotiators were able to hammer out an agreement in one day. The baby was ugly but McConnell was able to get all but eight Senate Republicans to vote for it. Reid sent the Senate bill to Boehner with a note that the House could make no changes to it. Most of the House Republicans balked at Reid’s take-it-or-leave-it decree and its absence of spending cuts. Only 85 Republicans voted for the Senate-crafted bill and were joined by 172 Democrats. The majority of Republicans – 150 of them – voted against the bill joined by 16 Democrats. Ryan and Boehner voted for the bill. House Majority Leader Eric Cantor voted against it. Over on the Senate side Marco Rubio voted against the bill setting up an interesting conflict between Ryan and Rubio – two likely Republican presidential contenders in 2016.

The House vote occurred two days before Boehner would stand for reelection as Speaker. His nominal opponent was Nancy Pelosi, but several Republicans were waiting in the wings to put their names forward if Boehner failed to get a first ballot win. He needed 214 votes, a simple majority, to win. He got 220 with 12 Republican defections for other candidates. It was originally thought that there would be 30 defections, which would have forced a second ballot. Pelosi got 192 votes. Boehner’s reelection was the closest first ballot win since Newt Gingrich’s close win in 1997 which followed his ethics wrist-slapping.

The passage of the “cliff” bill gave Obama bragging rights that he increased taxes on the rich. His original definition of “rich,” however, included couples making $250,000 or singles making $200,000. The deal that passed has thresholds for couples of $450,000 and $400,000 for singles. To that end, instead of increasing taxes on the “top 2%” as Obama had boasted his proposal would do, the deal he signed is in fact a tax increase on only the top 0.6%.

However, taxpayers will see their deductions capped beginning at the $250,000 and $200,000 thresholds which raise their effective tax rates. This stealth tax was accomplished by restoring the Personal Exemption Phase-out and the Pease provision, which expired in 2010. Obama resurrected it during negotiations for the tax increases. The personal exemption had been $3,800 per family member. Absent it, a married couple with two kids and a joint income above $250,000 will see an effective marginal tax increase of 4.4%. With four kids, that increases their marginal rate by 6%. Itemized deduction limitations add another 1% starting at the $200,000 and $250,000 thresholds.

Taxes on capital gains increased from 15% to 23.8% for individuals making more than $200,000 a year and couples earning more than $250,000, which includes the new 3.8% ObamaCare surtax on investment income. Capital gains haven’t been taxed this much since the first Clinton term. Taxes on dividends also increased from 15% to 23.8% for high earners, including the new 3.8% ObamaCare surtax on investment income.

Whereas Obama wanted an inheritance tax exemption of only $1 million, the exemption was increased to $5 million and indexed for inflation. However, the tax rate on inheritances above the exempted amount increased from 35% to 40%. Republicans wanted the inheritance tax – aka the “death tax” – eliminated. It is a hateful symbolic tax. Tax receipts from inheritance make up only a third of one percent of total tax receipts. People with potentially large estate tax liabilities avoid them through legal estate planning techniques so there is no economic argument for retaining the Estate Tax.

The Alternative Minimum Tax was created in 1969 because 155 high income households paid no income tax. At the time of its passage, the geniuses in Washington didn’t think to index it to inflation, thus in time this “class tax” became a “mass tax” as more middle class taxpayers were ensnared by it.  In recent years, Congress had to pass stop gap measures to set the threshold above middle class incomes. The cliff deal permanently patches the AMT and indexes it to inflation, rescuing 26 million taxpayers from it unless another temporary stop gap was passed this year. The AMT is the poster child for reforming the federal tax code.

The cliff deal didn’t extend the 2% payroll tax reduction that has been in place for the past two years. Therefore, despite Obama’s protestations that the middle class will not see tax increases, and that only the top 2% would see their taxes increased, the nonpartisan Tax Policy Center announced that 77% of taxpayers will be paying more taxes. Households earning between $40,000 and $50,000 will have an average tax increase of $580 and household incomes between $50,000 and $75,000 will average tax hikes of $820.

However, the cliff deal did extend unemployment benefits for another year, arguably reducing the incentive to aggressively look for work or accept a job whose pay is comparable to the unemployment benefit. Now, let me see if I’ve got this correct … we are going to reward unemployment and penalize employment (by increasing taxes 2%.)

Although it was not part of the cliff deal, the 2.3% medical device tax goes into effect this year. The rationale for ObamaCare was to bring down healthcare costs, but to pay for it medical devices are taxed, raising healthcare costs. By golly, I believe Obama really did discover an alternate universe!

Oh, and ObamaCare added 20 new taxes, so in combination with the “cliff taxes” 2013 should be an interesting year for the economy.

Negotiations over the debt ceiling, the deferred sequestration spending cuts, and getting a budget passed in the Senate loom in the near future. It’s hard to see how the Republicans can win any of these fights. Their leaders are inept if not cowardly. They can’t seem to muster the courage or competence to take their message to the people. If they fail to raise the debt ceiling and the government shuts down, they will get blamed, so why not get something for it – like budget passage by the Senate before agreeing to raise the ceiling? It ought to be easy to convince Americans that the country hasn’t had a budget since 2009 because Harry Reid won’t bring it to a vote, while the House Republicans have passed a budget every year since taking control.

Another tack would be to tie ceiling increases to entitlement reform – incrementally. The sequestration battle isn’t going to produce any sweeping spending cuts, certainly not in entitlements which are what must be reformed. Obama will just dig in his heels and let the automatic cuts occur as across the board cuts in domestic and defense spending, knowing that the Republicans will walk the plank to avoid defense cuts. So here’s the deal: conform Medicare eligibility to the Social Security retirement age which is 67 for people born after 1960 and Obama gets the equivalent of one month of spending in the debt ceiling increase. Raise the Social Security retirement age to 70 and the early retirement age from 62 to 67 over the next decade and he gets another month’s spending added to the debt ceiling. The price of another month is, for example, means-testing food stamps recipients, or block granting Medicaid to the states, or reducing unemployment benefits, or any of a long menu of quid pro quo spending reductions that get traded for offsetting incremental increases in the debt ceiling. Such a strategy is far more workable than haggling over sweeping spending reforms. It’s a message that can be taken to the people that they might understand: “We offered to raise the debt ceiling for X months’ worth of spending in return for Y and they turned us down.”

Obama will ask for more taxes in the coming negotiations. He saw Boehner’s near-death reelection, McConnell’s loss of eight in his caucus, and the almost two to one Republican vote against the McConnell-Biden bill. If he can continue getting the Republican leaders to buy into bad deals, he can divide and conquer their caucus and possibly regain the House majority in 2014. With Pelosi back in control, the last two years of his presidency would have smooth sailing as he completes his transformation of America into a welfare state.

Obama won Round One of the cliff deal. As he walked to Air Force One on New Year’s Day, he must have thought to himself, “Not a bad return for giving up a few days of my Hawaii vacation. And all I had to do was say ‘no’ repeatedly.”

An Unserious Budget

It is hard to imagine any issue that threatens the future of the Republic more than the current and projected fiscal condition of the US economy. In his first two years in office, Obama has added $3 trillion to the national debt. His 2012 budget delivered on Monday – ironically Valentine’s Day – shows yet a third year of trillion dollar-plus deficits in his administration, and it projects trillion-plus spending deficits for another decade.

The federal government will have borrowed as much during Obama’s four-year term in office as it borrowed during the previous two-century-plus history since the Republic was founded in 1789. Best you reread that last sentence.

We are spending ourselves into an unmanageable crisis!

The budget deficit for Obama's third year in office is $1.645 trillion according to his own budget documents. This is the largest deficit in world history, let alone U.S. history. Federal spending will be 25¢ of every GDP dollar! Historically it’s been 20¢ or less. How much larger must the government share of GDP become before the US economy can be called socialism?

Yet Obama’s Valentine’s gift to Congress was a $3.7 trillion 2012 budget cleverly gimmicked to show a saving of $1.1 trillion over 10 years. The decade’s saving, however, is less than the projected deficit for fiscal 2011. And the “saving’ is only a slight reduction in spending on the programs that Obama spent the first two years of his administration fattening up. One morning talk show host likened it to increasing your child’s weekly allowance from $1 to $4 and then cutting it back to $3 while calling the 25% reduction “painful.” The kid still has two more bucks than he had at the start.

Federal spending is now 37% higher than four years ago, which represents a trillion dollar allowance increase from Uncle Sam – or should I say from you and me, since Uncle Sam doesn’t have any money. With a sleight-of-hand that would make David Copperfield envious, Obama claimed he will lower discretionary spending to the lowest percentage of GDP since the Eisenhower administration. But Obamanomics will push federal spending in 2020 to double that of 2007. Oh, and Obama’s Valentine XOXO? His 2012 spending will drive national debt to more than 102% of GDP, last seen in this country during World War II.

Speaking at the CPAC gathering in Washington last week, Indiana Governor Mitch Daniels (R) warned of a “new red menace” that threatened the nation – although this time it was red ink rather than communism. But somewhat surprisingly, voices that are ideologically aligned with Obama – normally – came out with criticism of the new budget. Obamaphile blogger Andrew Sullivan lamented that others must lead the fight to restrain spending because …

“… this president is too weak, too cautious, too beholden to politics over policy to lead. In this budget, in his refusal to do anything concrete to tackle the looming entitlement debt, in his failure to address the generational injustice, in his blithe indifference to the increasing danger of default, he has betrayed those of us who took him to be a serious president prepared to put the good of the country before his short term political interests.”

Sullivan concluded his Valentine’s Day blog, The Daily Dish, with these words:

“To all those under 30 who worked so hard to get this man elected, know this: he just screwed you over. He thinks you're fools. Either the US will go into default because of Obama's cowardice, or you will be paying far, far more for far, far less because this president has no courage when it counts. He let you down. On the critical issue of America's fiscal crisis, he represents no hope and no change. Just the same old Washington politics he once promised to end.”

Wow! And that’s from a friend and supporter!

Likewise, the Obama-friendly Washington Post characterized him as Punter-in-Chief.

“Having been given the chance, the cover, and the push by the fiscal commission he created to take bold steps to raise revenue and curb entitlement spending, President Obama, in his fiscal 2012 budget proposal, chose instead to duck. To duck, and to mask some of the ducking with the sort of budgetary gimmicks he once derided.”

The same Washington Post editorial included a graph of publicly-held debt as a percentage of GDP. It looked like a hockey stick. The editorial ended …

“If Oklahoma Republican Sen. Tom Coburn could sign on to a deficit-reduction plan that included raising tax revenue, is it too much to ask for such bravery from Mr. Obama? And if Illinois Democratic Sen. Richard Durbin could sign on to a plan that included raising the Social Security retirement age, is it too much to ask for more from Mr. Obama than an airy set of "principles for reform"? Sadly, the answer appears to be yes.”

A new Rasmussen Reports piled on with a national telephone survey this week that found 55% of “Likely US Voters” said the president’s budget proposal doesn’t cut government spending enough. Rasmussen further found that 70% of “Likely US Voters” think they are more willing to make the hard choices needed to reduce federal spending than elected politicians are.

So there you have it. The mood of the country is moving to the fiscal right while Obama’s budget is right out of the land where the unicorns live. After seeing an outline of it, I thought if this budget represented Obama’s roadmap to “Winning the Future,” the theme of his State of the Union address, our country’s best years are behind it.

I had planned to write this week’s blog on how out of touch this president is with fiscal reality, but Obama’s media cheerleaders beat me to it. "I don't need to tell you what I think of the budget: It's disastrous," wrote Atlantic Magazine economics writer and Obama voter, Megan McArdle. "I'm starting to think it's time to panic."

When the budget arrived at the Capitol, Sen. McConnell (R-KY) called it “an unserious budget” and Rep. Paul Ryan (R-WI) called it a “political document which is ‘dead on arrival’ – or should I say,” Ryan added, “‘debt on arrival.’”

Congressional Democrats were delighted that Obama offered no plan for dealing with entitlements. That saved them from fighting another hard reelection campaign in 2012. However, the Tea Party Republicans remembered that they were elected – at least they believe so – on the promise that they would bring down spending. Spending cuts cannot avoid entitlements because entitlement spending, in combination with interest on the national debt, represent two-thirds of all federal spending.

And since the cowardly 111th Congress refused to pass a 2011 budget before the voters kicked them out, the Republicans of the 112th Congress have to create that budget on the fly and fulfill their campaign promise to cut $100 billion in spending. Thankfully the Tea Party House members haven’t been in Washington long enough yet to become jaded, so when their cautious leaders in the Republican caucus came up with $37 billion in spending reductions and thought it was close enough, the Tea Party freshman forced their elders to find more cuts or else forfeit the Tea Party votes. So far they are close to $100 billion.

Later this year, Republicans will turn their attention to a 2012 budget that reduces spending and deficits well beyond Obama’s budget. Since they are opposed to confronting out-of-control spending with large tax increases, which Obama did in his budget, entitlement spending will have to be reduced by Republicans, knowing they will be demagogued for doing so by Democrats in the 2012 election.

Entitlement spending – largely Social Security, Medicare, and Medicaid – are on autopilot, running up the national debt (and therefore its interest payment) every year. Because there aren’t enough taxpayers or available taxable income, the US must therefore borrow 40¢ of every dollar it spends. Even the most reckless spendthrift knows you can’t do that for long.

“They are suckers,” said one senior Democratic congressional aide of the House GOP plans to release detailed proposals to reduce entitlement spending. “They have painted themselves into a corner.” Obama’s reticence to address entitlements is a political trap, Democrats believe, for a Republican Party divided between Tea Party conservatives pushing for major changes to Medicare, Medicaid, and Social Security and a GOP leadership wary of the political peril of tinkering with Americans’ retirement security.

As polls show, the country is deeply frustrated with the $1.6 trillion deficit this year, and voters want spending cut back. But that's not the same as wanting spending cut back in the areas that are important to their interests.

Unless politicians are convinced that voters support cuts in the Medicare benefits that Granny receives, or in the Social Security benefits they pay into and expect to receive, there is little incentive to commit political hara-kiri, as Obama obviously concluded. Washington is many things, but an arena for political courage, it ain’t.

When the Pew Research Center recently surveyed Americans about government spending, they found only 12% wanted to see cuts in Medicare or Social Security spending, and only 6% wanted veterans benefit spending reduced. Those stats are reflected in Obama’s budget, which cuts discretionary spending but not mandatory spending. And since the big bucks are spent in the latter, not the former, his proposed cuts are anemic by default.

“None of the options polls well,” lamented one Republican insider this week.

Still, Republicans predict Obama’s dodging the real cause of budget deficits will come back to haunt him. Since becoming President, he has positioned himself as Washington’s only grown-up – a man who is willing to tackle tough problems and propose unpopular solutions. “Every Republican candidate in 2012 is going to bring this up,” one Republican aide believes, especially since the Republicans must show their hand first and bear the risk of doing so.

Spending reductions are difficult because there is probably no program funded by federal spending which is universally hated by members of Congress. Every program has an advocacy that must be reckoned with when spending is budgeted.

For example, Rep. Jim Clyburn (D-SC), the third ranking leader in the Democrat caucus and the leader of the Congressional black caucus, gave an emotional news conference this week, decrying education cuts proposed by Republicans in their quest to find $100 billion in spending cuts. Districts like the one he represents in Congress have a large number of poor and seven black colleges targeted by the GOP. Clyburn said of the cuts:

“You explain to me how that will provide us the wherewithal to compete. They’ve just gone in with a meat ax chopping stuff out in order to get to some magic number without regard to what this means to the people that we are trying to prepare for the future and what it means to this country if we are going to compete.”

The seven black colleges Clyburn is trying to protect were scheduled to get grants from the Department of Education. Since it was created by Jimmy Carter in 1979, the Department cannot show that it has had any positive impact on the nation’s schools, which are under the supervision of local and state officials. Yet in the 2012 Obama budget, the Education Department received the highest year-over-year percentage increase in budget, 21%, and is set to receive over $77 billion in spending. Republicans have been trying to shut down the department for 30 years.

Then there are Obama’s pet projects in his 2012 budget. He wants to rebuild the nation's roads and spend $53 billion on a high speed rail network in Florida and other states. The newly elected Republican governor of Florida, Rick Scott, says he will reject funds for the project. Scott is the third newly elected Republican governor to turn down money for Obama’s national rail system, joining John Kasich of Ohio and Scott Walker of Wisconsin. Each of the three replaced governors who had lobbied for the funds.

Obama also wants to spend $556 billion on highway and mass transit projects, $46 million to increase EPA spending "to reduce greenhouse gas pollution," and $584 million on research and innovation in “new and emerging environmental sciences.” Of course, Obama refers to this spending euphemistically as “investments,” but neither he nor Congress has ever bothered with a cost/benefit analysis to prove these projects aren’t just more government boondoggles.

However, Obama did issue this threat through a spokesman to Republic deficit hawks this week:

“If the president is presented with a bill that undermines critical priorities or national security through funding levels or restrictions, contains earmarks or curtails the drivers of long-term economic growth and job creation while continuing to burden future generations with deficits, the president will veto the bill.”

Translated: he will force Republicans to shut down the government and hopefully suffer the same consequences when they last did that in 1995, virtually assuring Clinton’s reelection for a second term.

There is something peculiarly reprehensible about a president or member of Congress who puts his or her political future ahead of the good of the country, regardless of party affiliation. The future of the Republic is poorly protected when our elected representatives lack the courage to confront their constituents with the facts that this country is headed for a fiscal train wreck and sacrifices akin to a wartime footing are called for if we are to avoid calamity. Obama’s quiescence in fiscal leadership contradicts the image he beholds in the mirror – a tough-minded chief executive who confronts challenges others avoid. Instead he has taken a political path, persuaded that he is more clever, more persuasive in out-maneuvering his opponents in the political chess game.

“I’m confident we can get Social Security done in the same way that Ronald Reagan and [late Speaker] Tip O’Neill were able to get it done, by parties coming together, making some modest adjustments. I think we can avoid slashing benefits, and I think we can make it stable and stronger for not only this generation but for the next generation.”

Those are the words of a community organizer, not a political leader.