Economics

Rubio called it: Obama offers another ‘blank piece of paper’ on long-term entitlement reform

From the WSJ:

President Barack Obama’s budget proposal Monday will offer several measures to trim the federal deficit in the next 10 years. But it would leave largely unchanged the biggest drivers of future government spending: the Medicare, Medicaid and Social Security programs that are expanding rapidly as the baby boom turns into a senior boom.

Senator Marco Rubio saw this coming. As he said yesterday in his CPAC speech:

So, where is the President’s plan to save Medicare? Let me show it to you. Here it is. [Holds up blank sheet of paper.] He doesn’t have one. It is a blank piece of paper. This is his plan when it comes to Medicare. His plan is wait for a Republican like Paul Ryan to offer a plan and then attack him. He hasn’t been in office three or four weeks. He’s been in office a little bit over three years. Two of those years, his party controlled both houses of Congress. And he’s dealt with none of these issues I’ve just outlined.

And it now looks like President Obama will end his term with a whole stack of blank sheets of paper. Rubio called it. And why hasn’t Obama outlined some long-term plan since a coming debt deluge will make a “built to last” economy impossible to achieve otherwise?

It’s pretty simple, really. Historically, federal spending is about 20 percent of GDP (with revenues about 18 percent). Currently, however, spending is around 24 percent of output. Obama and other liberals believe federal spending must stay at current levels and eventually rise to deal with the aging of America and the need to make new “investments” in education, clean energy, and what have you.

In short, they don’t believe Obamacare and its successors can bring spending back down to historical levels.

For example: Three liberal think tanks recently devised budget plans out to the year 2035, something Obama has never done. Their 2035 federal spending projection averaged 25 percent of GDP. Average debt to GDP was 63 percent — even with revenue at an unheard of 24 percent of GDP!

To make the numbers balance and reduce total debt with all that spending, you would need to also raise taxes on the middle class — probably through a value-added tax — not just on rich people and banks.

That is the liberal truth Obama is trying to avoid revealing by not putting out a long-term budget or entitlement plan. Obama won’t tell you that he wants to raise taxes on all Americans. I just did.

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