It’s hard to understand why Barack Obama nominated Senator Judd Gregg to be Secretary of Commerce, or why Gregg ever thought he could fit in with the Obama administration. Still, viewing Gregg’s introductory comments at today’s Senate Budget Committee hearing, one can only regret that his voice of sanity has no place in the administration:
I appreciate the chairman saying that, in the second five years of this budget, the debt levels are unsustainable, because they are.
And the cost of this budget is unsustainable. And the tax burden is unsustainable. The chairman didn’t say that. I added the second two categories. …
The problem is that that effort to try to stabilize the economy has been used as a straw dog for the purposes of expanding the size of government in the out years exponentially, moving it to the left in a way that has never been projected or seen before, should it be successful.
The budget proposes about $1.4 trillion in new taxes over the next 10 years, about $725 billion in new discretionary spending, about $1.2 trillion in new mandatory spending. And virtually no savings. …
It doubles the national debt in five years, publicly-held debt, this budget. And as the chairman has said, some of that is understandable, because of the fact that we’ve got this severe situation, and a lot of debt is being run up as a result of that.
But remember, much of the debt that’s being run up in the short term, if it works, if the spending works — for example, the TARP works, and some of the other initiatives work — it’s actually going to come back to us, because it’s invested funds.
But the assumption is that it isn’t going to come back to us to be used to reduce the debt. It’s going to come back and be spent, all these funds coming back to us, so the debt triples in 10 years.
The practical implications of that are staggering for our children.
All the presidents — including George Bush — since the beginning of our republic, will not have run up as much debt as this budget will run up in the first period of its term.
And there is no factoring in, really, of what is coming at us in a significant way, which is the retirement of the baby boom generation, the cost of entitlements on top of all of that.
So, you essentially have set up a scenario here under this budget, where we will pass on to our children in the very near future, at about the end of four years from now, a debt-to-GDP ratio which is unsustainable and a deficit ratio which is unsustainable. And that means our kids are going to have a hard time digging themselves out of this hole.
It’s being reported that Obama doesn’t have the votes in the Senate to pass his budget. That could be good news, but most likely it will just take a few tweaks and concessions (in the form of implicit payoffs or otherwise) to wavering moderates or, at best, a temporary stripping out of the carbon tax to enable the budget to pass.