The Audacity of Hope - Barack Obama [89]
But that’s not the path we chose. Instead, we were told by our President that we could fight two wars, increase our military budget by 74 percent, protect the homeland, spend more on education, initiate a new prescription drug plan for seniors, and initiate successive rounds of massive tax cuts, all at the same time. We were told by our congressional leaders that they could make up for lost revenue by cutting out government waste and fraud, even as the number of pork barrel projects increased by an astonishing 64 percent.
The result of this collective denial is the most precarious budget situation that we’ve seen in years. We now have an annual budget deficit of almost $300 billion, not counting more than $180 billion we borrow every year from the Social Security Trust Fund, all of which adds directly to our national debt. That debt now stands at $9 trillion—approximately $30,000 for every man, woman, and child in the country.
It’s not the debt itself that’s most troubling. Some debt might have been justified if we had spent the money investing in those things that would make us more competitive—overhauling our schools, or increasing the reach of our broadband system, or installing E85 pumps in gas stations across the country. We might have used the surplus to shore up Social Security or restructure our health-care system. Instead, the bulk of the debt is a direct result of the President’s tax cuts, 47.4 percent of which went to the top 5 percent of the income bracket, 36.7 percent of which went to the top 1 percent, and 15 percent of which went to the top one-tenth of 1 percent, typically people making $1.6 million a year or more.
In other words, we ran up the national credit card so that the biggest beneficiaries of the global economy could keep an even bigger share of the take.
So far we’ve been able to get away with this mountain of debt because foreign central banks—particularly China’s—want us to keep buying their exports. But this easy credit won’t continue forever. At some point, foreigners will stop lending us money, interest rates will go up, and we will spend most of our nation’s output paying them back.
If we’re serious about avoiding such a future, then we’ll have to start digging ourselves out of this hole. On paper, at least, we know what to do. We can cut and consolidate nonessential programs. We can rein in spending on health-care costs. We can eliminate tax credits that have outlived their usefulness and close loopholes that let corporations get away without paying taxes. And we can restore a law that was in place during the Clinton presidency—called Paygo—that prohibits money from leaving the federal treasury, either in the form of new spending or tax cuts, without some way of compensating for the lost revenue.
If we take all of these steps, emerging from this fiscal situation will still be difficult. We will probably have to postpone some investments that we know are needed to improve our competitive position in the world, and we will have to prioritize the help that we give to struggling American families.
But even as we make these difficult choices, we should ponder the lesson of the past six years and ask ourselves whether our budgets and our tax policy really reflect the values that we profess to hold.
“IF THERE’S CLASS warfare going on in America, then my class is winning.”
I was sitting in the office of Warren Buffett, chairman of Berkshire Hathaway and the second richest man in the world. I had heard about the famous simplicity of Buffett’s tastes—how he still lived in the same modest home that he’d bought in 1967, and how he had sent all his children to the Omaha public schools.