How about some discipline?
Published 12:23 pm Thursday, December 9, 2010
President Obama keeps saying he recognizes the multiple threats posed by the rising national debt, which now exceeds $12 trillion and is growing by more than $1 trillion a year. His actions, however, pose a more immediate threat to his credibility.
The $700 billion Troubled Asset Relief Program, happily, is costing less than anticipated as once-endangered banks pay off their loans early. But rather than putting savings of some $200 billion toward deficit reduction — a path that must be taken soon to avoid long-term fiscal disaster — the president on Tuesday announced a broad plan to spend it.
Part of it is justifiable, given double-digit unemployment and the continuing lack of credit availability. For small businesses that have cash on hand but remain wary of hiring, or those unable to borrow, tax credits for new hires could prove effective, if targeted wisely. And certainly, a further extension of unemployment benefits to the hardest-hit parts of the country, including ours, will be necessary.
But the president’s proposal to dole out billions more on infrastructure spending, when hundreds of billions remain in the pipeline for projects about to begin, favors dubious short-term action over the nation’s long-term best interest. The same goes for his idea to provide rebates to homeowners who make their homes more energy efficient. Laudable as such improvements are, the federal government shouldn’t be funding it with borrowed money when it’s already up to its neck in red ink.
The $787 billion stimulus package approved in February should be given a chance to work before more billions are piled on top of it. More of that money will be spent in 2010 than this year.
Friday’s encouraging report on unemployment — the national rate fell from 10.2 percent to 10 percent last month — and falling foreclosure rates suggest that current efforts may well be working.
On balance, the TARP program has been a success. The independent panel that oversees it issued a report Wednesday saying that it “can be credited with stopping an economic panic” that was clearly building in the fall of 2008. But it was sold as an emergency plan that was supposed to recover much of its original cost, not as a pile of cash to burn through.
In the absence of fiscal discipline, billions soon become trillions. Interest payments on the national debt consume a growing share of the total budget, making it ever harder to balance or to fund new initiatives.
At some point, the president must show that his rhetoric about the dangers of deficits means something. Now would be a good time.
