President Obama’s Budget and U.S. Fiscal Solvency

Ron Haskins, co-director of Brookings’s Center on Children and Families, says President Obama’s budget is unsustainable and adds that it will likely fail to help restore fiscal solvency to the nation’s economy. Haskins says unless lawmakers are willing to compromise on key issues the fiscal situation will worsen.

TRANSCRIPT

“The Budget that President Obama offered is unsustainable. It is a very very bad idea. Both candidates for president promised budget responsibility, and I don’t know if McCain would do any better, but the Obama budget is truly truly a step in the wrong direction. We will have trillion dollar deficits according to almost all every legitimate analysis now including the Congressional Budget Office, forever, and then they go up. When Medicare and Social Security really get rolling because the baby boomers are coming the deficits are going to go up even more. So now is the time we should be preparing for that, we should be cutting back.

“Now for the next two years, eighteen months whatever, as long as we are in a recession I’m not sure the Keynesian philosophy of spending money during a recession will work, but I tolerate that. I’m not going to object to that. But the Obama budget in the tenth year, when by his own estimates the economy is back basically going full steam, we still have a seven hundred billion dollar deficit, and that’s a serious underestimate according to the Congressional Budget Office, and even worse what he sent to Congress they will make it much worse, there is no doubt in my mind about that. They are not going to take all the “pay fors” so they actually result in the government getting any money, but they are going to pass all the wonderful new goodies that are in the budget. So I think we are in a truly truly desperate situation, and we are already in this situation, Republicans were equally as irresponsible, and we need leadership to get us out of this situation, otherwise our kids and grandchildren are going to pay the bill.”

“…To me a reasonable approach is put something on the table that is half tax increases and half spending cuts that what we need to do.”

“…We have very very redistributive tax code already. The upper five percent or so pay well over half the tax, in fact they pay something like sixty percent of the income taxes, so we already have a progressive tax system, and we should continue that. Taxes should go up, but spending should be cut, and roughly speaking half each way. Democrats have to give up some spending. Republicans have to support tax increases. And both sides are really almost religious in their opposition. Republicans, as you know sign pieces of paper saying ‘no new taxes,’ and Democrats love new spending, turned out Republicans liked new spending too when the controlled the Congress. So neither side is going to come to the table to do what it has to do. That’s why we really need leadership, and President Obama said all the right things during his campaign, but his first budget is very discouraging.”