Wall Street Journal: Obama’s Speech Most Dishonest in Decades


obamaThe following editorial appears in the Wall Street Journal:

Did someone move the 2012 election to June 1? We ask because President Obama’s extraordinary response to Paul Ryan’s budget yesterday-with its blistering partisanship and multiple distortions-was the kind Presidents usually outsource to some junior lieutenant. Mr. Obama’s fundamentally political document would have been unusual even for a Vice President in the fervor of a campaign.The immediate political goal was to inoculate the White House from criticism that it is not serious about the fiscal crisis, after ignoring its own deficit commission last year and tossing off a $3.73 trillion budget in February that increased spending amid a record deficit of $1.65 trillion. Mr. Obama was chased to George Washington University yesterday because Mr. Ryan and the Republicans outflanked him on fiscal discipline and are now setting the national political agenda.

Mr. Obama did not deign to propose an alternative to rival Mr. Ryan’s plan, even as he categorically rejected all its reform ideas, repeatedly vilifying them as essentially un-American. “Their vision is less about reducing the deficit than it is about changing the basic social compact in America,” he said, supposedly pitting “children with autism or Down’s syndrome” against “every millionaire and billionaire in our society.” The President was not attempting to join the debate Mr. Ryan has started, but to close it off just as it begins and banish House GOP ideas to political Siberia.

Mr. Obama then packaged his poison in the rhetoric of bipartisanship-which “starts,” he said, “by being honest about what’s causing our deficit.” The speech he chose to deliver was dishonest even by modern political standards.

The great political challenge of the moment is how to update the 20th-century entitlement state so that it is affordable. With incremental change, Mr. Ryan is trying maintain a social safety net and the economic growth necessary to finance it. Mr. Obama presented what some might call the false choice of merely preserving the government we have with no realistic plan for doing so, aside from proposing $4 trillion in phantom deficit reduction over a gimmicky 12-year budget window that makes that reduction seem larger than it would be over the normal 10-year window.

View Full Image

Bloomberg News
.Mr. Obama said that the typical political proposal to rationalize Medicare’s gargantuan liabilities is that it is “just a matter of eliminating waste and abuse.” His own plan is to double down on the program’s price controls and central planning. All Medicare decisions will be turned over to and routed through an unelected commission created by ObamaCare-which will supposedly ferret out “unnecessary spending.” Is that the same as “waste and abuse”?

Fifteen members will serve on the Independent Payment Advisory Board, all appointed by the President and confirmed by the Senate. If per capita costs grow by more than GDP plus 0.5%, this board would get more power, including an automatic budget sequester to enforce its rulings. So 15 sages sitting in a room with the power of the purse will evidently find ways to control Medicare spending that no one has ever thought of before and that supposedly won’t harm seniors’ care, even as the largest cohort of the baby boom generation retires and starts to collect benefits.

Mr. Obama really went off on Mr. Ryan’s plan to increase health-care competition and give consumers more control, barely stopping short of calling it murderous. It’s hardly beyond criticism or debate, but the Ryan plan is neither Big Rock Candy Mountain nor some radical departure from American norms.

Mr. Obama came out for further cuts in the defense budget, but where? His plan is to ask Defense Secretary Bob Gates and Joint Chiefs Chairman Mike Mullen “to find additional savings,” whatever those might be, after a “fundamental review.” These mystery cuts would follow two separate, recent rounds of deep cuts that were supposed to stave off further Pentagon triage amid several wars and escalating national security threats.

Mr. Obama rallied the left with a summons for major tax increases on “the rich.” Every U.S. fiscal trouble, he claimed, flows from the Bush tax cuts “for the wealthiest 2%,” conveniently passing over what he euphemistically called his own “series of emergency steps that saved millions of jobs.” Apparently he means the $814 billion stimulus that failed and a new multitrillion-dollar entitlement in ObamaCare that harmed job creation.

Under the Obama tax plan, the Bush rates would be repealed for the top brackets. Yet the “cost” of extending all the Bush rates in 2011 over 10 years was about $3.7 trillion. Some $3 trillion of that was for everything but the top brackets-and Mr. Obama says he wants to extend those rates forever. According to Internal Revenue Service data, the entire taxable income of everyone earning over $100,000 in 2008 was about $1.582 trillion. Even if all these Americans-most of whom are far from wealthy-were taxed at 100%, it wouldn’t cover Mr. Obama’s deficit for this year.

Mr. Obama sought more tax-hike cover under his deficit commission, seeming to embrace its proposal to limit tax deductions and other loopholes. But the commission wanted to do so in order to lower rates for a more efficient and competitive code with a broader base. Mr. Obama wants to pocket the tax increase and devote the revenues to deficit reduction and therefore more spending. So that’s three significant tax increases-via higher top brackets, the tax hikes in ObamaCare and fewer tax deductions.

Lastly, Mr. Obama came out for a debt “failsafe,” which will require the White House and Congress to hash out a deal if by 2014 projected debt is not declining as a share of the economy. But under his plan any deal must exclude Social Security, Medicare or low-income programs. So that means more tax increases or else “making government smarter, leaner and more effective.” Which, now that he mentioned it, sounds a lot like cutting “waste and abuse.”

Mr. Obama ludicrously claimed that Mr. Ryan favors “a fundamentally different America than the one we’ve known throughout most of our history.” Nothing is likelier to bring that future about than the President’s political indifference in the midst of a fiscal crisis.

{Wall Street Journal/Matzav.com Newscenter}


  1. Regardless of one’s political persuasion, NOTHING that the Wall Street Journal (WSJ) writes about the economy should be taken seriously. As its name indicates, the WSJ is nothing more than the mouthpiece for the power-brokers who rule our nation’s economy from the canyons of lower Manhattan.

    As Julia Finch wrote in The Guardian (“Road to Ruin,” January 26, 2009) the great recession that we are now struggling through was largely due to the Bush administration’s purposeful failure to police and rein in their greedy Wall Street banker friends. Without the constraints of government oversight and regulation (a responsibility of the executive branch), the pigs were allowed to feed at the trough and become fabulously wealthy while the rest of the country went to hell in a hand basket.

    The WSJ will attack any individual or institution that dares to challenge the financial oligarchs and Republican big-wigs who, together and forever oppose any regulation of the Wall Street financial system that earns them their gret wealth and power.

    Indeed, I believe that we need to get rid of Obama…but principally for his anti-Israel policies. Insofar as our domestic economy is concerned, the WSJ and its greedy cohort of Republican bankers are a rapacious bunch whose only interest is that the rich get richer while the rest of us struggle with ever rising prices for basic needs. We are truly caught between the devil and the deep blue sea.

  2. I knew when i started reading this editorial from a pundit writer on the WSJ editorial staff that I would be reading an article written by someone stuck in 1928 with the belief that markets regulate themselves and that capitalism exists today ( as it did sort of in 1928) that capitalism works without regulated markets and without the federal government working for big business to open markets abroad and keep them open while subsidizing the guts of what has become many main industries that wouldnt have taken off without the government. hi-tech and farming for example. So i imagined what this editorial pundit would say and i was generally correct.

    I knew he would not discuss the merits of the plan ( i will submit to this site the outline of his plan from the WASH POST after this post)

    The editors of the WSJ don’t let us down. The article includes no critique of Obamas plan as to whether it would lower the deficit and/or if it would preserve the programs designed by democrats throughout the 20th century to keep people from dying in the streets, to keep people from living on the street with chronic untreated illnesses, to keep people from having to maintain themselves on non nutritious or unsafe food ( Ryan the republican wants to gut the FDA)
    ;to keep people from not having good education ( which aside from morals) keeps the country stronger to compete with other countries and keep us economically viable especially now, due to what the democrats put into the structure of the government over the past 100 years.

    The WSJ pundit continued to not talk about the merits of the obama plan.
    Instead the pundit writer of the WSJ critiqued the lack of nobility in Obama’s presumed psychological state regarding the bugdet, he critiqued obama’s mental motivations, he listed fraudulent remarks about the timing of Obamas plan which he critiqued, and other marginal critiques about how good obama is as a politician ( i.e. like the fact that Obama didnt accept his commission’s findings ( the one commission set up in 2010 to propose solutions to debt))

    The 4th to last paragraph in the article is incoherent.
    the 3rd to last paragraph contains a lie
    the last paragraph criticizes obama for criticizing Ryan.
    So the WSJ pundit continues that Obama is somehow a dirty politician by Obama’s criticizing Ryans plan which crushes the majority of citizens in the country, who are also the neediest.
    The next tot he last paragraph suggests that obama wanting to let the bush tax cut extension expire on the wealthiest 2% of the country in order to reduce the deficit is a scheme to spend the money other than on the deficit. That isnt worth commenting on, it’s actually embarrassing to the journal that they printed this monstrosity of an irrelevant and deceitful article which ignores a critique of the plan in exchange for a critique on everything but the plan.
    Then in the last sentence he tells the reader that “Mr. Obama ludicrously claimed that Mr. Ryan favors “a fundamentally different America than the one we’ve known throughout most of our history.” Nothing is likelier to bring that future about than the President’s political indifference in the midst of a fiscal crisis.
    So again, it is obamas choosing the timing to do this, which is somehow in the wacky world of this pundiut supposed to crippal the country
    The next posting of mine will be the outline of Obama’s proposal from the Washington Post

  3. Here’s the basic outline of the White House’s long-term budget proposal from the Washington Post ( Ezra Klein author):

    * Top line: $4 trillion in deficit reduction over 12 years, backed by a “trigger” that begins making across-the-board cuts in discretionary spending and tax expenditures if debt if we’re not on track by 2014. That’s achieved through:

    +Discretionary spending cuts: Increases the non-security spending freeze to the freeze-plus-cuts proposal favored by the deficit commission. That nets roughly $800 billion. Lops a further $400 billion off of the security-related discretionary spending.
    Health care: Directs the Independent Payment Advisory Board to hold cost growth in Medicare to GDP plus 0.5 percent rather than GDP plus 1 percent. To make that achievable, IPAB gets new powers, including the ability to restructure Medicare’s insurance so it pays differently for treatments of different value. Also shortens the patent on biologic drugs from 12 years to seven years, implements the recommendations from the National Governors Association working group on Medicaid, and does a few more things. Total savings: $480 billion.

    + Non-Medicare, Medicaid or Social Security mandatory spending: Makes $360 billion in cuts.
    Tax reform: Raises $1 trillion by clearing certain expenditures from the tax code. Also assumes the expiration of the Bush tax cuts for income over $250,000. The breakdown of spending cuts to tax increases in the proposal is 3:1.

    + Social Security: Supports negotiations to close the Social Security shortfall consistent with the principles laid out in the budget.
    Initial impression is that this looks a lot like the Simpson-Bowles report, but in a good way. It doesn’t go quite as far on defense cuts, but it also doesn’t implement a cap on tax or spending. It goes a lot further than Ryan’s budget does in terms of actually figuring out ways to save money rather than just using caps to shift costs onto states/beneficiaries. More as I’ve had more time with it.

    + For some time now, Democrats and Republicans alike have been yearning for a great philosophical clash between the two parties. No more of this five percent of 12 percent of the federal budget stuff. We wanted entitlements, the role of government, the obligations that the old have to the young, that the rich have to the poor, that the powerful have to the powerless.
    Paul Ryan’s budget offer exactly that sort of reconstruction of the social compact. America is a very different place before his budget than it would be after his budget. But though Obama’s speech was closer to that sort of clash of visions than anything he’s offered before — he used the word “vision” 15 times, for instance — what he offered was not philosophy. It was policy. But you have to read it closely — and know where it came from — to see that.
    The assumptions and models included in the Ryan budget are this: “I can save an almost unlimited amount of money. My number can be anything I want it to be. The problem is I actually can’t save that much money because my math is based on fantasy. So my number is meaningless.”

    + President Obama says his plan cuts $4 trillion over 12 years. Rep. Paul Ryan says his plan cuts $4 trillion over 10 years. If you look at the numbers, the two plans appear quite similar. But if you look at how they’d get to the number, they couldn’t be more different. And it’s how you get to the number that matters, because that’s what decides whether you’ll get to the number. It’s also, incidentally, what decides the shape of our government going forward.

    Ryan’s number is the product of holding the growth of Medicare and Medicaid to the rate of inflation, which is far lower than has ever been shown to be possible. How he gets there is, on Medicaid, he tells the states to figure it out, and on Medicare, he tells seniors to figure it out. Both strategies have been tried: Various states have gotten waivers to radically remake their Medicaid program, and the consumer-driven model that Ryan is proposing for Medicare has been attempted in the Federal Employee Health Benefits Program and Medicare Advantage. None of these programs have worked, which is why we’re in our current predicament. Which is why Ryan’s plan is fantasy

    + Obama’s number is the product of holding Medicare growth to GDP+0.5 percent — which is, in practice, a few percentage points beyond inflation, and a few percentage points behind the health-care system’s normal rate of growth. He mostly gets there through the cost controls passed as part of the Affordable Care Act, which hope to hold Medicare to GDP+1 percent. He then proposes to shave a further half-percentage point off the growth rate by introducing value-based insurance — where we pay more for treatments that are proven to work than for treatments that are not proven to work — into Medicare and giving generic drugs quicker entry into the marketplace. These programs have worked at smaller scales and in more limited pilots. We don’t know if they’ll work across the entire Medicare system, but we have reason to think they will.

    +Then there are taxes. Ryan’s plan pledges to make the Bush tax cuts permanent, at a cost of at least $4 trillion over 10 years, and more after that. He’d then clean out the tax code, but he’d pump the money he made from closing expenditures back into tax cuts. Obama proposes to return to the Clinton-era tax rates on income over $250,000 and then raise a further trillion through closing tax expenditures. Altogether, that’s about $2 trillion less than letting all the Bush tax cuts expire, but at least $2 trillion more than Ryan’s plan. Notably, Obama hasn’t said which expenditures he’d close to get to $1 trillion. The difference between the two tax plans — particularly when added to Obama’s decision to cut $400 billion from security-related spending, while Ryan largely exempts that category — explains why Obama doesn’t have to make such deep cuts in programs for seniors and low-income Americans.

    Obama’s budget is not philosophy. It is very similar to the Simpson-Bowles report, which attracted the votes of Republicans as far to the right as Tom Coburn. Few Democrats would say their vision of balancing the budget is one in which there was only one dollar of new taxes for every three dollars of spending cuts, but that’s what Obama’s proposal envisions. Obama’s budget, somewhat curiously, is what you’d expect at the end of a negotiation process, not the beginning. In fact, as it’s modeled off of Simpson-Bowles, it is the product of a negotiation process, as opposed to an opening bid. It is, in other words, policy.

    + Ryan’s budget is purer, but it is also more fantastical. It posits the government it wishes were possible, and the policies it wishes would work. It is an opening bid so ideological that it leaves little room for a process of negotiation. Every dollar it purports to raise comes from cutting spending. Not one comes from taxes. It privatizes Medicare and unwinds the federal government’s role in Medicaid. For all the philosophy in his budget — and his budget does have a very different philosophy about the proper role of government than we see in federal pllicy today — there’s neither policy that could pass nor policy that could work. And, curiously for a conservative who distrusts both government and congress, it has no answer to the question of “what if this fails?”
    The policy that clarifies this difference is the “trigger.” Obama’s budget, aware that it might not pass and, if it does pass, it might not work, proposes to make automatic cuts to discretionary spending and tax expenditures if the promised savings don’t materialize. If Ryan’s budget falls shorts, there’s no comparable failsafe. That is to say, Obama’s budget has two plausible ways to get to its number, while Ryan’s budget has NONE. You don’t need a PhD in philosophy to understand why that’s a problem.

  4. George Orwell: You chose a most appropriate screen name as your post is truly Orwellian in its agitprop & misrepresentations just shy of outright lies. The tax structure that is at the heart of the Obama budget will undoubtedly reduce overall revenues as every increase in tax rates has done since it will massively depress economic activity. The result will be much less money than predicted.
    The healthcare savings are a total fantasy since reducing Medicare payments in any fashion will simply decrease the number of providers who will then accept Medicare thus leading to rationing & inevitable cost increases.
    Like liberals everywhere, you throw verbiage at the reader that slides over the fine points of the Democratic plan until it’s too late for us to change it (see Obamacare legislation). Since Obama & Co. took over the gov’t it is not possible to believe anything they say. I would trust industry over gov’t any day & any way.


    pril 14, 2011
    Who’s Serious Now?

    Paul Ryan, the chairman of the House Budget Committee, sounds upset. And you can see why: President Obama, to the great relief of progressives, has called his bluff.

    Last week, Mr. Ryan unveiled his budget proposal, and the initial reaction of much of the punditocracy was best summed up (sarcastically) by the blogger John Cole: “The plan is bold! It is serious! It took courage! It re-frames the debate! The ball is in Obama’s court! Very wonky! It is a game-changer! Did I mention it is serious?”

    Then people who actually understand budget numbers went to work, and it became clear that the proposal wasn’t serious at all. In fact, it was a sick joke. The only real things in it were savage cuts in aid to the needy and the uninsured, huge tax cuts for corporations and the rich, and Medicare privatization. All the alleged cost savings were pure fantasy.

    On Wednesday, as I said, the president called Mr. Ryan’s bluff: after offering a spirited (and reassuring) defense of social insurance, he declared, “There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. And I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.” Actually, the Ryan plan calls for $2.9 trillion in tax cuts, but who’s counting?

    And then Mr. Obama laid out a budget plan that really is serious.

    The president’s proposal isn’t perfect, by a long shot. My own view is that while the spending controls on Medicare he proposed are exactly the right way to go, he’s probably expecting too much payoff in the near term. And over the longer run, I believe that we’ll need modestly higher taxes on the middle class as well as the rich to pay for the kind of society we want. But the vision was right, and the numbers were far more credible than anything in the Ryan sales pitch.

    And the hissy fit — I mean, criticism — the Obama plan provoked from Mr. Ryan was deeply revealing, as the man who proposes using budget deficits as an excuse to cut taxes on the rich accused the president of being “partisan.” Mr. Ryan also accused the president of being “dramatically inaccurate” — this from someone whose plan included a $200 billion error in its calculation of interest costs and appears to have made an even bigger error on Medicaid costs. He didn’t say what the inaccuracies were.

    And now for something completely wonkish: Can we talk, briefly, about politicians talking about drugs?

    For the contrast between Mr. Ryan last week and Mr. Obama on Wednesday wasn’t just about visions of society. There was also a difference in visions of how the world works. And nowhere was that clearer than in the issue of how Medicare should pay for drugs.

    Mr. Obama declared, “We will cut spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency.” Meanwhile, Mr. Ryan held up the existing Medicare drug benefit — a program run through private insurance companies, under legislation that specifically prohibits Medicare from using its bargaining power — as an example of the efficiencies that could be gained from privatizing the whole system.

    Mr. Obama has it right. Medicare Part D has been less expensive than expected, at least so far, but that’s because overall prescription drug spending has fallen short of expectations, largely thanks to a dearth of new drugs and the growing use of generics. The right way to assess Part D is by comparing it with programs where the government is allowed to use its purchasing power. And such comparisons suggest that if there’s any magic in privatization, it’s the magical way it makes drug companies richer and taxpayers poorer. For example, the Department of Veterans Affairs pays about 40 percent less for drugs than the private plans in Part D.

    Did I mention that Medicare Advantage, which closely resembles the privatized system that Republicans want to impose on all seniors, currently costs taxpayers 12 percent more per recipient than traditional Medicare?

    But back to the president’s speech. His plan isn’t about to become law; neither is Mr. Ryan’s. And given the hysterical Republican reaction, it doesn’t look likely that we’ll see negotiations trying to narrow the difference. That’s a good thing because Mr. Obama’s plan already relies more on spending cuts than it should, and moving it significantly in the G.O.P.’s direction would produce something unworkable and unacceptable.

    What happened over the past two weeks, then, was more about staking out positions than about enacting policies. On one side you had a combination of mean-spiritedness and fantasy; on the other you had a reaffirmation of American compassion and community, coupled with fairly realistic numbers. Which would you choose??

  6. KRUGMAN IS YOUR GURU!?? The most liberal economist who said Obama didn’t spend ENOUGH in the failed stimulus package & who would have the US forever indebted to the Chinese with tax rates on par with stagnant European socialist countries is the man you quote to attack the Republicans’ plan. You couldn’t have picked a better source to SUPPORT Paul Ryan’s proposals. Has Krugman been right about anything? He still thinks Keynes was a genius even though Keynesian economics has NEVER worked anywhere in the world.
    This is just another example of liberals talking amongst themselves completely detached from reality.

  7. Obama pontificates in an accusatory tone everytime he opens his mouth. BUT the worst possible attribute of this poser is all the lying. My warning to those who voted for him is to get ready for the worst times of your life. He and Soros are here to destroy your country.