So how is the economy reacting to Obama’s record spending? After four years of the Obama doctrine, the U.S. economy grew just 0.4 percent in the last quarter of 2012. Last month only 88,000 jobs were created – a number that doesn’t even keep up with population growth. The economic outlook isn’t much better. Forecasters with the Obama administration estimate U.S. economic growth of 2.3 percent this year. At the same time, our budget shortfall is an estimated $845 billion, or 5 percent of the economy.
It’s well known that one of the primary drivers of our growing national debt is entitlement programs such as Medicare, Medicaid and Social Security. President Obama deserves some credit for an attempt at controlling the cost of these programs, which earned him a rather stern rebuke from Richard Trumka of AFL-CIO, but these reforms are not up to the task of actually fixing the problem. Even if Obama’s plan were put in place, entitlement spending would still grow over the next ten years, from 13.6 percent of GDP this year to 13.9 percent in 2023.
Obama’s willingness to at least bring up the politically-charged topic of entitlement spending is admirable, but ultimately his plan is ineffective. House Budget Chairman Paul Ryan already addressed this problem and got it right. For those young people concerned about future retirement, the Obama plan warrants an attendance ribbon, but the Ryan budget actually gets the job done.
One last irony of the Obama budget must be pointed out. While the President's April proclamation urges young people to "budget responsibly," the President's budget actually discourages fiscal responsibility by capping retirement accounts at $3 million. With life expectancy increasing, meaning longer retirement years, and with many young people realizing that both Medicare and Social Security are on a sure road to bankruptcy, the President is attempting to cap Americans Individual Retirement Accounts or IRAs. Rather than promote financial discipline and self-sufficiency, Obama feels the right to determine when you have enough money, and penalize any future savings.
Despite poor timing, neither Obama’s proclamation naming April the month of financial responsibility or his budget proposal were intended as pranks. But in both cases the joke really is on us.