LBJ Returns

March 19, 2009, 4:00 a.m.

LBJ Returns
By the Editors

Perhaps there is nothing in President Obama’s budget that better illustrates his priorities than his proposal to cap deductions on money donated to charity. “Don’t worry about giving,” this proposal seems to say. “That’s what the government is for.”

Taking, too. Obama’s budget increases taxes by $1.3 trillion. On the giving side, it increases discretionary spending by 12 percent and makes a $634 billion down payment on a national health-care system. Obama leaves the details of the system to Democrats in Congress, but he is specific about how to pay for it: He would cap itemized deductions for those in the top income-tax bracket and simultaneously raise their tax rates. The idea seems to be: Turn more of your money over to us, and we’ll give it away for you.

While Obama’s tax increases will almost certainly become law, his spending cuts will almost certainly not — particularly in the case of agriculture. Obama says he will save $10 billion by capping payments to wealthy farmers and billions more by scrapping other costly and inefficient farm programs. But don’t tell that to Rep. Collin C. Peterson, the Minnesota Democrat who chairs the House Agriculture Committee. “We just finished the [latest five-year] farm bill last year, and I don’t think we’ll open it up,” he informed the Washington Times. If Obama had really wanted to reform farm subsidies, he would have taken a stand when it mattered and voted against that bill in the Senate. Instead, he supported the subsidizers.

For his other proposed cuts to take effect, Obama will have to make credible threats to veto appropriations bills that increase spending where he has called for decreases. If he is able to pull this off, we will be among the first to congratulate him. But neither party has an outstanding record of controlling spending when it controls both ends of Pennsylvania Avenue, and judging by the bloated bulk of the stimulus bill there is little reason for optimism that Obama-era Democrats will fare better than their predecessors. In fact, Obama’s spending increases are larger than the new revenue from his tax hikes. His deficit-reduction plan is to hope that the economy improves.

What spending cuts we are likely to see are not necessarily ones that we should cheer. Obama would fund his health-care plan in part by gutting Medicare Advantage, the program that lets seniors choose privately administered health-care plans that are paid for by Medicare. Eliminating Medicare Advantage has been a liberal priority for years, because it is a roadblock to instituting a single-payer system. Obama promised to go through the budget “line by line,” looking for spending to cut. But in this task, as in others, he has sought the path of least resistance. The Left’s sacred cows appear to be safe.

In short, Obama’s budget raises taxes, increases spending, and creates programs that are likely to put a drag on our economy, such as cap-and-trade. Democrats like to point to Bill Clinton’s tax increases in the early 1990s as evidence that higher taxes are not incompatible with growth. But Clinton’s hikes coincided with the advent of the Internet, a revolutionary new technology that boosted productivity. What’s more, Clinton signed several growth-promoting trade agreements — good luck getting such a policy out of today’s “Buy American” Democrats. Unfortunately, Obama is adopting Clinton’s worst economic policies (high taxes, government-run health care) and eschewing his best ones.

Ellie