There is no tougher political tightrope to walk, given the current cantankerous mood of American voters, than trying to cast yourself as a committed deficit hawk while drafting a budget that champions yet more pump-priming.
The $3.8-trillion (U.S.) spending plan that Barack Obama just sent to Congress talks a good game about putting the United States on a stable fiscal footing but forecasts only a fleeting improvement in the deficit between 2011 and 2015 - and even then, only if the U.S. economy returns to sustained growth.
As a result, the U.S. government will take in barely $1 in taxes and other revenues for every $1.75 it spends this year. By next year, it will be forking out more to pay just the interest on its federal debt than Ottawa will spend to fund the entire Canadian state. The annual interest tab will almost quadruple within a decade to surpass $900-billion in 2020.
But with most seats in Congress up for grabs in this year's midterm elections, the President faces an impossible task trying to get legislators to take deficit reduction seriously before they face the voters. Most Democrats are unwilling to entertain meaningful cuts to spending (other than to the defence budget, which many of them would axe with alacrity), while most Republicans get hives at the prospect of tax increases (and defence cuts, for that matter).
As a result, the new spurt of stimulus spending proposed by Mr. Obama will send the budgetary shortfall for the current fiscal year that ends Sept. 30 to a record of $1.56-trillion, or 10.6 per cent of gross domestic product, according to the budget the President sent to Congress yesterday. By comparison, Canada's federal deficit will remain below 4 per cent of GDP this year and is projected to decline to less than 1 per cent of GDP by mid-decade.
"This is not showing a tremendous amount of leadership in the face of what is a very serious near- and long-term fiscal deficit," said Alex Brill, a research fellow at the conservative American Enterprise Institute and former economist at the House of Representatives ways and means committee, which is the lower chamber's chief tax-writing body.
A politically vulnerable President has opted for short-term gain, with a proposal for another $100-billion in stimulus spending, while paying only cursory heed to the long-term pain that lies in wait as unchecked outlays on Medicare, Medicaid and Social Security send the U.S. debt careening past $20-trillion by 2020 from $12.4-trillion now.
That appears to be at odds with the more muscular approach to shrinking government that voters, especially those joining the swelling ranks of the Tea Party movement, tell pollsters they are looking for - though most also want to see the jobless rate come down quickly.
Indeed, the only thing more unpopular than the $787-billion stimulus package onto which Barack Obama now wants to tack another $100-billion is the 10-per-cent unemployment rate that last year's burst of government spending was supposed to keep below 8 per cent.
Even so, Mr. Obama strived to depict his budget as a blueprint for fiscal rehabilitation, with a three-year plan to freeze some discretionary spending and a proposal to let tax cuts for the wealthy enacted under George W. Bush expire at the end of this year.
"Our nation could not afford these tax cuts when they passed, and it cannot afford them now," Mr. Obama insisted as he implored Congress to play along. "A decade of irresponsible choices has created a fiscal hole that will not be solved by a typical Washington budget process that puts partisanship and parochial interests above our shared national interest."
Still, the savings from those measures will hardly compensate for a ramping up of defence expenditures - with a request for an additional $41-billion primarily to wage the war in Afghanistan - and bursts in spending on education and green energy incentives.
The President said he will press ahead on his own with the creation of a bipartisan budget commission charged with "identifying additional policies to put our country on a fiscally sustainable path," even though the idea failed to gain the support of enough senators in a vote last week.
Instead of reversing the Bush tax cuts on those earning more than $250,000 annually, the AEI's Mr. Brill countered that the President should have imposed a freeze on defence spending (a measure favoured by Democratic House Speaker Nancy Pelosi) and slapped a cap on tax deductions for mortgage-interest payments. Such tax incentives contributed to the housing bubble, which ultimately burst in 2008, by fuelling demand for homes and encouraging Americans to take on mortgages they couldn't afford.
"Raising the marginal tax rate on a few [wealthy]people is a damaging way to try to bring more revenue to Washington," Mr. Brill insisted in an interview. "You need to get much more serious and look at the tax treatment of home ownership, especially coming out of an experience like we had in the past couple of years."
Mortgage interest deductibility is popular with voters, however, and Democrats and Republicans are united in treating it as a sacred cow.
So far, Mr. Obama has resisted imitating the pivot Bill Clinton performed early in his presidency by embracing the religion of balanced budgets. While Mr. Clinton benefited from an economy that rebounded more rapidly from the recession of the early nineties, he also enacted tax increases and a host of Republican-inspired policies, including welfare reform, that were unpopular with the Democratic base.
Jeffrey Frankel, a professor at Harvard University's John. F. Kennedy School of Government who served on Mr. Clinton's Council of Economic Advisers, suggested Mr. Obama should press Congress to re-enact "pay-as-you-go" requirements that force legislators to balance new program spending with revenue increases or expenditure cuts elsewhere.
The so-called "pay-go" rules expired during the first year of Mr. Bush's presidency, allowing the budget deficit to grow unchecked when the Republican President implemented a costly prescription-drug benefit program for seniors.
Two of Mr. Obama's principal fiscal-improvement measures from last year's budget - reining in Medicare costs with the passage of a health-care reform bill and raising hundreds of billions of dollars by auctioning off credits to carbon emitters - are now comatose and unlikely to be revived before this year's midterm elections.
As a result, the President is poised to lead his party into the midterms with an obese budget and little in the way of employment gains to show for the ramped-up spending. (Though without it, the unemployment picture would surely be worse.) Given the fearful state of Democrats and the obstructionist mood of Republicans, Mr. Obama's next chance to tackle serious budget reform will not come until next year. And Congress may have taken on a much redder hue by then.
Konrad Yakabuski