Loose Canons

Lew’s Lewd Letter

Obama's OMB director will pretend to attack the deficit in order to re-elect his boss.

By 8.29.11

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"Obama Takes Charge at Hurricane Command Center" blared the AFP headline on Saturday. But it was just another disappointment for Obama. By the time the over-hyped hurricane Irene blew into town, there wasn't anything for Obama to take charge of.

It could have been a big psychological moment for Obama's campaign but it was just another let down for the man. The stock markets seemed to respond better to the East Coast earthquake last week than to Barry's recent speeches.

But Barry O'bama really has the luck of the Irish. With every sentient American worried about our still-sinking economy, we've been diverted from thinking about it all summer.

Gaddafi's fall, Irene's sweep of the not-so-earthquake-shattered East Coast, and now Dick Cheney's memoir have taken turns dominating the news. Maureen Dowd's review of Cheney's book seemed to say that last week's earthquake and the Irene minicane were the result of Voldemort-Cheney casting another evil spell on Washington, D.C.

Meanwhile Obama vacationed at Martha's Vineyard, contemplating how he would announce his new plan to revive the economy and restore confidence in the financial markets. The liberal media has been bewailing the fact that Obama has no announced theme for his 2012 campaign. One sluggo even moaned that the campaign website had not a single slogan on it. But there soon will be slogans aplenty because the post-vacation Big Speech has been hyped almost as much as Irene. Obama has a lot riding on it.

The problem he faces is that neither he nor anyone on his team can bring themselves to consider that reducing the size and scope of government is the only way to restore confidence in our economy among the financial markets, investors, and voters.

From a bunch of press leaks and trial balloons, we mostly know what's coming. More "stimulus" spending, an "infrastructure bank" funded with same, and some pretextual tax cuts will likely be the major themes of the great speech to be delivered by our redistributionist president after Labor Day. And now, thanks to OMB Director Jacob Lew's August 17 letter to all executive department heads, we know a lot more.

Our economy isn't officially in recession because economic growth was all of 0.3% in the first quarter of 2011 and about 1% in the second quarter. It's got to be zero or lower to officially classify as a recession, but 0.65% in six months is close enough for government work. And the fact that unemployment still hovers around 9% -- for more than thirty months, the longest such period since the Great Depression -- is directly linked. Without economic growth, there cannot be more jobs.

A few months ago, Nancy Pelosi wondered aloud why the "Great Depression" bore that name because it wasn't so great. Maybe now even she understands it was about the magnitude of the depression.

But neither Pelosi nor Obama can understand that growth can only result from freeing the economy from governmental suppression-by-suffocation. The first line of Lew's letter says it all: "The President has defined our challenge as demonstrating that we can live within our means so that we can invest in job creation and economic growth now and in the long term."

Note well the cognitive dissonance. We have to live within our means -- the federal budget spending trillions -- in order to increase spending on job creation and economic growth. There will be no spending cuts if Obama has his way, just a rearrangement of who gets which part of the economic spoils.

And this will be Obama's campaign theme announced in the post-Labor Day speech. Obama's re-election plan is to take money from some federal programs to make it appear that the deficit is being attacked. Instead, under his "new" plan, spending will be increased overall to "create" jobs for which people will be hired between now and November 2012, even if those people are laid off the day after the election. No tax hikes will be proposed until after Election Day.

Lew's letter says that it reflects conversations in cabinet meetings. It instructs all federal agency heads to submit budget proposals for 2013 that are 5 percent below their actual enacted discretionary spending for 2011 and to identify other spending cuts that would bring the 2013 budget 10 percent below the 2011 actuals. Every agency that hasn't been given explicit exemption, Lew writes, has to do this.

Lew is not done there. He explains that the cuts should not be across-the-board or reductions in mandatory spending or creation of new "user fees" -- i.e., taxes without the offending three-letter label -- but that the latter can be proposed as alternatives to cuts.

The most important part of Lew's lewd letter is this one, where he directs federal agencies to spend more to create jobs:

At the same time as your submission shows lower spending overall, you should identify programs to "double down" on because they provide the best opportunity to enhance economic growth. Finding savings to support these investments will be difficult, but it is possible if budgets cut or eliminate low-priority and ineffective programs while consolidating duplicative ones; improve program efficiency by driving down operational and administrative costs; and support fundamental program reforms that generate the best outcomes per dollar spent.

Lew continues that, consistent with those guidelines, agency budgets should identify "priority investments related to economic growth which the Department proposes to expand or protect."

In a budget speech months ago, Obama credited departing Defense Secretary Bob Gates with $400 billion in defense spending cuts (over ten years) and demanded that those cuts be doubled. When the debt ceiling mess was punted over to the new congressional "supercommittee," if that group fails to agree on deficit reductions, the legislation said, it will trigger massive cuts in -- you guessed it -- defense spending as well as small cuts in entitlement programs.

It's all backwards. We conservatives always say that the government can't create jobs. That's true with one major exception: government spending can create jobs to perform those sovereign functions in which the free market has no function.

There could be some government stimulus if money were spent on the stuff that kills people and breaks things, on restoring our space program to its pre-eminence of the 1960s and 1970s, and on increasing the abilities of our intelligence agencies. But such spending -- even if it were made -- would not be enough to restore economic growth unless it were accompanied by massive spending cuts in the rest of the federal budget. And Barry won't permit that.

After Labor Day, when Obama delivers his speech, there will be a flurry of analysis and commentary, most of it aimed at how reasonable the president is being by "cutting" his budgetary plans. Just keep these two invariable facts in mind: Obama will not allow any major cuts in any near-term spending except in defense. Any cuts his speech proposes will be in the future, long enough away that he and Congress can just ignore them.

It's just like Sen. Mitch McConnell said a couple of weeks ago. We can't cure our economy with Obama in the White House. All we can do is prevent him from digging deeper the hole we're already in.

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About the Author
Jed Babbin served as a Deputy Undersecretary of Defense under George H.W. Bush. He is the author of several bestselling books including Inside the Asylum and In the Words of Our Enemies. He is coauthor (with Herbert London) of the new book The BDS War Against Israel. You can follow him on Twitter@jedbabbin.