Aspirations and RealityRandall Holcombe • Friday June 18, 2010 11:25 AM PDT •
I was talking with a new college graduate recently who told me of his plan to buy a BMW. He doesn’t have the money to do it now, but said that after he had a job for a few years and had some income saved up, getting a BMW was something he aspired to.
Am I stretching too much to see a parallel between this and the support for President Obama’s “hope and change” agenda? Like the new college graduate who aspires to own a BMW, President Obama hoped for the day when people could be secure in the idea that future health care costs wouldn’t bankrupt them, and the day when our economy could run on high-tech non-polluting domestically-produced energy.
The recent graduate who was talking with me about his aspirations for a BMW had the good sense to see that at the moment the car was unaffordable to him. He would wait to buy it until he had the financial means to do so. Indeed, if he’d concocted plans to get a dozen credit cards and max them out so he could get the car now, we would frown upon his behavior rather than admiring the fact that he has dreams and aspirations. Borrowing as much as possible now to get the car immediately would be a recipe for bankruptcy.
The reality is that the aspirations President Obama has are unaffordable. Sure, it would be nice to have everything he hopes for, but we can’t pay for all those dreams, and as he has pushed those dreams toward programs and promises, those promises can’t all be kept.
We can talk about all the reasons President Obama’s policies might be flawed; the problems with cap and trade, the perverse incentives in health care reform, and so forth, but that’s not what I’m talking about here. I’m talking about the irresponsibility of promising a nation more than its government can afford to deliver.
Alan Greenspan has a sobering essay on the topic in the Wall Street Journal, where he says, “For generations there had been a large buffer between the borrowing capacity of the U.S. government and the level of its debt to the public. But in the aftermath of the Lehman Brothers collapse, that gap began to narrow rapidly...” Greenspan notes, “In the 1950s, as I remember them, U.S. federal budget deficits were no more politically acceptable than households spending beyond their means. Regrettably, that now quaint notion gave way over the decades, such that today it is the rare politician who doesn’t run on seemingly costless spending increases or tax cuts with borrowed money.” That’s what happens when aspirations turn into promises and are legislated as government programs.
Now, Greenspan says, “The federal government is currently saddled with commitments for the next three decades that it will be unable to meet...”
President Obama campaigned on a set of aspirations many Americans share. We know that because he easily won the election. The campaign was like saying to the recent graduate, I hope that some day you can get the BMW, and if I’m elected I’ll do what I can to make your aspiration become a reality. Post-election, the administration has been like saying, I’ve taken out a huge loan that you’ll have to repay, and here’s your BMW. Actually, it’s not even that good, because looking at health care, we’re starting the payments now, but the benefits don’t start for years.
It’s great to dream big, as long as you don’t sabotage your future to try to make those dreams come true. People see this. I suspect that’s why President Obama was so popular when he was running for election, and why his popularity is suffering now. We’ll get a better indication in the November election, which is shaping up to be a referendum on Obamanomics.