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Ha'aretz , Israel

Alchemist or Santa Claus

By Nehemiah Shterlitzer

The problem is that even now, with a deficit of some $1.3 trillion that threatens the economic stability of the U.S. as well as the whole world, Obama continues to be good and generous.

Translated By Aaron Cederberg

10 January 2013

Edited by Heather Martin

Israel - Ha'aretz - Original Article (Hebrew )

News reporters are very objective. When Barack Obama went out for Christmas break, at the height of a difficult and dangerous budget crisis, they did not expend even a single word of criticism. As far as they're concerned, it is OK that the president plays tennis in Hawaii. What, doesn't he deserve to enjoy life on occasion?

Imagine what reporters would have written had George W. Bush behaved in a similar fashion. They would have crucified him, roasted him, he would have been the subject of jokes, and they would have explained ceaselessly how arrogant he is, how he is disconnected and irresponsible. How could he go on vacation during such hard times?

Those same reporters cover the "fiscal cliff" as if it is a force of nature, as if the United States happened upon it by chance. The truth, of course, is different. Obama dragged the U.S. into the threatening cliff, and he is responsible for the crisis. He is to blame for the enormous deficit, and he is responsible for the hazardous debt. The whole cliff is his handiwork, and he should be proud.

Indeed, it is true that he inherited a deficit that is 3.2 percent of the gross domestic product from Bush in 2008 and that the debt was about 70 percent — that is too much — but Obama, who entered his role in 2009, was quick to outdo his predecessor. He quickly decreed that he would save the U.S. from the financial crisis through a combination of larger budgets and lowered taxes — a wonderful combination of alchemy and Santa Claus.

It may be true that he was right to raise budgets and lower taxes for one year of the crisis, but he should have been quick to return to the correct path. Rather, Obama spread money and higher budgets about not for one year, but for four. And we are not just talking about healthcare reform, we are taking about larger retirement handouts, a broadening of unemployment benefits, an increase in every state's budget and increases in the budgets for the Department of Transportation, the Department of State, Federal Emergency Management Agency and agricultural subsidies. He poured billions into various and eccentric recovery programs, lowered the salary requirements for debtors, increased the size of the public sector to incredible proportions and all this while lowering taxes for everyone — everyone from low to medium to high incomes. That is how Santa Claus operates: he distributes to everyone without demanding anything in return.

The small problem with this is the dramatic growth in both the deficit and debt. The deficit jumped to the frightening level of 8 to 10 percent of gross domestic product in every one of his years in office, and the national debt rose to 105 percent (!) of gross domestic product, which is a colossal failure.

The problem is that even now, with a deficit of some $1.3 trillion that threatens the economic stability of the U.S. as well as the whole world, Obama continues to be good and generous. He opposes the expiration of tax cuts on some 90 percent of the population. He is unwilling to shrink the budgets he has raised, and he does not want to trim the federal budget except marginally. Therefore every political "solution" he accomplishes with the Republicans will be a bad solution. He will not cure the disease; rather, he will worsen it. Because Obama does not want to do what is necessary: real budget reductions and tax increases to all layers of the public — middle class as well as upper class.

That is what has to be done, after the party of the last decade that was only been made possible by money borrowed from China and the rest of the world. It is time that they pay the bill with a certain lowering of their quality of life; otherwise, they will cause a worldwide crisis.

The U.S. economic crisis is a good lesson for us. Similarly, our debt and deficit are ballooning out of proportion. But unlike the U.S., we do not have the privilege of continuing the populist policies that have been characteristic of the last few years. Any new government to be formed will have to cut 14 billion shekels from the budget and also raise taxes by five billion shekels.

We cannot afford to drone on about a "fiscal cliff" and do nothing. The Chinese will not give us permission, and any deficit will result in a quick collapse. With us, the local Santa Claus will demand his full price in two or three months.



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