A Budget Full of Illusions

With the budget proposal for 2013, Obama’s presidency gains a tragic component. Many of his plans would be right; however, they do not stand a chance in the U.S. House of Representatives. The United States has lost four years — and above all, with his budget plan, Obama is delivering ammunition for ideological battles.

The office leaves its mark on the occupant. Seldom can one observe this so well as with Barack Obama during the past three years of his presidency. The man, who once stepped up with the promise of bringing “hope” and “change we can believe in,” now submits the last budget proposal of his first term of office.

It is a budget full of illusions; Obama promises a change that no one believes in any longer: a tax on the rich, investments in education, industry and infrastructure — and all of this with a deficit of more than $1.3 trillion. At 7.5 to 8 percent of the country’s economic output, the U.S. budget is not so terribly far removed from the conditions in Greece.

Obama’s presidency gets a tragic component here. It would be right to bring the U.S. tax system into balance again. An answer to the budget problems is unthinkable without tax increases. It would also be right to invest in new streets and rails, in supply lines and flight security. More than ever, it is necessary to put billions into the ailing education system.

But all of these good plans do not stand a chance of passing the Republican-controlled House of Representatives. The prospects for compromise with the other side are as good as none in an election year. So the budget is primarily one thing: The template for a rather populist election campaign waged by the White House.

First and foremost, the deficit and national debt remain. Obama’s Chief of Staff Jack Lew is right when he says, “the time for austerity is not today.” Which is to say: The economy is still too weak to be able to withstand massive government austerity plans. In fact, as low interest rates show, the financial markets have not lost their confidence in the U.S. despite of the deficit. That is the difference from Greece.

Initially, America was even rewarded for the deficit: The country is avoiding a recession and enjoys a moderate economic recovery. Nevertheless, one should not underestimate the world economic consequences of this set-up: The Germans are more isolated than ever with their austerity measures. They are, depending on the progress of the euro crisis, placed under pressure from Washington. Those with money should spend it, the people from Obama’s economic team say.

The Logic Has Reversed

But how sustainable is all of that? At the beginning of Obama’s term in 2009, the baseline seemed to be clear: One must first prevent, with a lot of money, a fall into a depression; then one must begin systematically reducing the national debt. This rational strategy was shattered in the reality of Washington party battles. All know that the budget can only be cleaned up if the American social systems — pensions and health insurance of retirees — are radically reformed.

However, anyone who approaches such topics is committing political suicide, and presumably not only in Washington. Anyone who demands sacrifice is voted out of office. Therefore, the logic is reversed: The debate about social systems does not happen; instead, the Republicans force Obama into an absurd race to cut short-term, mostly very reasonable expenditures.

America has lost four years. Can it make up for that? What Europeans easily underestimate: The U.S. has, even if the decaying infrastructure suggests something different, a dynamic and highly productive national economy. This economy tolerates more political mistakes than does Europe’s; therefore, the U.S. can simply grow out of some of their problems. But the tolerance for mistakes is not limitless. The next president must show leadership on the budget. In spite of everything, one wishes, given the Republican candidates, that he is again named Obama.