Go to your room, Mr. President

If you have ever watched children argue, you can tell which side is losing the debate.  First, the losing side shifts the blame - "but it's not my fault".  Then, the whining starts - "I have been doing all this work, and you won't play nice with me."  Finally, it sinks to straight-out personal attacks - "Well, you're a stinky poo-poo head."  About that time, just before it comes to blows, a parent has to step in and send everyone to time-out.  

This week, we got to see that there is not that much difference between the average seven-year-old and our sitting president.


Although we are still 16 months until the next major election, Washington is already gearing up for the fight.  All sides are trying to position themselves for the vote.  President Obama has serious reasons to be concerned and it is starting to show.  In his press conference on June 29th, the President was asked about the debt ceiling negotiations (for a primary on the debt ceiling, you can check last week's article here).  His responses show he knows he has lost the debate and ended with him metaphorically stomping his feet and throwing a tantrum.

As I described in a previous post, the US Congress has until August 2nd to pass a solution on the debt ceiling issue. The economic risks of not remedying the situation are too large -- can you say Greece?  The President and Congress know there are huge risks to failure here.  They also know that any negative repercussions will fall on the sitting president and his party.  The Democrats want to raise the debt, and increase revenues by raising taxes.  However, Mr. Obama's party does not control the House, so the GOP solution will eventually pass - namely, raise the debt limit, with matching reductions in spending.

Frustrated with the inevitable outcome, the President took this opportunity to try everything he could to change the story and shift the direction.  The resulting statements are good for a laugh.

" Get rid of tax breaks for millionaires and billionaires; tax breaks for oil companies and hedge fund managers and corporate jet owners." - President Obama

Maybe President Obama doesn't understand how math works, because while those ideas are fun to say, they aren't going to close the gap.  The current short fall is estimated at ~$120 BILLION each month.  Let's look at how Mr. Obama's big ideas compare to the needed reductions:

• Corporate jets -- The President is most likely referring (he mentioned it six times!) to what is known as "accelerated depreciation".  This changes how long companies can depreciate equipment (including corporate jets), which in turn impacts the taxes paid by the purchaser.  Interestingly enough, this tax benefit was included in President Obama's own stimulus package to stimulate purchases, and help create manufacturing jobs.  Even if this tax break were eliminated for corporate jets, the estimated financial impact would be $0.0025 billion per month, or .02% of the needed reduction.
• Oil subsidies -- The oil companies have long been a favorite target of the President.  But the tax breaks he is targeting aren't just straight gifts to these firms.  They include incentives to pursue renewable energies (one of Obama's top goals), breaks for investing to build manufacturing facilities (which create jobs), and benefits for exploration (which help limit dependence on the Middle East).  Obama has supported all these incentives, and taken credit for the impact, across many different industries, but now he wants to remove them for five specific companies.  Apparently, the President is glad to give money to companies supporting his agenda, as long as they don't actually make a profit.  Even if these incentives were removed for the five targeted companies, the additional revenue would amount to 0.28% of the required savings.
• The "wealthy" -- There is no need to recount the Democratic party's great disdain for people who are financially successful; that could take an entire article all by itself. So it is no surprise that the President called again to "make them pay their fair share."  The debate on the merits of this argument can wait until another day.  For now, it is enough to point out it would address less than 5% of the needed reduction, and would not have an immediate impact.

"And I’ve already shown that I’m willing to make some decisions that are very tough and will give my base of voters further reason to give me a hard time." -- President Obama

The President talked a great deal about leaders and leadership, asserting that he was doing everything necessary to be a leader, and now Congress needed to step up and be leaders.  When I think of leaders, someone standing up and saying - "it's their fault" is not what comes to mind.  Leaders take responsibility.  Leaders make the tough choices.

President Obama talks about needing a balanced approach, but everything specific he suggested focused on the historical targets of the Democratic party (defense, the rich, Big Oil).  He does not give one specific example of a cut that would upset his base voters.  Unfortunately, there is no way to close the gap without getting serious about the real costs of our government.  The 2010 Federal Budget broke out as follows (from CBPP based on OBM records):

• Defense and Homeland security -- 20%
• Social Security -- 20%
• Medicare, Medicaid, and CHiP -- 21%
• "Safety net" Programs (food stamps, unemployment, etc) -- 14%
• Interest on debt -- 6%
• Benefits for Veterans and Federal retirees -- 7%
• Everything else (education, transportation, research, etc) -- 12%

Closing the gap will require cuts to "entitlements" - the math simply requires it.  A real leader would suggest those necessary cuts.

"Malia and Sasha generally finish their homework a day ahead of time" - President Obama

The President reaches "name-calling" phase in the next to last question.  He mentiones that his daughters always have their homework done in advance, so Congress is being lazy that they haven't gotten this resolved yet.  After accusing them of procrastination, Mr. Obama makes fun of them saying "They’re in one week, they’re out one week" (a pointed jab at the planned July 4th recess). 

It is a good thing the White House isn't made of glass!  The stones Barack Obama is throwing set a new standard for irony and hypocracy.  According to govtrack.com, Senator Obama missed almost a quarter of the votes during his four-year tenure.  In the last 18 months he was in the Senate, he missed 67% of votes.  Senator Obama was the poster child for Congressional absenteeism. 

Obviously President Obama has been working harder in the White House.  In fact, so hard, that he hasn't been able to spend time with his family.  In talking about his girls doing their homework, the President (twice!) got his daughter's age wrong! (He said she was 13, she is still 12.)

Given his record, President Obama should keep his opinions on Congress' travel plans to himself.

President Obama is losing this debate.  On Tuesday, he threw a public temper tantrum because he isn't getting his way.  So, I believe he needs the same message I give my children when they throw a tantrum.  "I know you are frustrated, but that is not how we deal with our emotions.  You need to go to your room until you are ready to be nice and do your job."  Who knows, maybe a long weekend in "time out" would be good for him -- might give him a chance to get to know his daughters again.