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Today’s Guest Commentator: Barack Obama

President Obama, newly inaugurated for his second term, is heading directly toward a confrontation with congressional Republicans who want to force him to cut federal spending before they agree to raise the national debt ceiling.

The debt ceiling will ultimately be raised; both parties agree on that. And any spending cuts will hardly put a dent in the growth of the federal debt, which now totals $16.4 trillion and is rising by $1 trillion a year. Even the supposedly hard-line Republican position is pretty soft. House Speaker John Boehner wants spending to be cut by a dollar for each dollar of increased debt, which sounds pretty tough - until you realize that Boehner allows 10 years to cut $1 trillion in spending, while the debt would increase by nearly that same $1 trillion in just the first year.

Still, the president and his Democratic allies in Congress are aghast at the threat by Republicans to shut the federal spending spigot if they do not get their way. Republicans, the president has said, seek to hold the country hostage to their political agenda.

Obama sang a different tune when, as a Democratic senator, he voted against raising the debt ceiling in 2006. Back then, Republican George W. Bush was in the White House.

I was going to write a commentary on the evils of burdening our children and grandchildren with a staggering debt load simply because we lack the will to pay our own bills. But in his floor speech on March 16, 2006, then-Sen. Obama made the case as eloquently as I could hope to do. So, after just one more observation, I will turn the balance of today’s commentary over to the former junior senator from Illinois.

My final note is that the president’s comments were reprinted last week by Glenn Kessler, author of the Fact Checker column in The Washington Post. Kessler noted the president’s reversal of position and his explanation that his opposition to raising the debt ceiling in 2006 was “a political vote.” Kessler then added his own observation: “This is why so many Americans hate politics.” Kessler awarded the president his “upside-down Pinocchio” in honor of his “major-league flip-flop.”

I yield to Sen. Obama.

“Mr. President, I rise today to talk about America’s debt problem. The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. government can’t pay its own bills.

“It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policies. Over the past five years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is ‘‘trillion’’ with a ‘‘T.’’ That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers.

“Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the federal government will spend $220 billion on interest. That is more money to pay interest on our national debt than we’ll spend on Medicaid and the State Children’s Health Insurance Program.

“That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America. And the cost of our debt is one of the fastest growing expenses in the federal budget.

“This rising debt is a hidden domestic enemy, robbing our cities and states of critical investments in infrastructure like bridges, ports and levees; robbing our families and our children of critical investments in education and health-care reform; robbing our seniors of the retirement and health security they have counted on.

“Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities. Instead, interest payments are a significant tax on all Americans - a debt tax that Washington doesn’t want to talk about. If Washington were serious about honest tax relief in this country, we would see an effort to reduce our national debt by returning to responsible fiscal policies.

“But we are not doing that. Despite repeated efforts by Senators Conrad and Feingold, the Senate continues to reject a return to the commonsense pay-go rules that used to apply. Previously, pay-go rules applied both to increases in mandatory spending and to tax cuts. The Senate had to abide by the commonsense budgeting principle of balancing expenses and revenues.

“Unfortunately, the principle was abandoned, and now the demands of budget discipline apply only to spending. As a result, tax breaks have not been paid for by reductions in Federal spending, and thus the only way to pay for them has been to increase our deficit to historically high levels and borrow more and more money. Now we have to pay for those tax breaks plus the cost of borrowing for them. Instead of reducing the deficit, as some people claimed, the fiscal policies of this administration and its allies in Congress will add more than $600 million in debt for each of the next five years. That is why I will once again co-sponsor the pay-go amendment and continue to hope that my colleagues will return to a smart rule that has worked in the past and can work again.

“Our debt also matters internationally. My friend, the ranking member of the Senate Budget Committee, likes to remind us that it took 42 presidents 224 years to run up only $1 trillion of foreign-held debt. This administration did more than that in just five years.

“Now, there is nothing wrong with borrowing from foreign countries. But we must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours.

“Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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