Pay As We Go

The Director of the Congressional Budget Office's blog puts it plainly and simply:

[F]iscal policy is on an unsustainable path to an extent that cannot be solved by minor tinkering. The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services. That fundamental disconnect will have to be addressed in some way if the budget is to be placed on a sustainable course.

And then we have this tidbit from Politico:

President Barack Obama plans to announce in next year's State of the Union
address that he wants to focus extensively on cutting the federal deficit in
2010 – and will downplay other new domestic spending beyond jobs programs,
according to top aides involved in the planning.

It is simply the truth that Barack Obama is more fiscally conservative than his predecessor pretended to be. The proposed spending on health-care reform (which is dwarfed by the Medicare prescription drug entitlement), plus the various stimulus packages that were begun by Bush and were necessary to keep going under Obama during this first year, have had positive effects to stimulate spending and get money flowing again. NPR reported this morning that during the last year, personal savings increased dramatically to 5% from 0%. This is largely due to uncertainty about the job market. Obama's focus on job creation and retention is the right thing to do. We'll have to do with less federal funding for the arts/humanities for a while, although it would be a mistake to forsake education spending as well.