Three myths about Obama’s budget

Does Obama’s budget represent that of a European-style socialist state?

The presidentâÄôs budget has elicited a vicious backlash from conservative pundits âÄî one that I think is worth addressing head-on. Here are three key myths about the budget that have gained traction among Republicans in recent days. Myth #1: This is European-style socialism. One-time Republican standard-bearer and possible 2012 presidential contender Newt Gingrich called the outlines of President Barack ObamaâÄôs budget âÄúthe boldest effort to create a European socialist model we have seen.âÄù It is true that the proportion of gross domestic product spent by the government is set to climb to 40 percent in the coming fiscal year. This is substantially closer than ever before to the roughly 47 percent of GDP spent by the European Union over the past decade. However, the undisputed cause of this jump is the federal effort to save our economy, not ObamaâÄôs support for new federal programs in areas such as energy, education or health care. If this question is one of values, then it is a value shared not only by Obama but also by his predecessor, who led the initial effort to pass the economic stimulus and bank bailout packages. Further, we should recall that President George W. Bush originally ran for office on a platform of tying peopleâÄôs social security more closely to the stock market. Can you imagine how ravaged our social safety net would be if he had succeeded in doing so just before the New York Stock Exchange took its monumental nosedive? So, perhaps the free market isnâÄôt the answer to everything. However, simply because the federal government moves to expand its role in providing citizens with a more robust safety net does not mean that our liberties are at risk. It also does not mean that a European political system of hegemonic labor unions, monstrous bureaucracies or an underclass that feeds upon the state is lurking around the corner. The private sector will remain the basic provider of goods and services under this budget. Myth #2: We need a spending freeze. House Minority Leader Rep. John Boehner has called for a federal spending freeze in order to âÄúshow the American people that weâÄôre serious about holding the line on spending.âÄù He has explained that âÄúif you look around the country, our economy is struggling. American families are tightening their belts. But they donâÄôt see government tightening its belt.âÄù However, a federal spending freeze is a gimmick. As morally satisfying as it might feel to cut off Washington fat cats in a year when Americans face such difficult financial circumstances, it is a formula for economic disaster. When market demand crashes as drastically as it has in recent months, only the federal government can step in and jump-start demand quickly enough to get most Americans back to work again. That is why Nobel Laureate Paul Krugman calls BoehnerâÄôs proposal downright idiotic: âÄúThatâÄôs not a retrogression to Herbert Hoover; even Hoover knew better than that.âÄù Myth #3: All we need is better regulation. Conservative columnist Charles Krauthammer calls ObamaâÄôs new budget priorities âÄúthe greatest non sequitur ever foisted upon the American people.âÄù He argues that because the crisis was not triggered by a lack of spending in these areas, boosting spending now will only prolong it: âÄúHealth, education and energy âÄî worthy and weighty as they might be âÄî are not the cause of our financial collapse. And they are not the cure.âÄù Certainly, the immediate cause of this crisis had nothing to do with health, education or energy âÄî it was triggered by negligent financial regulation and a mad rush to help risky buyers purchase houses they could not afford. However, simply tightening the regulatory system is not going to fix this crisis; deficit spending is, and that makes it the cure. But not all sectors are created equal. These are strategic industries that will make America more competitive down the road and also serve as ideal focal points for employment promotion today. All three are areas in which America has enormous comparative advantages. Our health care system âÄî in spite of letting far too many fall through the cracks âÄî also offers the best top-of-the-line medical treatment in human history. Our education system is home to the best universities in the world (including the best technical university, of course), and despite our dependence on imported fossil fuels, for the time being, America holds a remarkable edge in the field of energy technology. All three of these are also industries that are undoubtedly poised for long-term global growth. They are humanityâÄôs frontiers, and they can provide a solid foundation for employing AmericaâÄôs workforce in the future if we devote adequate attention to them now. Heaven forbid they might change American society for the better. Insuring the uninsured, especially during a time of spiraling unemployment, is a moral responsibility âÄî one that we have ignored for far too long. Ending AmericaâÄôs addiction to foreign oil is the right thing to do âÄî for our national security and for our environment. And renewing our commitment to educational excellence and equality is something that we members of the Massachusetts Institute of Technology should understand especially well. This column, accessed via UWire, was originally published in The Tech at the Massachusetts Institute of Technology. Please send comments to [email protected]