Excerpted from an editorial appearing in the Chicago Tribune on Tuesday:
Unemployment is painfully high, illegal immigration is stoking angry resentment and the United States is still fighting two wars. But asked by Gallup last month to identify the scariest threat to our future, Americans said they were most alarmed about the federal debt.
With 79 percent of Americans rating it "extremely serious" or "very serious," it tied with terrorism for the top spot. So what does the Obama administration propose to do about those concerns? It proposes to pile on more debt.
President Barack Obama wants to hand out $50 billion in "emergency" spending to help state and local governments, which he says is necessary to avert "massive layoffs of teachers, police and firefighters." If those are not enough, he used his weekly radio address to ask Congress to block a 21 percent scheduled cut in reimbursements to doctors who treat Medicare patients. That will cost $1 billion more than keeping rates where they are now — and $23 billion more than letting the cuts take effect.
The aid to state and local governments is essentially another round of economic stimulus, based on the assumption that deficit spending serves as a tonic for the sluggish economy. But the evidence that the original $787 billion plan has worked as intended is sketchy at best.
The money for state and local governments would prevent some layoffs. But that is not necessarily a wise thing. Those governments expanded spending during good times without taking into account the prospect of an eventual downturn. Now that the downturn has arrived, depleting their tax revenues, they need to cut back. The federal aid will just postpone that unpleasant obligation.
If the administration thinks laying off public employees is unthinkable, then it should find a way to offset the expense by reducing outlays on other federal programs. The emergency aid should not be allowed to dig us deeper into debt.
The same goes for the "doctor fix." No one thinks it's a good idea to suddenly slash physician payments by 21 percent. But if it's a good idea to keep reimbursement rates from falling, it's also a good idea to pay for the adjustment.