The United States can learn important budgetary lessons from Socrates. No, I don’t mean the ancient Greek philosopher. I’m talking about Portugal’s former socialist prime minister, Jose Socrates.
Socrates was Portugal’s prime minister until last Wednesday, when he resigned after the Portuguese parliament rejected his proposed austerity measures. His austerity plan included budget cuts but also would have raised income and value-added taxes. His failure to pass the measure has fueled speculation that Portugal will need a bailout and may also lead credit agencies to downgrade the country’s credit rating.
An official from the center-right Social Democratic Party explained that his party rejected the budget proposal because the massive tax hikes it included were unnecessary: “Cutting government spending alone will be enough to fulfill all the budget deficit targets.”
Republican Congressman Paul Ryan made a similar comment recently: “We don’t have a revenue problem. We have a spending problem.”
Portugal’s Social Democrats do not oppose closing the budget gap in general. They opposed the prime minister’s plan because it called for tax hikes at a time when the country’s unemployment rate is 11.2 percent. Sound familiar?
On February 14th, President Obama sent his 2012 budget to Congress — a budget that includes massive tax hikes but few budget cuts. At a time when the U.S. economy is stagnant, the president wants to increase taxes to the tune of $1.5 trillion over the next decade. The budget is further proof that President Obama isn’t serious about reining in our out-of-control deficits.
In fact, Obama threatened to veto the House-passed continuing resolution that would have financed the government for the rest of the year and cut $61 billion from the budget. The president’s opposition to the bill ensured its defeat.
Now, Congress is stuck passing short-term budgets every two or three weeks. The most recent continuing resolution was passed on March 17th and is set to expire on April 8th. This type of cowardice is exactly what the American people hate about Washington politics.
Instead of standing up for the American people and fixing our problems, Congressional Democrats play games with a small amount of cuts. Cutting $61 billion from a budget of $3.7 trillion should be non-controversial. It was meant to be a small amount of cuts that would get the ball rolling and lead to more substantial cuts in the 2012 budget.
At least Portugal is doing something about its problem. Portugal’s 2011 deficit is expected to be 4.6 percent. However, our president’s own budget analysts at the Office of Management and Budget project that the U.S. deficit will surge to 10.9 percent of GDP in 2011, up from 8.9 percent of GDP in 2010.
Other countries are attempting to find solutions for their fiscal problems while we are exacerbating our own.
So to President Obama, I offer the following advice: Use Socrates’ defeat as a “teachable moment.” Tax hikes will not solve our fiscal crisis. Our budget problems can only be cured by rolling back big government and making significant spending cuts.
Gary Aldrich is the president of Liberty Central. He is also the president of The Patrick Henry Center for Individual Liberty.