But why did Obama say that?

Everybody is quoting the remarks President Obama made yesterday in New Mexico, in which he called deficit spending “unsustainable“:

“We can’t keep on just borrowing from China . . We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt. . . . It will have a dampening effect on our economy.”

Which sounds like he read my blog yesterday. Given the $789 billion stimulus that Obama pushed through Congress in February, and given that his first annual budget plan is $1.8 trillion in the red, this “debt is bad” speech provokes a lot of eye-rolling from conservatives. Instapundit is flabbergasted, for example, and Professor Jacobson sees this as an expedition into “economic bizarro land.”

The question that intrigues me, however, is why Obama suddenly decided to start talking like a fiscal hawk. Did his speechwriters just decide to recycle phrases from last year’s campaign speeches, when Obama routinely excoriated the Bush administration for its deficit spending? Or is this some new rhetorical gambit?

Jules Crittenden says he’s actually “encouraged” to hear Obama acknowledge the negative economic impact of deficit spending. Don’t get encouraged too fast, Jules.

My guess is that this “debt is bad” line is not about cutting spending. It’s about raising taxes.

That is to say, if we assume that this speech about “unsustainable” debt signals a new theme that will become part of the administration’s economic policy, Obama can only be laying the groundwork for massive tax hikes:

  • A. We can’t keep borrowing money, because that will “have a dampening effect on our economy”;
  • B. However, we can’t cut entitlement spending, because that would hurt poor people and old people who are dependent on federal aid;
  • Ergo . . .

  • C. We must raise taxes on “the rich,” who “aren’t paying their fair share.”

And if any critic dares to point out that raising taxes will also “have a dampening effect,” Obama will be prepared to accuse them of fiscal irresponsibility. This is essentially a repeat of what Walter Mondale did in his 1984 presidential campaign, when he promised to raise taxes, trying to cast the tax-cutting Reagan as a reckless spendthrift.

We’ll see if Obama has any more luck with this argument than Mondale did.

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