Obama’s budget insanity
Posted by Richard on February 14, 2012
The Fiscal Year 2008 Bush budget (the year before Hank Paulson panicked Bush into bailout mode with warnings of impending economic collapse):
- Spending: $2.9 trillion (that’s $2,900 billion)
- Deficit: $455 billion
- New taxes: None
- Federal debt: $9.99 trillion
February 23, 2009 Obama speech to the National Governors Association:
“Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to next budget, the next administration, or the next generation,” he said. “That’s why today I’m pledging to cut the deficit we inherited by half by the end of my first term in office.”
Obama said he would reinstate the pay-as-you-go rule requiring any new expenditure to be set off by a cut in spending.
The Fiscal Year 2013 Obama budget:
- Spending: $3.8 trillion (that’s $3,800 billion) in FY2013; $5.8 trillion in 2022; $47 trillion over 10 years
- Deficit: $901 billion in 2013 (but AFP says “if we strip out the budget’s unrealistic assumptions, yet another trillion-dollar-plus deficit is nearly certain. … The past three years the nonpartisan Congressional Budget Office issued an analysis of the President’s budget. They found the deficits were actually 20 percent higher than the President claimed.)
- New taxes: $1.9 trillion over 10 years
- Federal debt: $16.2+ trillion for 2013; over $25 trillion by 2021, according to ALG’s Bill Wilson
So how can the administration claim to be cutting the deficit by $4 trillion over 10 years and yet have annual spending grow from $3.8 trillion to $5.8 trillion (a 53% increase)? There’s the double-counting of last year’s “cuts” and a good helping of what AFP calls tricks and gimmicks. But mainly it’s the baseline budgeting scam, which I explained last August. ALG’s Bill Wilson has some numbers (emphasis added):
The Office of Management and Budget’s (OMB) baseline for 2013-2022 says outlays will total $47.053 trillion. Obama’s proposed budget takes that to $46.959 trillion. Since spending actually increases every year under Obama’s proposal, the only cut is off of the baseline — and that’s just $94 billion of so-called “cuts”.
Meanwhile, OMB says revenues over the next ten years will total $38.391 trillion. Under Obama’s proposal, that goes up to $40.274 trillion — an increase of $1.883 trillion in taxes, mostly on job creators.
By our count, that’s about $20 of tax increases for every dollar of “cuts,” and those are not even real cuts to the actual budget. Spending would still increase every single year under Obama’s proposal. Meanwhile, the tax hikes are real.
The latest Obama budget would be laughable if the numbers weren’t so sobering and the consequences of continuing down this path weren’t so dire.
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