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A $2.1 Trillion Spending Increase



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Here’s the bottom line on President Obama’s budget: It’s a massive spending increase when what the country desperately needs is a plan for fiscal discipline.

According to the Administration’s own projections, the federal budget deficit will fall no lower than $533 billion over the next ten years and the country will add an astounding $7 trillion to the national debt. And that’s not because the economy is expected to sputter indefinitely. Their estimates assume robust growth resumes in 2010 for good.

The reason the government will continue to run massive deficits under this budget plan is because President Obama is a world-class spender.

Forget the phony straw-man “baseline” they present (according to their accounting, they “cut” spending by nearly $1 trillion over ten years).

Let’s start with the baseline before they cook the books. It shows a ten-year (2010 to 2019) deficit of $1.6 trillion, with taxes of $37.6 trillion, spending of $35.8 trillion, and net interest costs of $3.4 trillion over that period (these numbers can be calculated — with some effort — from the bridge tables the Administration provided).

The Obama budget, however, spends $37.7 trillion over ten years, or $1.8 trillion more than the real baseline. And that doesn’t even count the health-care plan, which would add another $0.3 trillion (some of the $0.6 in added health-care costs are offset with spending cuts).

All totaled, then, the Obama budget increases spending by about $2.1 trillion. Throw interest costs for all the new debt in and total outlays will go up by nearly $3.3 trillion over the coming decade.

Just as disturbing as the numbers are the policies. On health care, the Administration is calling essentially the same play as they did on the “stimulus.” Provide general principles which mean very little and hand off to the Congress a pot of money to spend — in this case $634 billion over ten years. This is not a recipe for financial discipline or for using sound economic theory to inform program design.

In his speech before Congress, the president implied that he had a plan to root out waste and inefficiency in health care which would solve our budgetary problems. Where is that plan? There are several cuts proposed in health care, mostly for insurers and drug companies, but spending on Medicare and Medicaid will still double from 2009 to 2019 in the Obama budget, and that’s before the inevitable spending increases associated with expanding insurance coverage. There is nothing offered that would come close to solving either our entitlement or health-care cost problem. Where does the Administration think this plan will come from? The Congress?

The president has repeatedly said he plans to stop kicking the can down the road. Now is the time for making tough choices, he scolds. But his budget makes no such choices, and Congress certainly won’t either. 

– James C. Capretta is a fellow at the Ethics and Public Policy Center.  He was an associate director of the Office of Management and Budget from 2001 to 2004.



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