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White House Tries to Spin David Brooks


David Brooks’s column today offers the Obama administration equal time to defend its budget (I thought that was what the NYT’s other columnists were for). The White House spin was predictably underwhelming, but a few major points are worth highlighting:

1) The administration pats itself on the back for eventually bringing spending “down” to 22% of GDP (the health plan brings it to 23% by 2019) from the current bailout/stimulus-inflated spending levels. But Washington spent 20% of GDP before the recession, and has spent 23% of GDP only three other times in the post-war era. Those differences may seem small, yet they would expand government by $8,000 per household. And anyone who thinks only the “rich” will get slapped with the tax bill is dreaming.

2) The White House is almost certainly lowballing its spending figures. They assume that: A) all temporary stimulus spending, such as higher Pell Grants and health spending, will be allowed to expire; B) discretionary spending growth will be held to 2% annually after 2012 (rather than the 8% growth each of the past two years); and C) the $634 billion down payment on universal health care will not be expanded. Fixing those assumptions brings spending to 25% of GDP by 2019 — with annual $1.2 trillion deficits.

3) The administration’s optimistic economic assumptions artificially reduce their deficit estimates. Assuming 60% faster economic growth than the Blue Chip Consensus estimates by 2012 should raise eyebrows. But to assume this growth even after passing one of the largest tax increases in American history, and slamming the energy sector with a $634 billion cap-and-trade energy tax is simply not credible. If growth comes in closer to the Blue Chip estimate, then annual revenues will be $100-$200 billion lower.

In reality, this budget will likely bring about the largest peacetime government in American history, permanent $1 trillion budget deficits, and no solution to the coming costs of Social Security, Medicare, and Medicaid. There’s no spinning that.

 – Brian Riedl is Grover M. Hermann fellow for federal budgetary affairs at the Heritage Foundation.


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