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President Obama’s Budget Gimmicks


The president’s recent budget proposal would raise taxes by $3 trillion over the next decade. Yet the president would put most of these new revenues into new spending rather than deficit reduction. Overall, the national debt would double over the next decade — a total of $74,000 per household in additional debt dumped into the laps of our children and grandchildren.

My new paper, “Obama Budget Raises Taxes and Doubles the National Debt,” details the president’s tax-and-spend spree. It also details President Obama’s numerous budget gimmicks, such as:


·         Rosy Economic Scenario. The White House projects that in 2020 the economy will be nearly $1 trillion larger (adjusted for inflation) than the CBO estimates. If the economy performs closer to the CBO projections, it will raise budget deficits even higher.

·         Excluding Cap-and-Trade Costs. The President’s budget simply removed the costs of the House-passed $800 billion cap-and-trade plan that he endorsed.


·         A $132 Billion “Magic Asterisk.” The President’s budget vaguely claims $132 billion in “program integrity” savings. The White House says this includes cleaning up waste in entitlement programs and increasing IRS enforcement of tax laws. Of course, government waste is easy to identify and difficult to eliminate. The federal government’s track record on rooting out waste is abysmal, and promises to close the “tax gap” of unpaid taxes have not translated into progress.


·         $23 Billion Terminations and Cuts? President Obama also hypes up his $23 billion in proposed spending cuts and terminations (less than 1 percent of all spending). He doesn’t mention that last year, every dollar saved from his $7 billion in spending cuts went into new government spending. Not a dollar went towards deficit reduction. And this year he proposes more of the same.


·         The Baseline Assumes War Spending Rises Forever. Repeating his much-maligned gimmick from last year’s budget, the president first creates a fantasy baseline that assumes the Iraq surge continues forever (which was never U.S. policy), and then “saves” $728 billion against that baseline by ending the surge as scheduled under his policies. It is like a family “saving” $10,000 by first assuming an expensive vacation and then not taking it.


·         Low-balling Discretionary Spending. The President’s budget assumes that non-war, non-emergency discretionary spending will expand by just 30 percent over the next decade, just slightly faster than inflation. But in reality, discretionary spending surged by 104 percent during the past decade. This free-spending Democratic Congress provides no reason to expect sudden austerity. If discretionary spending instead grows at the same rate as the economy (about 5 percent nominally per year), it would add about $400 billion to the 2020 budget deficit.

·         PAYGO. The President bases much of his budget restraint on Pay-as-You-Go rules that purportedly guarantee that all new spending must be offset. Except that PAYGO exempts all discretionary spending (40 percent of the budget). It exempts the automatic annual growth of Social Security, Medicare, and Medicaid, which threatens Washington’s long-run solvency. It exempts the endless stream of emergency “stimulus” bills. The few places it does apply, Congress waives the law. PAYGO is designed to serve more as a talking point than as a tool for deficit reduction.


·         Deficit Commission. Rather than take the lead and propose entitlement reforms that would reduce the deficit, the president has appointed a commission to devise a plan. While some commissions may be useful, this one likely will not. The deficit commission currently plans to write its recommendations in a back room without public hearings or public buy-in. These recommendations won’t be unveiled until after the election, where they would be voted on by a lame-duck Congress — if they are even voted on at all (there is no “fast-track” procedure guaranteeing a vote). The American people will be unlikely to embrace major tax and spending changes thrust upon them with so little transparency and voted on by an unaccountable lame-duck Congress.

Again, this and more can be found here.

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


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