The Corner

A Closer Look at Obama’s Budget

As we dig into the President’s budget, more emerges:

1) Remember the President stating his budget “identified $2 trillion in savings over the next decade?” It actually increases spending by $1 trillion. But he classifies as “savings” $1.4 trillion in tax increases (apparently savings for the government, not for you) and $1.5 trillion “saved” in Iraq relative to a fantasy baseline that otherwise assumes current spending levels forever. The Iraq gimmick is the equivalent of a family deciding to “save” $10,000 by first assuming an expensive vacation and then not taking it.

2) Real federal spending per household — $24,000 before the recession — would reach $33,000 per household by 2019. Between 2008 and 2013, the $5.7 trillion in new debt will come to $48,000 per household.

3) It is easy to “cut the deficit in half” after you’ve quadrupled it. Furthermore, three upcoming developments — the end of the recession, troop pullout in Iraq, and phase-out of the supposedly-temporary “stimulus” spending — would, by themselves, cut the 2013 budget deficit in half. President Bush was slammed for averaging $300 billion budget deficits while funding a war. President Obama will be praised for running $500 billion deficits in 2013 at a time of (assumed) peace and prosperity.

4) The President’s budget proposes a new PAYGO law — and then violates it by $3.4 trillion.

5) The tax increases are staggering. The President would raise taxes by $1 trillion on the top 2.5 million tax filers. That comes to $400,000 per tax filer over ten years. And despite these harsh tax hikes (and a $646 billion cap-and-trade tax hike), the President’s rosy budget assumes a much faster economic recovery than CBO or the Blue Chip Consensus.

Brian Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.

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