On Monday, I noted that the president’s budget, with all its tax increases and “spending cuts,” fails to close the deficit — ever. Questioned on this point by Representative Scott Garrett during a House Budget Committee hearing yesterday, OMB acting director Jeffrey Zients had to agree: Under the proposed plan, the budget is never balanced. So much for a balanced approach.
This is bad news. As we know, most of the spending cuts will never materialize. Also, I suspect that the president’s plan will have a hard time delivering on the promise to increase tax collection above 19 percent of GDP as soon as 2015 and grow revenue to 20.1 percent of GDP by 2022 (see Table S-1).
More importantly, the data show that budget numbers are not to be trusted under any circumstances. Case in point: the president’s first budget. Back in 2009, he promised that by 2012 his budget would have reduced the deficit in half. The following chart shows how far off his predictions were.
The blue bars represent Obama’s projections of deficits in the budget he submitted for fiscal year 2010. The red bars are the actual deficits and, in the case of 2012 and 2013, the projections in this year’s budget. In 2010 and 2011, the deficits were worse than projected. Not surprisingly, the further the projections, the less accurate they became. For instance, in 2009 the president promised that the deficit for 2012 would be less than $600 billion. In reality, it will be $1.3 trillion.
In the president’s defense, the same thing can be said about most budget predictions by previous administrations (even though the scale of the mistake is quite large). But this example goes a long way to show that the FY 2013 budget numbers are not to be trusted.