We have been waiting for two months to get a budget out of the White House, but the president apparently did not use his time to come up with anything different than what he has in the past. As I expected, this budget calls for more spending, more taxes, and no reform. A few points worth noting:
1. The FY2014 budget figure is astonishing: $3.77 trillion.
This is the only number that really matters and should be taken seriously, considering the amount of rosy assumptions and wishful thinking built in the out-year numbers. And in FY2014 the president went all out. I assumed his spending proposal would be higher than the FY 2013 number and the Republican budgets (both Ryan and Paul), but I didn’t think he would spend more than the Senate Democrat plan. Here is a recap of other headline budget figures for 2014:
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Senator Rand Paul: $3.2 trillion.
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Chairman Paul Ryan: $3.53 trillion.
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President Obama: $3.77 trillion.
So much for his budget being conciliatory or trying to find a middle ground. President Obama’s budget would spend $160 billion more in FY 2014 than the Congressional Budget Office’s baseline. That’s a lot of extra spending.
If it happens, it will put an end to the relatively flat spending levels (even decreasing levels) that we have had in the last few year (which you can see in this chart).
2. Deficit reduction through tax increases only.
The president claims that his budget reduces the deficit over ten years by $1.8 trillion ($600 billion in revenues, $1.2 trillion in spending cuts.) It doesn’t. It only reduces the deficit by $600 billion, and only through tax increases. That’s because $1.2 trillion of the $1.8 trillion number comes from replacing the sequester cuts. So basically, the president does what he has been doing for many of his budgets, taking credit for cuts (or reductions in the growth of spending, really) that are already in place. Here is CQ on the issue:
Although the White House will tout its “balanced” 10-year, $1.8 trillion deficit reduction plan included in the budget, the net result after canceling the $1.2 trillion sequester would be about a $600 billion net reduction in the deficit over a decade — about the same as the additional tax hikes on the wealthy that the president wants.
That’s right. Again, the actual deficit reduction is only $600 billion, all on the tax side — from closing ”assorted loopholes, including those for carried interest, corporate jets and oil companies.” Once I get my hands on a budget, I’ll be curious to see what the president plans to do with the $67 billion in tax-credit extenders he granted his corporate friends in the fiscal-cliff deal in January. At the time, he didn’t seem to think that all loopholes are problematic.
We can also expect that much of the deficit reduction rests the misguided belief that the economy is going to grow thanks to the president’s plan to grow the government generously.
3. A Dessert Now and Dessert Tomorrow approach to budgeting
I can’t say that I’m impressed by the president’s courage. His approach is effectively this: Spend today and promise that tomorrow others will make the tough choices he won’t. As CQ put is:
Many of the president’s plans to cut spending phase in toward the end of the 10-year budget window, effectively trading the pain of the sequester now for entitlement trims later.
As I said, the president doesn’t want to make any other tough but necessary choices to put our budget on a sustainable fiscal path. The budget message is: Grow spending today, and pretend that whoever is in power in 2016 will cut spending and reform entitlements then.
More later.
Update: Expect a lot of reporting about how the president’s budget is a fair middle ground between Ryan and Murray. See, for instance, The Washington Post this morning. The paper reports that unnamed “Administration officials” call the Obama budget “a path to compromise, a centrist course that avoids the extreme spending cuts of the House Republican budget as well as the $1 trillion tax hike endorsed last month by Senate Democrats.” That’s when you remind people that the president will spend more in FY2014 than the Murray budget.