The Truth About Obama's 2012 Budget

Separating economic myth from economic fact

Editor’s Note: Reason columnist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Myth 1: Under President Barack Obama’s 2012 budget, we will “live within our means”.

Fact 1: Debt and spending will continue to grow and deficits will continue to persist under the president’s Fiscal Year 2012 Budget Request.

White House Office of Management and Budget Director Jack Lew claims that President Obama’s new budget calls for a “sustainable” deficit but the facts tell a different story. Despite a nominal commitment to fiscal reform, the president’s budget calls for $3.7 trillion in spending. That’s more spending than occurred in fiscal year 2010. This spending will result in a projected net deficit of $1.6 trillion, the highest level of deficit in U.S. history.

Under the president’s budget, total spending would increase 49 percent over the next 10 years. Even after inflation, this represents a 30 percent increase in spending.

If we keep to this course, publically-held debt will double from $9 trillion to $18 trillion in 2021—a figure that represents 77 percent of GDP by 2021.

Nor is this the first time Obama has made unrealistic budgetary promises. The president’s first budget was called “A New Era of Responsibility.” The chart below shows the differences between that claim and the economic reality. The blue line represents the deficit promises made by Obama’s first budget and the red line represents what the president says will happen now.

As you can see, back in 2010, the president promised to cut the deficit to $912 billion in 2011 and to $581 billion by 2012. Based on the president’s 2012 budget released last week, the deficits in 2011 and 2012 will be twice the size originally promised. In 2011, the deficit will be $1.6 trillion, not $912 billion. In 2012, the deficit is expected to be $1.1 trillion, not $581 million.

Take a moment to let these numbers sink in. Over the course of two years, projected deficits have increased by $1.5 trillion. Not even primary budget balance, one of the goals set by the administration, is achieved by this new proposal.

Myth 2: The president’s budget reduces 2012 discretionary spending by 5 percent. This will bring domestic discretionary spending to the lowest level since Dwight Eisenhower was president.

Fact 2: Domestic discretionary spending has been decreasing steadily as a proportion of total spending due the growth of mandatory entitlement spending. Moreover, many of the “cuts” in the president’s budget are actually just budgetary gimmicks.

The budget focuses on domestic, non-discretionary spending cuts, which would reach 37 percent of all federal spending in 2010. Yet this share of the budget has been decreasing steadily as a total share of federal spending since at least the 1960’s due to the growth in entitlements. The president’s claim he will decrease this level of spending is therefore meaningless.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • ||

    Graphs or so small they are hard to read... Is ink getting expensive?

  • Third Page||

    Fact 4: The Republican cuts may be bigger than the president’s cuts but they still barely scratch the surface of our overspending problem.

    First, the proposed Republican cuts only apply to non-defense discretionary spending, which is just 12 percent of the budget.

    Second, as the chart below shows, even when it comes to Republican cuts to the non-defense part of the budget, spending still won’t go down to 2008 levels as promised.

    Oh, and I have a couple of bar graphs too.

  • ||

    I'll see your bar graphs and raise you one Bar Refaeli...

  • ||

    alt text: This ain't the only thing goin' up yo ass....

  • DLM||

    We should have a fourth branch of government corresponding to what the CBO & GAO do now, but without the pressure from the President and Congress to cook the books. It would have authority to audit any financial aspect of government.

  • Resto Druid FTW||

    Wait, something released by a politician amounts to little more than smoke and mirrors?

    Say it ain't so!

  • DADIODADDY||

    "sustainable deficit"...WTF?

  • ||

    Yeah, it's like "sustainable" cancer.

  • Ekim||

    Economists encourage wanton borrowing, advising that printers can just print the debt away. For lowly citizens, this means that economists are advising that printers print their pensions and life savings away.

  • Gregory Smith||

    Buy guns and gold, people! If Obama keeps running the country this way we're all gonna have to make our way to Barter City.

    In the meantime, could somebody tell Michelle Obama that she does not need an office staff of 43?

    Next Smoking Ban? Bus Stops.
    http://libertarians4freedom.bl.....stops.html

  • littleflw||

  • ||

    there war will stopASK NOT WHAT YOUR COUNTRY CAN DO FOR YOU BUT WHAT YOU AN DO FOR YOUR COUNTRY

    Brief Summary: CO2/DOSE NOT = GLOBAL WARNING
    OR ENCOMPASS THE PROBLEM
    The Bright Morning Stars will restore
    The Bio-Electrode Magnesium Levels in our Atmosphere willA restore by
    Producing Molly Cellulite
    That life will rebuild itself and we can maintain our planet with
    Light, care, and reduce the energy required .With Seven Satellite it
    Will require and the cooperation of all cities and every nations
    Within range not use Public Lighting unless need.
    The start up cost is enormous, but the cost is low to preserve the
    Only earth we have and THE {{MEMBRANE ARE WORLD REQUIRES} AND REPAIR
    Give all children what is their better
    AND LET THEM LIVE

    Look at the moon it’s quit a thing to view orange eclipse’s DAILY.;
    As well the carbohydrate’s in random species GLOBAL
    Robert Steneck

    1995the northern hemisphere is risen temp do to ring of fire and
    Activity and more SNOW MELTS FROM BELOW.
    I told them it would require FIFTEEN YEAR, S TO PREVENT WEN REPOSED
    WE HAVE A GRATER ISSUES WE CAN ESTIMATE IN DUR ONLY 22% SERVILE RATE I THY WANT TO DANCE THAT PEOPLE
    THANCK YOU

    ROBERT
    STENECK.
    WITH (GOD LOVE)
    (AID, S AS WELL AS HEPATITIS C)

    IT, is & (MULEFICTIONS}} (>DISEASE)// [(POST /
    =CRYOGENIC`-0} `-/'CROH=; LESION’’’}}* And many OTHER
    DISEASE NOT KEEP IN CONTAINMENT OR CURE" WITH EN}}

    With the treatment two use for above with (SEROMYCIN). As the
    Toxins in water very do not exceed more then
    ((TWO GRAMS SODIUM NITRATE'S TOTAL INTAKE}} OR EAT BEFORE REMOVE ALL
    SALT FROM DIET FLESH AS WELL FOR CANCER PATIENTS AS WELL FOR TREATMENT
    THAT CONCEDE
    As the body finds and aborts foreign subs tents and recovers ENHANCAEIVLY
    Lab test will not be collusive all lesion they refer to as cancer breast
    Cancer as well and more
    The I can name
    AND POTABILITY OVER NINE HUNDRED MILLION LIVE; S SAVED GOD BLESS

    FEMALE NEED REQAUR THAT NEED RINSE BREST.S VALVE TO RINSE TO CLEANSES
    AS GOD INTENDED GRATE ANTIBODY'S WILL PRO SEED

    HEART MURMUR, S


    {(BISCOE TREE PRUNUS PERICA}}
    Eat one hand full of pick leaves for top of trees eat quarterly at one
    Time to elasticate arteries
    For full body and give’s energy and remove pain an mobility and youth.


    {{ CURE FOR ALL, DE.COLI/S DISEASE, S]]

    MELATONIN LEG EXTRACT;" IN ARMOR ONE IN COLI, S GIVE TO ALL CANCER
    RESEARCH


    IN MEMORY OF BOBBY KENNEDY
    A GOOD MAN
    GOD BLESS THE UNITED STATE OF AMERICA

    READ PAGE 30-31 53 AND 78 JAMES.D WATSON (DNA) THE SECRET OF LIFE THANK YOU AND
    SEE DC GET, S IT [TABER, S CYCLOPEDIC MEDICAL DICTIONARY REPORT

    PAGE.S 55-57]] HIV NOT APPLICABIE [[HIVE, S]]

    God grace thank you bob STENECK

    On Thu, Jan 20, 2011 at 4:06 PM, Joe Biden wrote:

    Robert --

    It was two years ago today that Barack and I were sworn in, and I remember what he said like it was this morning:

    "The challenges we face are real, they are serious, and they are many. They will not be met easily or in a short span of time. But know this, America: They will be met."

    Even then, we knew it would take time. We knew it would be hard. And we knew we would sometimes make mistakes.

    But we did not lose sight of what we came to do.

    Together, we took on difficult issues that had been put off for decades. And some say we have accomplished more in two years than any administration since Roosevelt's.

    Take it from me, that's something you should take to heart -- because none of it would have been possible without your hard work.

    But the job's not done.

    I am reminded of that every time I travel to the small towns in Pennsylvania, Iowa, New Mexico -- all over -- and on the weekends I get home to Delaware. I meet folks who are still struggling, who want to know when the recovery will start to turn things around for their family.

    These people are why we can't quit.

    And moving forward with this new Congress, we will need to defend what we've achieved together as aggressively as we pursue the goals that remain.

    I believe in the power of public service because I've seen what it has done throughout our country's history to combat social and economic injustice. And I am proud to say it's a story that continues in the remarkable progress we've made in the past two years. To tell it, Organizing for America has written Promises Kept.

    Take a look at the Promises Kept report of all the work we've done in two years -- you can download a copy or have a few sent to you to share with friends.

    There's a whole lot to be proud of.

    Of course, the big ones come to mind first: historic health insurance reform, which is reining in the insurance companies and helping control the cost of care for millions of Americans; Wall Street reform, which put in place the toughest consumer protections ever; and the end of combat operations in Iraq, which brought more than 100,000 troops home.

    And there is so much more you've helped achieve that is right now improving lives across the country:

    -- We passed the Recovery Act, which saved and created more than 3 million jobs, provided the largest middle-class tax cut in a generation, and made landmark investments in clean energy, infrastructure, and education.

    -- We made critical investments in General Motors and Chrysler, saving tens of thousands of jobs -- and perhaps the companies -- and spurring a rebirth of the American car industry.

    -- We wrote into law student loan reform and credit card reform, which ended the worst abuses of the banking industries and are making lending fair for American families.

    -- We put two new Supreme Court justices on the bench -- Sonia Sotomayor and Elena Kagan, who bring rich and diverse experience to the Court.

    -- We have begun to reset America's relationship with the international community, from the ratification of a new START nuclear arms treaty with Russia to tough new sanctions on Iran to strengthening our long-term partnership with a unified Iraq.

    -- And we finally repealed "Don't Ask, Don't Tell," which was the right thing to do -- not only because it makes our military stronger at a time when it needs to be the strongest, but because we are seeking that military might with an abiding sense of justice.

    Telling the story of the past two years will be critical to the fights ahead. And it's not just the story of this president or this White House -- it's your story.

    And it is literally proof that the organizing you do on the ground -- the conversations you have with your friends and neighbors -- is working.

    Now, I'm not going to say the last two years were easy -- and I won't tell you the fights ahead are going to get any easier.

    But I didn't sign up for a cake walk. And I'm pretty sure you didn't either.

    We're here to move our country forward. We're here to lay a new foundation for this country -- for our economy, for our politics, and for our children's and grandchildren's futures.

    And, as Barack says, what we will be able to accomplish together is in your hands.

    It's how hard we all work, and how well we all tell this story.

    Take a few minutes to read Promises Kept -- and let's keep moving:

    http://my.barackobama.com/PromisesKept

    Thanks for everything,

    Joe

    {{ CURE FOR ALL, DE.COLI/S DISEASE, S]]

    MELATONIN LEG EXTRACT;" IN ARMOR ONE IN COLI, S GIVE TO ALL CANCER
    RESEARCH

  • ||

    The budget deficit has two major contributing factors. Number one GOP and Dems have to put aside their agendas and have a real discussion or we are doomed no matter what else we do. Second, defense spending (defense of the empire) is the downfall throughout history of great and powerful societies. It will be the end of ours too if we do not drastically cut defense spending.

    Social Security should not be lumped in with the above two. If govt would just stop stealing its revenue, it is solvent for a long time and the next generation can worry about it. We have enough to deal with regarding the other two.
    The biggest lie(perpetrated by ALL politician's) is that cuts to discressonary spending will do any good without addressing health and defense.

  • ||

    Anyone who has had to manage a household budget knows you cannot spend mor than you have . You can borrow, but that cuts into what you have available when it comes to payday.(think- pay the bills)

    You cnat pay with what you don't have. Many are in trouble fiscally because they borrowed more that they can make payments on. Zip! bankruptcy. It relieves you, but it causes others to have to have a diminshed income putting them in a position of short fiunds. Sped what you ain't got and make others pay for it. You then plead for cedit when you have proven you are untrustworthy to lend to. You have shot yourself in the foot because of your greed. Somewhat stupid, even for a politician.

  • منتدى العرب||

    Thank you

  • Louis Vuitton 1904 Monogram Be||

    http://www.louisvuitton.be/lou.....-p-44.html I really loved reading your blog. It was very well authored and easy to understand. Unlike additional blogs I have read which are really not good. I also found your posts very interesting. In fact after reading, I had to go show it to my friend and he enjoyed it as well!

  • nike running shoes||

    is good

  • دليل||

    asfgasg

  • ndru||

    thank you for this excellent article ndru from ubytovanie na slovensku

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement