Obama's Fiscal Fakery
How can you pay down the national debt by building it up?
Decrying "a decade of deficits" on Monday, President Obama declared that "my budget lays out a path for how we can pay down these debts." It is hard to see how that can be true, since his plan would add $6.7 trillion to the national debt during the next decade.
Obama thus begins his fourth year in office the way he began his first, preaching prudence while practicing profligacy. Back then, you may recall, he promised to cut the deficit, at that point estimated to be $1.3 trillion, "at least in half by the end of his first term," as a spokesman for the Office of Management and Budget put it in February 2009.
How did that work out? Obama's first budget projected a deficit of $533 billion for fiscal year 2013. The budget he unveiled this week raises that figure to $901 billion, so he missed his target by about 70 percent.
What happened? In 2009 Obama had a "strategy for investing in what we need, cutting what we don't, and restoring fiscal discipline." In practice, given the president's broad view of what counts as a necessary investment, that meant spending more while pretending to spend less. This year the deficit is expected to be more than $1.3 trillion, which is higher than it was last year, which was higher than it was the year before.
Yet Obama is still singing the same tune. While declaring that "the fiscal realities we face require hard choices" and bemoaning "the chronic failure to confront difficult decisions," he says the government must "invest in those things that are absolutely critical to preparing our people and our nation for the economic competition of our time." Apparently those things include not only "education, innovation, and infrastructure" but also such seemingly noncritical programs as the National Endowment for the Arts, which gets a 5 percent boost under his plan.
Abolishing the NEA, of course, would not yield much savings, since it accounts for only 0.004 percent of federal spending. But the program is symbolically significant, since it is totally unnecessary, and it's not as if the president is above touting tiny spending cuts. His budget plan includes a 205-page volume detailing "210 cuts, consolidations, and savings measures" that together total $24 billion next year, less than 1 percent of federal spending.
Obama also brags that the Patient Protection and Affordable Care Act will "reduce our budget deficits by more than $200 billion in its first decade," citing a projection by the Congressional Budget Office. That estimate, the CBO warns, is "quite uncertain," hinging on Medicare spending controls that "may be difficult to sustain" and insurance subsidy rates that Congress is apt to raise in response to political pressure.
Even if the health care law does leave deficits a bit lower than they were otherwise expected to be, that will be thanks to more than $800 billion in new taxes, fees, and penalties it imposes during its first decade. Similarly, the White House claims "more than $4 trillion in balanced deficit reduction" from 2013 through 2022, but that includes nearly $2 trillion in tax hikes (which Obama prefers to call "tax reform"). The administration also counts $1 trillion in reductions from projected spending that were enacted last summer and $848 billion in fictitious savings from war spending that never would have happened.
At the same time, the administration's figure ignores the hundreds of billions of dollars that will be required to maintain Medicare patients' access to care by preventing doctors from exiting the program because of scheduled rate cuts. Once such "gimmicks" are taken into account, the Republican-controlled House Budget Committee calculates, the $2 trillion in spending reductions claimed by the president shrinks to $413 billion.
Even then, the president's "savings" do not amount to cuts in overall spending, which would continue to rise every year under his proposal. Although Obama calls his plan "balanced," following it would mean the budget never is.
Jacob Sullum is a senior editor at Reason and a nationally syndicated columnist. Follow him on Twitter.
© Copyright 2012 by Creators Syndicate Inc.
