Budget

5 Things to Know About President Obama's Budget Proposal

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Whitehouse.gov

The most important thing to know about President Obama's budget proposal is that it won't go anywhere. It's not intended to, and the White House isn't even bothering to pretend otherwise.

Instead, it's an election-year wish list—or, if you prefer the White House's gentler spin, a statement of values. "Our budget is about choices, it's about values," President Obama said earlier this week. Here are a few of the choices his budget would have the nation make.

Annual spending would rise over the next decade. Outlays would grow from $3.9 trillion in 2015 to $5.91 trillion in 2024. In theory, the growth would be roughly commensurate with growth in the economy, ticking up just slightly from 21.4 percent of GDP to 21.5 percent over the course of a decade. But the White House has been coy with details about its assumptions regarding the projected growth rate of the economy, so it's hard to assess this beyond face value.

Tax revenues would rise as a percentage of the economy. Obama's budget would raise revenue levels closer to spending levels in order to sustain the spending while reducing annual deficits. Revenues would rise from $3.34 trillion, or 18.3 percent of the economy, in 2015 up to $5.48 trillion, or 19.9 percent of the economy, in 2024. That would be one of the highest annual levels in the nation's history. 

The national debt would become even bigger. Annual deficits would decrease, according to administration projections, dropping down to 1.6 percent of the economy, thanks in large part to increased tax revenue levels that partially close the gap between collections and spending. But even smaller annual deficits still add to the federal tab. Over the next decade, the president's budget plan would leave us with a debt that's $8.3 trillion higher than it is now.

Growing debt would lead to bigger interest payments. This year, we'd spend $223 billion on debt service. By 2024, the president's proposal projects interest payments of about $812 billion.

The budget would never, ever balance. The White House even seems to have given up its old line about getting the budget into "primary balance"—a technical annual balance that ignores the interest cost of carrying a heavy debt load. (According to the Congressional Budget Office, that budget plan never reached primary balance either.) 

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  1. So this President proposes more spending, debt, and taxes. I would be shocked if it wasn’t the case.

  2. “Oh, the Austerity!”

    Why didn’t we pass the balanced budget amendment again?

    1. We didn’t have to pass a balanced budget amendment – we passed a debt-limit ceiling law which means the government absolutely, positively cannot borrow any more money beyond what they’ve already borrowed.

  3. Tax revenues would rise as a percentage of the economy.

    Oh, if only the policy makers could actually engineer that for their schemes.

    1. Smart people smart models. Smarter people smarter models. Smarterer people smarterer models. We’re all in on this logic, bless us.

  4. The only time we’ve ever got 20% of GDP in tax revenue was a couple years in the late 90s/early 2000s at the height of the tech boom. Color me skeptical that the government is gonna collect that much (barring massive tax raises on the middle class and poor, via a VAT or something like that) of GDP. That doesn’t even account for how overly optimistic those GDP figures are.

  5. Looks like the usual raise taxes now, cut spending later BS to me.

    Fortunately, we all know this budget, like every budget proposed by this administration, is DOA.

    1. Fortunately, we all know this budget, like every budget proposed by this administration, is DOA.

      Never underestimate the power of WarBoehner.

  6. Revenues would rise from $3.34 trillion, or 18.3 percent of the economy, in 2015 up to $5.48 trillion, or 19.9 percent of the economy, in 2024.

    What a fantasy. Revenues have only gone above 19% of GDP eight times since the Truman administration, no matter where the tax levels were located. The average is about 17.5%.

    It’s laughable that leftists call Obama “a student of history” when he can’t even read the budget history his own OMB produces.

    1. So he’s…wait for it… on the wrong side of history?

  7. Can we just declare bankruptcy and have a “Going Out of Business” sale and get it over with?

    1. I certainly hope so. I want an MRAP. And a tank. The commute will never be the same.

      1. Is it still accurate to call it a commute when you just roll over everything on your way to work?

        1. I think that’s called “fun”.

  8. Growing debt would lead to bigger interest payments. This year, we’d spend $223 billion on debt service.

    The 10 year rate will not stay under 3% forever, no matter what the Fed wants you to think.

    1. That was my question: what interest rate are they assuming?

      A reversion to the historical mean will double or triple our current interest payments, not including any new debt.

      Looks like the Prez wants to add 50% the debt over the next 10 years.

      1. Cool – once interest rates climb enough to make interest payments 100% of the budget, it’s game over. We win.

  9. I suspect you’d find a wildly disparate difference between their assumed rate of GDP growth and the interest rate on the debt.

    It’s fantasies, all the way down.

  10. Do former presidents receive a govt pension? I’d really like a few chief executives to have to file BK and squeak by like the rest of the prols.

  11. I’d really like a few chief executives to have to file BK and squeak by like the rest of the prols.

    “Nobody ever went broke underestimating the intelligence of the American People.”

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