Obama's Budget Promises an Olympian Mountain of Debt For Our Kids to Pay Off
Reason contributor and Mercatus Center policy analyst Veronique de Rugy notes that Barack Obama's brand-new budget proposal features an illustration of a mountain on its cover. That's fitting, she says, because the president is promising to build a mountain of debt over the next decade:
This budget would indeed produce a mountain of debt so the image is fitting. Debt held by the public will go from $14.1 trillion in 2016 to $14.7 trillion in 2017 and then onto $21.3 trillion in 2026. Under the budget's very rosy assumptions, deficits, which have already grown from $438 billion in 2015 to $616 billion in 2016, fall to $503 billion in 2017 (how deficits shrink by over $100 billion is a mystery) but they will be up to $741 billion in 2026.
And that's all under the optimistic (read: delusional) scenario of 4 percent annual growth.
Whenever a new budget proposal comes out, I'm always interested in going to the big tally of how much is being spent vs. how much is being brought in. Here's the relevant info from the president's budget:
Granted, all the numbers and percentages are projections, estimates, and fantasies, but they are nonetheless telling.
Note especially that Obama is totally comfortable keeping federal spending as a percentage of GDP well above 20 percent. Since 1974, when current budget rules were adopted, outlays have averaged about 20.5 percent of GDP while revenues—poor, struggling revenues—have averaged just 17.4 percent of GDP. That explains annual budget deficits and mounting national debt totals and at least until the 21st century, both parties generally agreed (at least in principle, if not in reality) that revenues and outlays should roughly tally up.
The spending explosion is not something that happened exclusively under Obama. As Reason has exhaustively documented, George W. Bush was a "big-government disaster," jacking spending through the roof even before fiscal year 2009, when he and Obama jointly spiked outlays to 24.4 percent of GDP, the highest level seen since World War II. If both Bush and Obama have a lot of explaining to do, so too does Ronald Reagan, who on average borrowed 18 cents of every dollar of spending he signed off on as president. It was good old Dutch who normalized the idea that persistent deficits weren't a problem because we were always just a couple of years of good growth away from achieving balance or surplus. Ultimately, though, it took a weird partnership between Bill Clinton and a Republican Congress in the very late 1990s to achieve that—and they did it by cutting a ton of defense spending in the wake of the Cold War.
That's not going to happen anytime soon, alas, with both Democrats and Republicans comfortable with spending around $600 billion on defense. Indeed, the ferocity with which both Ds and Rs fought to end sequestration is one indicator that the two parties ruling the government are always happy to spend more and more money, just as long as enough of it gets tossed in the directions they prefer. After a period of gridlock, during which real, per-capita spending flatlined and even dropped, the two sides realized in December that they could simply stick the future American taxpayer with the bill.
So they did. The worst part of Obama's budget—and the ways in which Republicans have conspired to increase spending just late last year—is that it attempts to normalize substantially increased spending levels as a percentage of GDP. Why exactly the government needs to be spending a higher percentage of GDP is not clear and I'm doubtful any member of either the GOP or the Democratic Party will ever bother clarifying the matter.
Back in 2011, Veronique de Rugy and I laid out a plan to balance the budget without raising taxes. Read "The 19 Percent Solution."