Last week the White House unveiled President Barack Obama's Fiscal Year 2012 Budget Request. According to Budget Director Jack Lew, the administration has come up with a plan for a "sustainable" deficit. In her weekly appearance on Bloomberg TV, Reason columnist Veronique de Rugy explains the truth about Obama' s budget by separating 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.
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.
Myth 3: The president's budget accurately reflects economic and politic reality.
Fact 3: The president's budget incorporates unrealistic assumptions about both the U.S. economy and the implications of the president's policy choices. Our fiscal situation is far more dire than the president's budget lets on.
Myth 4: Budget cuts proposed by Republicans will eviscerate the American middle class.
Fact 4: The Republican cuts may be bigger than the president's cuts but they still barely scratch the surface of our overspending problem.
For additional information, see de Rugy's article "The Truth About Obama's 2012 Budget."