The Obama administration seems to have a serious problem with its hearing, not to mention its memory. Last November, the voters said loud and clear that government is too big and spends too much, but three and a half months later, the White House has forgotten that crucial mid-term election message. Under President Obama's budget, government spending will rise to nearly $4 trillion a year, and the budget deficit will jump to a record $1.6 trillion this year and nearly that much next year.
What stands out in the Obama budget proposals is its estimate of $1.6 trillion in new tax revenues, largely through higher taxes on the wealthy and businesses, while the high-unemployment economy is still struggling to put people back to work. There's also higher funding for a smorgasbord of dubious Obama programs for energy (the green kind that is years if not decades off, not the kind you put in your car or your oil heating furnace); high-speed, high-subsidy rail lines; a faster Internet; more R&D subsidies; an over-budgeted and waste-ridden Department of Education; and a huge 500 percent increase for Obama's costly health care programs, to name just a few.
The lead story in Tuesday's Washington Post points out in its third paragraph that Obama's proposed spending freeze "would produce minimal savings," and his other budget policies "would do nothing to further reduce next year's deficit." Heritage Foundation's chief budget analyst Brian Riedl crunched the numbers and found that unless we get serious about controlling government spending, the annual budget deficit will never fall below $1 trillion for the rest of this decade.
Compare this to the government's fiscal position in 2007, the year before the subprime mortgage-induced recession: Federal spending was running at just 19.6 percent of GDP (the nation's gross domestic product) and the deficit was a tame $161 billion, a fraction of what it is today.
And this was with the Bush tax cuts in full force and the costs of two wars. Flash forward to 2011, the third year of Obama's failed Old Deal presidency, where government spending is gobbling up 25 percent of GDP and the budget deficit is at $1.6 trillion, 10 times larger, feeding a gargantuan $14 trillion debt.
"The Democrats took control of Congress in 2007 and used the recession as cover to permanently increase spending on federal entitlements, regulatory bureaucracy and silly industrial policies, like high-speed rail and electric cars," writes economist Peter Morici at the University of Maryland's School of Business.