Obama's budget increases 2012 deficit by a third. Yes, that's correct. President Obama submitted his proposed 2012 budget this past Monday. This budget produces a $1.1 trillion deficit for 2012. This deficit is 33 percent higher than his 2011 budget projection, which targeted the 2012 deficit at $828 billion. This higher 2012 deficit is equivalent to $3,217 per person in the United States (based on the U.S. Census Bureau's population clock).
This year's forecast of the 2011 deficit is $1.6 trillion, 30 percent higher than Obama's 2011-budgeted deficit of $1.3 trillion.
Let's step back and take another look at what has happened: The government spent $265 billion less in 2010 than had been forecast for 2010 at the time of the 2011 budget.
The receipts (read, taxes on companies and individuals, i.e., their expenses) for 2010 were about on target, actual $2,163 billion versus a forecast of $2,165 billion. This change in spending produced a 2011 deficit $378 billion, or 30 percent higher than originally budgeted.
The one thing we can determine so far is that the administration does not have a stellar record for budgeting. Before beginning my writing career, I worked in corporate finance. In my last few years in corporate planning, I was in charge of budgeting and planning for companies worth $3 billion. My background includes an MBA in finance, and I am a holder of the Chartered Financial Analyst designation. This lets you know that I know how to scrutinize the details of budgets and sub schedules to see if the logic and the math hold up.
During the 2011 budget process, revenues (taxes on individuals and corporations) were originally forecast to rise $402 billion (19 percent) from 2010 to 2011, but are now forecast to rise by just $11 billion. Outlays (government expenses) were projected to rise by $113 billion, or 3 percent. In the 2012 budget submission, the 2011 outlays increased by $363 billion, or 11 percent.
So, while we spent less in 2010 than had been forecast in 2010, we are still planning on spending more in 2011.
Hmm. The first rule in budgeting is to make sure your year-end forecast reflects what is going to happen, because that is how the next year is compared.
Clearly, in the last year's round of forecasting year-end results, the outlays were overstated. Maybe there should be a bit of scrubbing on the 2011 year-end government-spending forecast. Outlays (government sending) decreased by $62 billion in 2010; the 2011 year-end forecast is for an increase of $363 billion.