Upon further review, President Obama's FY 2013 budget is significantly worse than we initially suspected, which is really saying something. Specifics to follow, but let's first flash back to January 20, 2009 and President Obama's inaugural address. Within the first few paragraphs of his first presidential message to the American people, Obama emphasized the importance of grappling with tough choices, which he said had been postponed long enough:
Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age...Today I say to you that the challenges we face are real, they are serious and they are many. They will not be met easily or in a short span of time. But know this America: They will be met...On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics. We remain a young nation, but in the words of Scripture, the time has come to set aside childish things.
These were sentiments with which Americans of all political stripes could concur. Unfortunately, as has so often been the case throughout his woeful presidency, these profound words have been utterly unmatched by deeds. In fact, Obama's 2013 budget embodies the very impulses Obama once decried: Eluding difficult but necessary decisions, and fueling a childish campaign strategy based almost entirely upon petty grievances, false promises, and (especially) recriminations. One of the most appalling elements of this document is its deliberate dishonesty. Let's concede that Washington always employs some degree of numbers-fudging during this process, but Obama drags the practice to new depths. Senate Budget Committee ranking member Sen. Jeff Sessions (R-AL) calls the president's heavy reliance on gimmicks "exceedingly deceptive." A few examples bear out that assessment, in no particular order:
(1) Obama claims his budget achieves $4 Trillion in savings vis-a-vis the exploding national debt (more on that later). How does he accomplish this? The first trillion is already law, locked in by last summer's debt deal. You will recall that Obama originally demanded that the debt ceiling be raised in a stand-alone vote, untethered to any cuts. House Republicans forced him to embrace these cuts, for which he's now claiming credit. The next trillion comes from deeply disingenuous war "savings," which are conjured by declining to spend surge-level appropriations in Iraq and Afghanistan that were never proposed or budgeted in the first place. The budget also claims to absorb the $500+ Billion cost of future Medicare "doc fixes," without providing any pay-for mechanism. None. Finally, proposed increases of income taxes (including the unserious Buffett rule), death taxes, and other rates amount to $1.9 Trillion in supposed savings, even though the vast majority of this sum goes to finance new spending. Incidentally, this document calls for $47 trillion in total spending over the next 10 years, including tens of billions on high speed rail, Solydnra-style "green energy" subsidies, and other costly Obama hobby horses.
(2) Despite the nearly $2 Trillion in tax hikes baked into Obama's budget cake, his fiscal blueprint still adds $11 trillion to the gross debt over the coming decade. You read that right: If Obama's plan were adopted and enacted in full, the gross national debt would stand at $25.9 Trillion by the end of 2022. And the $11 Trillion figure doesn't include the nearly $5 Trillion in new debt Obama has already accrued; it does include a $1.3 trillion annual deficit in the coming year -- far short of Obama's 2009 pledge to cut the deficit in half by the end of his first term:
Phil Klein provides some valuable perspective on this front:
It’s also worth noting that the White House relies on rosier economic forecasts than the CBO. In 2012 and 2013, the OMB sees growth of 2.7 percent and 3 percent, whereas the CBO has projected 2.2 percent and 1 percent growth during those years. Weaker economic growth hurts the deficit both by reducing revenues and boosting spending on government programs such as unemployment insurance. (Though the CBO baseline assumes that all Bush tax cuts expire starting next year, which hurts the economic forecasts). To put this in context, Obama’s first budget after coming into office projected that the deficit would be $581 billion this year. Today, the fiscal year 2012 budget is projected at $1.33 trillion.
Hey, he was only off by $700 billion or so. Read Phil's entire piece for more key points. Let's also recall that US GDP growth slowed from 3 percent in 2010 to 1.7 percent in 2011. Obama may believe that raising taxes on businesses and job creators -- not to mention embarking on another $825 Billion "stimulus" adventure! -- will jump-start the economy enough to match his team's rosy projections. History and common sense suggest this outcome is highly unlikely.
(3) Remember the aforementioned debt deal? It called for an initial batch of savings, followed by automatic "sequestration" cuts of at least $1.2 Trillion unless the Super Committee reached a better deal (which they didn't, thanks to Democrats' petulant intransigence). What does Obama's budget do? An analysis from Senate Budget Committee Republicans describes the president's maneuver thusly: "The president eliminates the reductions required by the law that he signed and replaces it with tax increases. Then he fails to score the cost of repeal, a monumental deception."
(4) As I posited in my previous post, the president will surely seize on his "bold" plan to cut $360 Billion from Medicare and Medicaid to demonstrate his seriousness about entitlement reform. The president himself laid out a compelling case on the urgent need for such reforms last winter... right before he proceeded to offer zero leadership on the issue in a shamefully demagogic speech. His new budget treads further down the latter path. I've already explained why $360 Billion is a drop in the bucket that fails to meaningfully address the underlying demographic and arithmetic problems that plague our entitlement programs. But how does Obama achieve even this relatively small number? Though a somewhat hazy combination of eliminating "waste, fraud, and abuse" (a tired Washington cliche that he derided in the debt speech mentioned above), strengthening IPAB (the president's unelected rationing board), and tinkering with modest means testing (which is at least a baby step in the right direction).
President Obama unveiled his budget in a Virginia speech before hundreds of cheering liberals. He blathered on about "fairness" -- which reminds me, read this column-- whined about "millionaires and billionaires," and urged supporters to badger Congress into action. Political Punxsutawney Phil has spoken: It's going to be a long, insufferable general election season, my friends.
UPDATE II - A telling statement from top Obama economic advisor Gene Sperling, who earlier today called for a "global minimum tax:"
Rather than promoting a competitive tax regime at home, Sperling fantasizes about imposing an international "Buffett rule" to prevent people from voting with their feet, which apparently constitutes a "race to the bottom." We're so screwed.
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