President Obama has said that the cuts included in his fiscal 2012 budget will force “tough choices and sacrifices.” Meanwhile, House Speaker John Boehner invoked a former tax-hiking president in defending his chamber’s proposed budget reductions.
“When we say we are going to cut spending, read my lips: We are going to cut spending,” Boehner said. It’s no surprise that political leaders are talking a good game. Americans have finally grasped the rough outlines of their government’s looming fiscal collapse — and are demanding deep cuts in an effort to restore some semblance of sanity to the spending process.
Unfortunately, Obama has proposed trimming just $30 billion from a $3.66 trillion budget, while Boehner’s cuts total a mere $61 billion.
You’ve heard the expression “using a bazooka to kill a fly”? Well, these proposals are akin to using a fly swatter to kill a charging rhino.
But glaringly inadequate spending reductions are only the beginning of the problem — far graver dangers lurk within our government’s shoddy accounting and chronic refusal to address the root causes of this impending implosion. Consider these numbers: In 2008, the White House Office of Management and Budget projected a total three-year deficit of $334 billion for fiscal 2009-11.
These projections were made before the onset of the recession, obviously, but a year later — when America’s economic free fall was in full effect — OMB was still projecting ludicrously low deficits. In fact, two years ago OMB projected a total three-year deficit of only $302 billion for fiscal 2010-12.
The actual shortfalls for fiscal 2009 and 2010 ended up being $1.4 trillion and $1.3 trillion, respectively — the largest federal deficits since World War II. And the projected deficits for fiscal 2011 and 2012 are currently estimated at $1.6 trillion and $1.1 trillion.Yet even these astoundingly high numbers are based on dubious fiscal forecasting. For example, the Congressional Budget Office is projecting that the government will owe $5.5 trillion in interest payments on its ballooning $14.2 trillion debt over the coming decade. But that figure represents the best-case scenario. More realistic forecasts put the 10-year interest tab closer to $7.5 trillion.
Whichever amount you assume, interest payments on the debt will dwarf the $478 billion in cuts that Obama has proposed over the coming decade — as well as the $2.5 trillion in cuts proposed by the Republican Study Committee over the same time period.
Equally troubling are the unrealistic revenue assumptions contained in Obama’s budget — forecasts which form the basis for future deficit projections. According to Obama’s numbers, total gross receipts will climb from $2.17 trillion this year to $3.58 trillion by 2015 — a 65% increase. Does anyone expect our economy to support such a dramatic expansion of federal tax receipts so soon?
Double-digit annual revenue growth has occurred just three times over the last two decades. And yet Obama is counting on this rate of growth to take place in five consecutive budget years?
No wonder one economist recently referred to his revenue estimates as “something approaching the realm of Greek myth.”
Perhaps he — and for that matter Boehner — is unaware of the $703 billion in “unobligated” agency surpluses that Sen. Tom Coburn and others have recommended tapping in an effort to reduce the deficit. Of these funds, $82.4 billion has been sitting in agency reserve accounts for more than six years.
Obviously neither Obama’s nor Boehner’s cuts seem so “sacrificial” in light of those surpluses.
Tough choices and sacrifice will be required, however, in addressing entitlements. Spending on Social Security, Medicare and Medicaid will consume nearly two-thirds of the federal budget by the end of the decade — yet neither Obama nor Boehner has summoned the political courage to address these ticking time bombs.
In failing to do so, they are refusing to level with the American people about the inevitable insolvency of these programs.
America can pull itself back from the brink, but it will take a level of honesty and a commitment to cutting government not yet seen from the leaders of either political party. It will also require sending a copy of “Budgeting for Dummies” to both the White House and Capitol Hill.