Considering the amount of money that has been and will be shoveled out from the U.S. Department of Treasury isn’t an easy task in light of the billions and trillions being tossed around like hot cakes in Congress. But the magnitude of the error in the Obama budget plan, estimated today at $2.3 trillion by the Congressional Budget Office, is worth a second look.
One analyst says it’s almost hard to fault the original, mistaken estimates, given how large and complex the original budget and bailout plan is. Another claims that while Bush’s numbers dance was condemnable, it doesn’t come close to the smoke-and-mirrors scheme of the Obama administration.
Obama’s budget calculations were nearly a quarter off. He thought his spending spree was only 75% of what it actually cost. That’s enough to make a homeowner default on his mortgage, but not enough to make a President default on his spending plans.
Some think Obama’s faulty estimates will make Democrats who are already skeptical about overspending withdraw their support. Or maybe it won’t matter, and the additional spending will simply sail through a Congress already eager to oblige the executive branch.
Sen. Ben Nelson (D-Neb.), told the Los Angeles Times that the bad numbers might influence what he and other more conservative Democrats think “is the appropriate level of spending – what might be put off to another budget, what we can pursue incrementally.” The 51-member Blue Dog Democrat group released a statement Thursday indicating their hesitation with the size and speed of spending.
At this point, Obama himself has simply reinforced his commitment to handing out taxpayer’s money – under the guise of “investing” in projects he deems appropriate. The cost of these “investments” is daunting.
“In rough magnitude, right now we’ve got about $19,000 worth of public debt for everyone who lives in the U.S., and that will be roughly tripling for every person by 2019,” said Chris Edwards, director of Tax Policy Studies at the Cato Institute. He added that the estimates for programs such as health care were extremely conservative, meaning that estimates about future debt were also probably low.
It’s the largest amount the US will have ever spent as a percentage of GDP since World War II. The savings Obama says he has made in the budget don’t count the wars in Iraq and Afghanistan; to the contrary, Obama’s budget counts the cutting of funds from those wars as “savings.”
Edwards says the battle axes are now going to be pointed in another direction.
“Were going to have the biggest budget battles we’ve had in the next ten years than we’ve ever had in history,” he said.
One section of the newly released CBO estimates claims that the stimulus package would benefit the economy in the short term, bringing the U.S. out of a recession by 2010. But Stephen J. Entin, President and Exex director of The Institute for Research on the Economics of Taxation, said that this evidence is contradicted by long-term estimates.
“Massive amounts of spending might ultimately crowd out investing or increase tax rates, which would ultimately impede the growth rate,” he said.
Isabel Sawhill Senior Fellow at the Brookings Institution, supports bailout packages, but has no illusions about the rate of spending and its effect on future growth.
“I think quite simply that we have an unsustainable fiscal future, and that something is going to have to be done, and it’s not clear what can be done because the spending cuts and tax increases are politically poisonous,” she said.