Free Markets, Free People

Budget Voodoo

Barack Obama is about to submit his first budget to Congress.

Finally, because we’re also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget.  - President Barack Obama to a joint session of Congress, Feb 24, 2009

That’s the promise.  The reality, as the Washington Post observes, isn’t quite in keeping with the promise:

President Obama’s spending plan is built on the assumption that lawmakers can resolve some hugely contentious issues — and it relies on a few well-worn budget tricks.

The tricks?  The usual stuff – calling something what it isn’t and inflating future spending numbers to make the future real numbers appear to be “savings”.  For instance:

And though Obama told Congress on Tuesday that his budget team has “already identified $2 trillion in savings” to help tame record budget deficits, about half of those “savings” are actually tax increases, administration officials said. A big chunk of the rest of the savings comes from measuring Obama’s plans against an unrealistic scenario in which the Iraq war continues to suck up $170 billion a year forever.

The tax increases, of course, include an increase in taxes on the top 2%.  And further savings are based on pretending that the Bush administration planned on spending $170 billion (seems like a small number when compared to the numbers being thrown around these days, doesn’t it?) beyond 2011 when it planned on pulling the bulk of the troops out of the country.

“It’s a hollow number,” said Sen. Judd Gregg (R-N.H.), the senior Republican on the Senate Budget Committee, who recently withdrew as Obama’s nominee to head the Commerce Department. “You’re not getting savings if you’re assuming spending that isn’t actually going to occur.”

What accounts for the other major source of income?

 But to pay for it, the president counts on a big infusion of cash from a politically controversial cap-and-trade system, which would force companies to buy allowances to exceed pollution limits. 

The promise that energy costs are going to skyrocket seems one promise he’s bent on keeping.  That of course will require more spending to offset the consequences (but don’t figure on being in on the subsidy, you probably won’t qualify).  And then there’s the redistributionist “spread the wealth” bonus to be realized from cap-and-trade:

Obama also wants to use the money to cover the cost of extending his signature Making Work Pay tax credit, worth up to $800 a year for working families. That credit, which will cost $66 billion next year, was enacted in the stimulus package, but is set to expire at the end of 2010.

Cover the cost is a way of saying, making the program permanent.

Then there’s the deficit promise.  Obama has set a goal of cutting the deficit in half by the end of his first term.   As observers say, there’s absolutely nothing difficult about reaching that goal:

This year’s budget deficit is bloated by spending on the stimulus package and various financial-sector bailouts, expenses unlikely to be repeated in future years. The nonpartisan Congressional Budget Office recently predicted that the deficit could be halved by 2013 merely by winding down the war in Iraq and allowing some of the tax cuts enacted during the Bush administration to expire in 2011, as Obama has proposed. That alone would cut the deficit to $715 billion, according to the CBO.

Notice that final number, folks.  That’s “half” of the deficit.  In other words he’s going to be running a deficit north of $700 billion dollars and trying to convince you how well he’s done.  In fact, all he’ll have done is add several trillions to the debt with several trillions more to come if reelected.

The era of big deficit financed government isn’t just back, it’s back on steroids sitting in a rocket sled pointed at economic  hell.

~McQ

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8 Responses to Budget Voodoo

  • It’s a con job and people continue to fall for it.  TAO promises that no part of his budget will escape scrutiny.  Sounds good, right?  But what does that MEAN?  I can write a highly scrutinized budget for my wife and I that is utterly impossible to meet, based on meaningless numbers, twisted definitions, and outright fabrications:

    ME – “Honey, we can afford that trip to Hawaii if we reduce the amount of money we were going to spend on that original Da Vinci.”

    HER – “Um… Honey… We didn’t plan to buy an original Da Vinci.  We don’t have that kind of money.”

    ME – “We can take out a second mortgage on the house.  We can also demand raises from our bosses.  If push comes to shove, we can use the color photocopier at your office to make a few dozen new $100 bills.”

    HER – “Um… Maybe you need to take a nap.  By the way, where do you keep your credit and bank cards?  I… um… Need to make sure they are still good.”

    Do we really think he will go through the budget line by line, page by page?  Even if he does, what will he do?  He has no line-item veto.  “On page 1173, line item #93,012(a), there is an expenditure of $2.012 millions for a supplemental grant to the the NIH to study the increase in the rate of decrease of the consumption of sugar-free chewing gum by unmarried males aged 18 – 25 inclusive.  It’s outrageous!”

    Is he REALLY going to hold up passing a budget and (gasp!) gridlock the government over what Trashcan Chuckie describes as pork that Americans don’t care about?  ESPECIALLY if it’s pork inserted by a political ally or is something he actually agrees with?  Or will he shrug, recognize that no budget is perfect, and pass whatever he’s given with a token cut or two (probably from DoD)?

    It’s a con game.  Unless and until a majority of the American people start asking, “Why the hell are we spending this much money?” and “Where the hell are you getting it from?”, Congress and the president will continue to increase spending until we become a de facto socialist people’s republic or the economy collapses.

  • The reported budget deficit was $248 billion in 2006, less for fiscal 2007.  (The actual change in public debt for 2006 & 2007 was $536 billion & $459 billion (upwards, of course)). The Great One (sorry, Jackie) promises to ‘reduce’ the deficit to $715 billion in four years.

  • There is a lot of scary stuff in Obama’s budget planning.  One of the things that scares me the most is the plan to raise money under a proposed cap & trade system.    From the little I’ve read of the EPA’s plans on regulating carbon, that alone could destroy our economy.  Goodbye to the coal/energy industry.   Hello skyrocketing gas and electrical costs.   Goodbye to the steel, cattle, poultry industries.  They will all go offshore.

  • Well, thank God!  Pres. Obama has given the Republican party a huge gift.  He’s taken the vast Etch n Sketch of history, and vigorously shaken away the significance of the Bush deficits.  Quadrupling the figure is bound to do that.

    And let me add, in regards to the Democrats who trumpeted Clinton’s surplus ad nauseum for 8 years:  HA!

    • Even the “Clinton surplus” was an illusion.  Total government debt increased through the ’90s per the Treasury.  We haven’t had a real surplus since 1957.

      • It’s only a debt if you acknowledge it.

        Libs like to bill themselves as the “reality-based community”, yet have to constantly redefine words to avoid (or lie about) reality when it suits them.  Hence, Clinton had budget “surpluses” even though debt increased under his tenure.

      • Oh yes, I know that.  It was merely a “projected” surplus.  The fact is, Democrats have been insufferable about it.  “Bush killed the surplus!”

        Well if Bush killed it, Obama ground up the remains and sprinkled them in the ocean.  Then nuked the ocean.

  • Near trillion dollar deficits as far as the eye can see…
    Table S–9. federal Government financing and debt
    Debt Subject to Statutory Limitation, End of year:
    2008 – 9,960
    2009 -12,680
    2010 -14,054
    2011 -15,250
    2012 -16,173
    2013 -17,097
    2014 -18,048
    2015 -19,010
    2016 -20,004
    2017-20,999
    2018 -21,990
    2019 -23,132