Free Markets, Free People
Record Budget, Record Budget Deficit Proposed By Obama Administration
The President, Democrats and some pundits have been trying to set the public up for this for a few weeks. They talk about how important deficit reduction is in the long term, but claim that when the economy is bad and unemployment is high that is not the time to be pursuing that goal. Paul Krugman, for one, has been saying it for months. And Obama made that claim in his State of the Union address. The entire reason behind the prep was to prepare the public for massive spending and budget deficit proposal – neither of which we can afford. In anticipation of this, Democrats quietly raised the debt ceiling $1.9 trillion last week:
President Barack Obama will propose on Monday a $3.8 trillion budget for fiscal 2011 that projects the deficit will shoot up to a record $1.6 trillion this year, but would push the red ink down to about $700 billion, or 4% of the gross domestic product, by 2013, according to congressional aides.
The deficit for the current fiscal year, which ends on Sept. 30, would eclipse last year’s $1.4 trillion deficit, in part due to new spending on a proposed jobs package. The president also wants $25 billion for cash-strapped state governments, mainly to offset their funding of the Medicaid health program for the poor.
Now of course, as any good Democrat knows, this is all George Bush’s fault. They are being forced to spend this money because Bush wrecked the economy.
With that now out of the way, some interesting things are to be found in the two paragraphs cited. One, deficit year two is larger than deficit year one. Why? Because the Obama administration and the Democratic Congress spent the previously budgeted money (40 cents of every dollar borrowed) on pet projects and nonsense which were not simulative at all. Now they’re faced with the same crisis that faced them at this time last year and they’re again coming up with the same solution – throw money at it. However this time the new “stimulus” will be disguised as a “jobs bill”.
Then take notice of the claim by “congressional aides” that the deficit will be “down” to a mere $700 billion by 2013. That’s based on the assumption, per the Wall Street Journal, that some spending cuts “that have previously been proposed without success” will be passed and work as promised. Anyone – what’s the track record on those sorts of assumptions?
Of course what’s interesting is that $700 billion will be less than half the deficit proposed in this year’s budget thereby allowing Obama to claim he fulfilled the promise of “cutting the deficit in half” by the end of his first (and hopefully only) term. Hey, he never said how high he’d run it to make that promise come true, did he?
Note too that there’s a bailout of the states included in this budget. Is that a precedent we want to set? And what does the bailout address? Government run health care. It is, as usual, costing more than anticipated. Why should anyone believe government’s control of more of that market will cost less?
President Obama is also pushing for a bi-partisan debt committee to be empanelled by Congress to address the debt.
A bipartisan 18-member debt commission would forward any deficit-reduction proposals they come up with to Congress after this year’s midterm elections. Issues it would face would include how to cut the deficit further in the short term and how to rein in long-term growth of entitlement programs, such as Medicare, Medicaid and Social Security. Commission members would have to come up with between $180 billion and $190 billion in cuts to meet the president’s target.
Congressional leaders have promised the president that they would submit the panel’s recommendations to an up-or-down vote in the lame-duck session of Congress, after the elections but before the newly elected House and Senate take office.
Although it is recognition of the critical problem to our national solvency the debt represents, it is also a political ploy to shift responsibility to Congress and require them to make all the unpopular cuts necessary to reduce that debt. Congress becomes the focus of the public’s ire if it cuts favored programs, not the President. It’s another attempt by Obama to shirk his leadership role and avoid blame for making tough choices. As usual, he’ll talk about it and he’ll pontificate, but he expects others to do the dirty work and suffer the political consequences of proposing and making spending cuts and ending programs. That’ll work out well, I’m sure.
Note too that even Congress isn’t at all enthusiastic about it – they would only do these cuts in lame-duck sessions after an election but before the new Congress is seated.
And I had to laugh at this:
White House officials say they are ready to make some tough choices to get the deficit under control. White House communications director Dan Pfeiffer wrote on the White House Web site this weekend that the president’s budget would propose to terminate or cut back more than 120 programs, saving about $20 billion in the fiscal year beginning in October.
Budget proposal: $3.8 trillion. Deficit: $1.6 trillion. “Tough choices”: $20 billion.
Programs which might – I want to stress that point, might – be terminated to achieve that huge $20 billion in savings?
The proposals include consolidating 38 education programs into 11, cutting the National Park Service’s Save America’s Treasures and Preserve America grant program, and eliminating the Advanced Earned Income Tax Credit, which allows low-wage workers to get tax-credit checks in advance but which is rife with abuse, White House officials say. The Brownfields Economic Development Initiative, which converts decayed former industrial sites to new uses, would be cut, and payments ended to states to restore abandoned mines, many of which have been long cleaned up.
Social Security? Medicare? Medicaid? You know, the big drains on the budget?
Nada. Can firmly kicked to the non-existent Congressional panel (and no, the health care reform debacle didn’t address Medicare or Medicaid reform in any meaningful way) to address. He can find the will to propose huge budgets and incredible levels of spending, but apparently he’s just not going to take the political risk of proposing real and substantial cuts to spending or ending wasteful and unnecessary programs.
So we are now well into the Obama era of trillion dollar deficits (all Bush’s fault, remember) with really no end in sight. Certainly the administration wants you to believe an end is in sight, but recall that all rests on their projections and assumptions. And we all have enough experience with government projections and assumptions to know what they’re really worth.
A bucket of warm spit, if that.