American Elephants


Obama’s Budget Plan: Unserious. Irresponsible. by The Elephant's Child

The federal government has a budget process. It begins with the President’s budget which is a request to Congress for the funds to run the government and provide for the common defense. Then the Senate and the House of Representatives come up with budgets in response to the requests from the executive.

The President has finally released his budget two months late. The Senate finally produced a laughable budget after refusing to write a budget for four years, and the House has had time to write several versions, and pass one that gradually begins to reduce our towering debt.

The president’s budget isn’t a balanced plan to get the debt crisis under control. It is a  genuflection to complete fiscal irresponsibility. Investors’ review of the budget finds it:

  • Boosts spending and deficits over the next two years. Obama’s own budget numbers show that he wants to hike spending over the next two years by $247 billion above the “baseline”, which would mean $157 billion even after his new taxes. He claims he will get tough on spending and deficits — later. Every budget expert knows boosting spending today makes it harder to cut later.
  • Vastly exaggerates spending cuts. Smoke and mirrors department. He inflates the claimed savings by first canceling the automatic sequester spending cuts he previously signed into law, then reclaims them as new savings, and by adding in cuts in interest payments on the debt.  The press has reported that his budget would cut spending by a total of $1.2 trillion over the next decade, but his own numbers show he actually cuts it by a mere $186 billion.
  • Relies almost entirely on tax hikes. Obama’s budget plan would increase revenues by $1.14 trillion over the next decade. His budget proposes $6 in new taxes for every $1 in spending cuts. He is obsessed with spending.
  • Cuts the deficit less than claimed. “My budget will reduce our deficits by nearly another $2 trillion.” Obama said Wednesday. But the budget shows total deficit reduction of just $1.4 trillion, and they start rising again after 2018.
  • Creates a new entitlement with no way to pay for it. Obama claims that he can finance a new $76 billion preschool program for the nation’s four-year-olds by hiking tobacco taxes again. The last time he hiked tobacco taxes to pay for an expansion of Medicaid, revenues came in $2.2 billion less than expected.
  • It boosts taxes on the middle class, something he has promised not to do. He plans to change the government’s “consumer price index” in a way that would lower the official inflation rate. He is selling this as a way to cut the Social Security annual ‘cost of living” adjustments which are based on the CPI. But the CPI also applies to annual tax bracket adjustments, a sneaky way of hiking taxes by $124 billion, mainly on the middle class over the next decade due to bracket creep.

In his remarks upon releasing his overdue budget, President Obama claimed blithely “The numbers work. There’s not a lot of smoke and mirrors in here.”  If you took the smoke and mirrors out — there would be nothing left, nothing at all.

 

 


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