Obama budget breaks the bank
House and Senate Democratic leaders are looking to pass the Obama administration’s $3.6 trillion federal budget for 2010, but the lawmakers under them should take into account the shocking deficit impact and fight to reign in the proposal. We’re not holding our breath that they will do so, despite the immense deficit predictions announced March 20 by the non-partisan Congressional Budget Office.
The CBO has projected the initiatives proposed in President Obama’s budget would increase the deficit to over $1.8 trillion this year. That is 13.1 percent of GDP and significantly more than the already staggering $1.75 trillion deficit projected by the White House. The CBO also found that in 2013 the blueprint will result in $672 billion in deficit spending, $139 billion more than the administration’s estimates.
The ramifications of continuing President Bush’s years of deficit spending will become increasingly relevant in coming years. The resulting debt will have to be paid either by higher taxes or massive spending cuts, or both, likely at an inopportune time.
But just as Mr. Obama’s ethics rules were heralded as the toughest in history but then found to have significant ex- emptions, and the congressional Democrats’ stimulus package was called a model of transparency despite not being drafted in a truly transparent way, there are increasing signs that the Obama administration’s idea of fiscal responsibility is not quite what it advertises.
Mr. Obama claims $2 trillion in sav- war funding will continue at high levels despite a stated intent to reduce troop levels in the near term, and that some Bush tax cuts will not expire in 2010.
Such gimmicks, typically relied on by administrations, allow Mr. Obama to claim deficit reductions — spending less than the pessimistic “norm” — while ready implemented this year. These include overhauling health care, implementing a cap-and-trade greenhouse gas emissions program, and shifting federal student loans into the Education Department’s direct-loan program.
Mr. Obama’s new spending proposals will also collide with huge Social Security obligations from many Baby Boomers reaching retirement age. While he said his administration was looking line by line through the budget for areas to cut spending, this is typically promised by new administrations and the execution is often shaky at best.
Senate Finance Committee ranking Republican Charles Grassley of Iowa on March 23 endorsed an across-the-board freeze in spending to keep the government and federal spending from growing. Alas, political reality means that such a proposal, much less any real attempt to challenge the Obama budget, has almost no real chance of gaining traction.
Despite President Obama and Democratic leaders’ talk of fiscal conservatism, there is little sign that Congress and the White House are truly reversing years of Bush administration spending increases built on the idea that deficits don’t matter. We hope to be proven wrong but, as we said earlier, we’re not holding our breath.