Obama’s phony debt plan

The Washington Times Weekly - - Editorials -

With­out any trace of irony, the White House’s new 10year deficit-re­duc­tion plan is ti­tled “Liv­ing Within Our Means and In­vest­ing in the Fu­ture.” It achieves nei­ther of these ob­jec­tives, but you would never know that by look­ing at the de­cep­tively rosy fu­ture it prom­ises.

Pres­i­dent Obama’s agenda con­tin­ues the con­ceit of long-term Washington bud­get pro­jec­tions that bear no re­la­tion to re­al­ity.

It over­states the ad­min­is­tra­tion’s abil­ity to pre­dict and in­flu­ence events. The use of smoke and mir­rors is a nec­es­sary po­lit­i­cal trick be­cause high­light­ing mas­sive pur­ported “sav­ings,” par­tic­u­larly in the out years, en­ables Mr. Obama to claim credit for tril­lions in deficit re­duc­tion that are sup­posed to ap­pear long af­ter he is off the po­lit­i­cal stage. He reck­ons to “cut” deficits by $3 tril­lion in 10 years — but so long as we’re pulling numbers out of a hat, why not $6 tril­lion in 20 years or $30 tril­lion in 100 years? Ten-year eco­nomic sce­nar­ios are the height of ego­tism; even So­viet dic­ta­tor Josef Stalin was con­tent with over­see­ing five-year plans.

The base-line eco­nomic assumptions in Mr. Obama’s plan are as fan­tas­tic as any that have emerged from this White House. As with past pro­jec­tions, un­em­ploy­ment lev­els are too low, growth pro­jec­tions are too high, and deficit numbers are as­tro­nom­i­cally more op­ti­mistic than re­al­is­tic. The fis­cal 2010 bud­get pro­jected the deficit would be $581 bil­lion in 2012. The fis­cal 2012 bud­get pro­jected a fed­eral deficit of al­most dou­ble that. The pro­posal in­tro­duced Mon­day bumps that fig­ure up to more than $1.3 tril­lion. The ac­tual deficit will be even higher.

The pro­jec­tions are al­ways off be­cause the Obama team clings to highly un­re­al­is­tic eco­nomic-growth assumptions. The lat­est deficit pro­posal says that “dur­ing the pre­vi­ous six quar­ters, real gross do­mes­tic prod­uct (GDP) had grown at an av­er­age rate of 3 per­cent,” im­ply­ing that this is a ro­bust trend that is likely to con­tinue.

Mr. Obama’s first bud­get pro­jected that this year’s eco­nomic growth would be more than 5 per­cent, but sec­ondquar­ter GDP growth in 2011 was only 1 per­cent, and growth al­most ground to a halt in the first quar­ter at 0.4 per­cent. Rather than a push for greater spend­ing, these facts should prompt re­newed sober­ness and cau­tion for eco­nomic crys­tal-ball gaz­ers at 1600 Penn­syl­va­nia Ave.

The assumptions in Mr. Obama’s plan dou­ble down on al­ready-bank­rupt hopes. For Mr. Obama’s deficit numbers to make sense (us­ing the plan as ap­plied to the Of­fice of Man­age­ment and Bud­get mid­ses­sion re­view base line) the econ­omy is ex­pected to grow at a rate of al­most 5 per­cent in 2012, al­most 8 per­cent in 2014 and 8.5 per­cent in 2016. If Mr. Obama could de­liver that kind of growth, he wouldn’t now be try­ing to ex­plain away 9 per­cent un­em­ploy­ment and ap­proval rat­ings in the low 40s.

These baloney growth assumptions il­lus­trate why politi­cians love to talk about the won­der­ful, mag­i­cal, far­away out years. Too bad we live in the trou­bling times de­liv­ered by the “fierce ur­gency of now.”

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