Since the 2008 campaign we have been lectured by President Obama ad nauseam about fiscal responsibility, about not leaving a mountain of debt for our children, about ongoing deficit spending.
November 25, 2008:
“In these challenging times, when we are facing both rising deficits and a sinking economy, budget reform is not an option. It is an imperative,” Obama said. “We cannot sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness, or exist solely because of the power of a politicians, lobbyists, or interest groups. We simply cannot afford it. This isn’t about big government or small government. It’s about building a smarter government that focuses on what works. That is why I will ask my new team to think anew and act anew to meet our new challenges…. We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way.”
February 23, 2009 in speeches to the National Governor’s Association and his Fiscal Responsibility Summit:
“Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to next budget, the next administration, or the next generation,” he said. “That’s why today I’m pledging to cut the deficit we inherited by half by the end of my first term in office.”
In those same speeches he referred to Social Security as “the single most pressing fiscal challenge we face by far.”
At the Business Roundtable, March 12, 2009:
“I didn’t come here to pass our problems on to the next President or the next generation–I’m here to solve them”
And finally, February 1, 2010, as he introduced his $3.8 trillion budget for fiscal year 2011:
“We simply cannot continue to spend as if deficits don’t matter… as if we can ignore the problem for another generation…..We have to do what families across America are doing; save where we can so we can afford what we need.”
As a demonstration of fiscal responsibility, the President has introduced his budget for fiscal 2011. The President’s budget will:
- Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;
- Raise taxes on all Americans by more than $2 trillion over the next decade (counting health care reform and cap and trade, both of which are included in this budget);
- Raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade;
- Eliminate tax breaks for charitable donations and mortgage interest for millions of Americans;
- Borrow 42 cents for each dollar spent in 2010;
- Run a $1.6 trillion deficit in 2010–$143 billion higher than the recession-driven 2009 deficit, and nearly 11% of the country’s entire economic output;
- Leave permanent deficits that top $1 trillion in as late as 2020; and
- Double the publicly held national debt to over $18 trillion.
After repeatedly criticizing President Bush for $3.3 trillion in deficits over his eight years in office, President Obama’s budget would run $7.4 trillion in deficits over the same period, more than doubling down on the bad behavior of his predecessor. Not only does it not cut his inherited deficit in half, it projects ongoing expansion of the deficit to near $1 trillion by the end of this decade.
In addition, the primary spending cuts proposed by President Obama in the 2011 budget are a three-year freeze on discretionary spending, generating an estimated savings of $250 billion over a ten year period, 3% of the total deficit generated during that same period. On it’s surface this freeze appears to be a step in the right direction. However, over the past two years discretionary spending programs have seen a 22% cumulative increase in annual appropriations, in addition to a 25% increase from the stimulus package. So the freeze simply locks in already inflated budget figures. As an example of fiscal discipline this is a bit of a shell game.
It is difficult to see where this budget demonstrates the level of fiscal discipline we have been hearing about from the President. As budget negotiations commence, perhaps he, Democrats and Republicans can get serious about spending cuts and deficit reduction by:
- Taking discretionary spending back to pre-recession levels
- Performing a line-by-line review of this budget as promised in an attempt to identify real savings, such as eliminating Head Start and other failing programs rather than providing them with budget increases;
- Using uncommitted funds in the economic stimulus and TARP programs to reduce the deficit;
- Ending the lip-service given to fixing Social Security and Medicare by bringing them into long-term sustainability and dealing with the $75 trillion unfunded liability we are passing on to our children;
- Reversing salary, benefit and allowance increases given last year to members of Congress and eliminating the automatic COLA increase.
Additional suggestions are welcome!