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Debt would double under Obama plan

Created on March 18, 2009

Debt would double under Obama plan

Obama doubles down on Bush borrowing, spending

By Ken McIntyre

President Obama framed his first budget as a break from what he calls the failed policies of the Bush admin­istration. But the numbers tell a different story: The Obama budget doubles down on President George W. Bush's borrow, spend and bail­-out policies.

That's the conclusion of Brian Riedl, The Heritage Foundation's widely cited expert on the federal budget, who sets out to educate concerned taxpayers and members of Congress by noting, among other facts:

--Bush expanded the federal budget by a historic $700 billion through 2008; Obama would add another $1 trillion.

--Bush put in motion a succession of taxpayer-funded bailouts; Obama is accelerating along that course.

--Bush created a Medicare drug entitle­ment likely to cost $800 billion in the first decade; Obama wants to make a $634 billion down payment on a new govern­ment health care fund.

--Bush increased federal education spending well above inflation; Obama would double those outlays.

Before the recession, Riedl notes, annual federal spending under Bush totaled $24,000 per household. Obama proposes to increase the cost of government to $32,000 per household by 2019 - an $8,000 expan­sion, accounting for inflation.

The president's spending plan also would add trillions of dollars in new debt, Riedl says, because steep tax increases planned for all taxpayers can't pay for everything in his budget.

"Overall, the president's budget represents a sharp break from the policies that created the most prosperous 25-year period in American economic history," Riedl writes. "Instead, it puts politicians in charge of an increasing portion of the economy. Congress should discard this tax-and-spend budget and start from scratch."

Riedl recalls that Bush ran budget deficits averaging $300 billion a year. After harshly criticizing those deficits while a candidate, our new president pro­posed a budget that would run deficits averaging $600 billion -- even after the economy recovers and the troops come home from Iraq.

Bush presided over a $2.5 trillion increase in the publicly held national debt through 2008. Setting aside this year -- when Bush and Obama share responsibility for another $2.6 trillion -- the Obama budget would add $4.9 trillion in public debt from 2010 through 2016. That's almost double the debt accumulated under Bush over the same number of years.

"The public debt level would double over the next decade to $12.5 trillion in inflation-adjusted dollars," Riedl writes. "At 67 percent of gross domestic product, this would constitute America's largest debt burden since immediately following World War II.

"In the short run, this surge of debt would increase interest rates," he says, adding that rate increases would "slow down the economic recovery by making it more costly for businesses to invest and more difficult for families to afford home and auto loans.

"In the long run, Washington is dumping a colos­sal amount of debt into the laps of our children and grandchildren.

"The annual interest on this debt would nearly equal the entire defense budget by 2019. And given the unsustainable costs of paying Social Security, Medicare and Med­icaid benefits to 77 million retiring baby boomers, the federal debt will continue expanding after 2019.

"Without real reforms," Riedl concludes, "the result may be devastating tax increases for decades to come."