Obama's Eight Bogus Budget Arguments

COMMENTARY Budget and Spending

Obama's Eight Bogus Budget Arguments

May 14, 2009 3 min read

Senior Fellow, Manhattan Institute

President Obama has proposed a historic expansion of spending, taxes and debt. His budget would increase real spending from $25,000 per household to $32,000 per household by 2019. It would raise taxes by $1.4 trillion. And it would double the national debt - a staggering $9.3 trillion in new borrowing.

A master communicator, the president employs clever rhetoric to defend his tax-borrow-and-spend budget. Unfortunately, this rhetoric fluctuates between misleading and false. Here are eight of his bogus budget arguments:

Assertion No. 1: "I pledged to cut the deficit in half" by 2013.

Fact: The president doesn't mention that the deficit has quadrupled this year. Merely cutting it in half from that bloated level would still leave budget deficits twice as high as under President Bush. This is like eating a 5,000 calorie meal, and then pledging to halve your calories from that level.

Furthermore, three upcoming developments - the end of the recession, troop pullout in Iraq, and phase-out of the supposedly temporary "stimulus" spending - would, by themselves, cut the budget deficit in half.

Despite Mr. Obama's talk of "inheriting" President Bush's $1.2 trillion deficit for 2009, then-Sen. Obama supported nearly all the policies that created the deficit. That deficit estimate has surged to $1.8 trillion since his inauguration. And when the recession ends, Mr. Obama would still run $1 trillion deficits - compared with President Bush's $162 billion deficit immediately before this recession.

Assertion No. 2: "We have already identified $2 trillion in savings over the next decade."

Fact: Savings relative to what? The president first creates a fantasy baseline that assumes the Iraq surge continues forever (which was never U.S. policy), and then "saves" $1.5 trillion against that baseline by ending the surge as scheduled. It's like a family "saving" $10,000 by first assuming an expensive vacation and then not taking it.

Another $1 trillion in "savings" is actually tax increases. Government savings used to mean spending cuts that save taxpayer dollars. In the Obama White House, they mean tax increases that feed the government.

Assertion No. 3: "If your family earns less than $250,000 a year, you will not see your taxes increased a single dime."

Fact: This is patently false. The president has already signed into law a 61-cent cigarette tax increase. His budget proposes a $646 billion cap-and-trade tax that would be passed onto households at an average cost of $600 to $2,000 annually.

Assertion No. 4: New spending is "temporary" to fight recession.

Fact: Does anyone believe Mr. Obama, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid will allow stimulus bill expansions, including Pell Grants, food stamps and "make-work pay," to expire? The president's own budget already extends several expensive stimulus provisions. Overall, his budget would create the largest peacetime government in American history by 2019. There is nothing temporary about it.

Assertion No. 5: Economic "day of reckoning" was caused by a lack of liberal social policies.

Fact: Mr. Obama claims that the current economic day of reckoning partially resulted from current health care, education and energy policies, and that enacting his tax-and-spend reforms are the solution. Nonsense. The recession was caused by a financial crisis brought on by a housing bubble.

To argue that national health care, energy taxes and education spending would have prevented this recession (they didn't save Europe from the same financial calamities) or may prevent the next is simply to use a financial crisis to shove an unrelated big-government agenda down the throats of recession weary Americans. Or, as White House Chief of Staff Rahm Emanuel succinctly put it, "to never let a crisis go to waste."

Assertion No. 6: "A return to honest budgeting"

Fact: Mr. Obama deserves credit for reversing Mr. Bush's policy of not budgeting for the Alternative Minimum Tax patch, the global war on terrorism, and future unanticipated emergencies.

But the Obama budget has large gimmicks, too. In addition to the $1.5 trillion Iraq "savings" trick described above, the president ignores the economic consensus and assumes an economic boom will begin next January. His budget assumes that he will allow most of the "stimulus" spending to expire. The president also assumes that - after a 7 percent increase next year - real discretionary spending will be frozen for the following nine years. Finally, he simply excludes the cost of his massive health plan from his budget totals. These gimmicks lowball the 2019 budget deficit by more than $500 billion.

Assertion No. 7: A new direction from Mr. Bush's "deep fiscal irresponsibility"

Fact: For all his criticisms of Mr. Bush's economic policies, Mr. Obama is actually accelerating many of them. Mr. Bush engaged in a massive spending spree, with large financial bailouts and big deficits; Mr. Obama's budget proposes an even bigger spending spree, more financial bailouts, and larger budget deficits. Mr. Bush had the Medicare drug entitlement; Mr. Obama has a massive health plan. Mr. Obama isn't rejecting Bushism, he's doubling down on it.

Assertion No. 8: Agenda reflects "hard choices."

Fact: The president titled his budget "A New Era of Responsibility." Yet promising voters huge new federal subsidies - paid for by doubling the national debt - isn't exactly a profile in courage. Instead, it is the most fiscally irresponsible budget in American history. To propose dumping $74,000 per household of new debt into the laps of our children and grandchildren is economic child abuse.

Brian M. Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

First Appeared in Washington Times