Obama Spend It Now

White House unveils most expensive proposal in American history

February 14, 2012

President Obama on Monday unveiled the most expensive White House budget request in United States history, falling well short of his repeated promises to bring federal spending under control.

Despite pledging in 2009 to cut the federal deficit in half by the end of his first term, the president’s budget in fact does little to address the primary drivers of the national debt, relying heavily on gimmicks and accounting tricks to give the appearance of fiscal responsibility.

The announcement comes against the backdrop of deadly riots in Greece as the country struggles to impose severe austerity measures made necessary by its refusal to bring national debt levels under control.

Republicans are calling the president’s budget "one of the most spectacular fiscal cover-ups in American history." On a conference call with reporters Monday, Sen. Jeff Sessions (R-Ala.) and Rep. Paul Ryan (R-Wis.) slammed the president’s budget as a failed attempt to confront the mounting debt crisis, and a worrisome abdication of leadership.

"Instead of creating an America built to the last, this is a plan for an America drowning in debt," Ryan said. "This is not a fiscal plan to save America from a debt crisis and grow the economy. It is a political plan to help the president’s reelection."

"This budget lulls the American people into the belief that the concerns, their concerns are being taken care of, when they are not," Sessions said. "It’s just not correct for the president to be claiming massive reduction in deficits when his projections maintain the same levels of debt."

Under Obama’s proposal, federal spending will rise from $3.8 trillion in 2013 to $5.8 trillion in 2022, an increase of 53 percent. He plans to spend a total of $47 trillion over the next decade, adding a cumulative $6.7 trillion to the federal budget deficit. If enacted, the White House plan would increase the debt held by the public—the amount owed by American taxpayers—from $12.6 trillion to $19.4 trillion over that same period, a 54 percent increase. As a share of GDP, the public debt is projected to increase from 74.2 percent to 76.5 percent by the end of the 10-year budget window.

Maya MacGuineas, president of the non-partisan Committee for a Responsible Federal Budget, said in a statement that the president’s proposals "would barely stabilize the debt—and at too high a level. We need to go bigger if we want to get this debt monkey off our back."

According to White House projections, by the end of his first term in office President Obama will have added $5.7 trillion to the national debt, more than any president in history. While campaign for president in 2008, Obama said that the $4 trillion in debt accumulated under President George W. Bush was "irresponsible" and "unpatriotic."

Obama’s budget calls for more than $350 billion in new stimulus spending, a majority of which comes in the form of additional funding for the Departments of Education and Transportation, all of which have already seen significant increases since 2008.

Obama plans to spend $70 billion on education in 2013, a $12.6 billion increase compared to 2008. The Transportation Department would receive $74 billion in 2013, a $63.3 billion increase, or 692 percent, compared to 2008.

This substantial increase in debt-fueled spending notwithstanding, Obama sought to portray his latest budget as a sincere effort to reduce the deficit. "I'm proposing some difficult cuts that, frankly, I wouldn't normally make if they weren't absolutely necessary, but they are," he told a crowd of supporters in Annandale, Va. "The truth is, we're going to have to make some tough choices in order to put this country back on a more sustainable fiscal path." These "difficult cuts" and "tough choices," the White House claims, would reduce the federal deficit by about $4 trillion by the year 2022.

A GOP aide familiar with the budget process calls that figure "inaccurate at best." Most of the "savings" come in the form of tax increases—the White House claims $1.5 trillion, but Republican analysts with the House and Senate Budget Committees say the real figure is closer to $2 trillion. Under the president’s proposal, tax revenue as a share of GDP would rise to 20.1 percent in 2022, well above the historical average of 18 percent. The remaining $2.5 trillion in claimed deficit reduction, however, is not achieved through spending cuts, but rather through a litany of budgetary gimmicks.

For instance, the White House effectively eliminates the $1.2 trillion spending sequester mandated by the Budget Control Act, replacing it with a significant tax increase. However, the president’s budget still takes credit for that $1.2 trillion in savings.

"This is the biggest gimmick in here, nobody should be buying it," said one GOP aide familiar with the budget process. "These are savings that were imposed on the president, that are already in the law, that he is now claiming credit for."

As the aide points out, Obama initially opposed any effort to tie spending cuts to the debt ceiling legislation.

The White House also purports to save $800 billion from the inevitable winding down of the Afghanistan war, money that was never intended to be spent, and therefor cannot accurately be said to have been saved. "All of that money is borrowed," Sessions said. "So when you cease to spend the money on the war, it’s not as if there’s extra money coming into a pot which we can now spend."

Another gimmick the president uses to claim another $522 billion in savings is to manipulate the budget baseline to assume the permanent funding of the so-called "doc-fix"—Medicare reimbursements for physicians that Congress habitually approves, despite cuts mandated by law—but without accounting for the cost. "From his perspective, it is current law," the GOP aide says. "But that’s simply not the case. It’s a baseline game."

After accounting for these gimmicks, GOP budget analysts estimate that the president’s budget reduces the deficit by a grand total of $273 billion over 10 years.

All told, Obama’s fourth and final budget request before the 2012 election constitutes a failure to live up to the economic promises he made on the campaign trail.

On entitlement spending, by far the largest contributor to the federal deficit, the president’s budget does little to contain the skyrocketing costs of Medicare and Medicaid.  The Congressional Budget Office estimates that by 2022 federal spending on Medicare alone will reach $1 trillion.

That is another broken promise for a president who pledged to take action to reform entitlements. "We’re going to have to take on entitlements, and I think we’ve got to do it quickly," Obama said in October 2008. "We’re going to have a lot of work to do, so I can’t guarantee that we’re going to do it in the next two years, but I’d like to do it in my first term as president."

Douglas Holtz-Eakin, former CBO director and president of the American Action Forum, told the Washington Free Beacon that Obama’s latest budget is just another bag of gimmicks that should come as no surprise to observers of Washington politics.

"This isn't a serious governance document, and Senate Democrats say they're not interested in seriously dealing with the issue because it dangers them politically," Holtz-Eakin said. "It’s more of the same."