President Obama's 2010 budget looks more astounding by the day, especially when someone other than the White House budget office is analyzing it. The latest case of epic sticker shock came Friday when the Congressional Budget Office published its assessment, which found that the proposals would increase the federal deficit by $2.3 trillion more over 10 years than the White House had claimed.
Hey, what's a little rounding error among friends?
Mr. Obama keeps saying he has "inherited a trillion dollar deficit," which is true. But he's hardly an innocent bystander. CBO shows that the President is seeing that $1 trillion and raising it again and again, as far as the eye can see. In only two months, since the last CBO budget review in January, Democrats have passed laws that increase spending by $134 billion in the last six months of this fiscal year alone, and $1.2 trillion over the next 10 years. And that's all before his 2010 budget proposals.
The White House responded that CBO, which is also now run by Democrats, has a more pessimistic economic forecast than do White House economists. But not by much. CBO expects growth this year to decline by 3%, while the White House's rosy scenario has it falling by only 1.2%. Both predict roughly the same growth rates in 2010 (2.9% for CBO vs. 3.2% for the White House) and 2011 (both 4%).
The big difference between the two guesstimates is in spending, with CBO calculating that Mr. Obama's proposals will increase federal outlays by $1.7 trillion more than the White House projects. Entitlement spending -- Medicare, Medicaid, and so on -- will increase by $1.1 trillion. In 2009 and 2010 alone, CBO estimates that Mr. Obama's budget will increase spending by $347 billion more than the White House claims.
As a share of GDP, CBO says this means spending will hit an astounding 28.5% in fiscal 2009, which ends this September, and still be at 25.5% next year, staying at close to 23% to 24% of the economy for the next decade. As CBO dryly notes, this is "above the average of 20.7 percent over the past 40 years." Even CBO's estimate is conservative because it assumes that most of the spending in the stimulus bill will be temporary, though Democrats are already planning to make much of it a permanent part of the budget baseline.
Where does this take the Obama budget deficit? Up into the great beyond. This year's deficit will hit 13.1% of GDP and next year's will still be at 9.6%, assuming a healthy recovery, and then never get below 4.1% for the entire decade. These deficits assume the passage of Mr. Obama's enormous tax increases in 2011 and $629 billion in new cap-and-tax carbon revenues. The share of debt held by the public will double -- to 82.4% in 2019 from 40.8% in 2008 (see nearby chart).
And by the way, all of this is without including the costs of Mr. Obama's plan to offer "free" health care for the middle class. The White House budget includes only a "down payment" on health care, with every serious person figuring it will cost at least $1.2 trillion, and probably more. Incredibly, Democrats on Capitol Hill are, with White House encouragement, talking about jamming health care through Congress with a special procedure that requires only 50 Senate votes.
At least after World War II, spending could, and did, decline rapidly when the country demobilized. In this case, with the bulk of federal spending geared toward income maintenance and transfer payments that have political constituencies, that won't happen. And that is part of Mr. Obama's plan. One unstated but clearly implicit goal of his budget is to put in place spending programs that make ever-more Americans dependent on government and that will require a permanently higher level of taxation to finance. All of this is being done in the name of addressing income inequality.
Republicans have an obligation to slow down this express train to a European welfare state, and to educate Americans so that they put pressure on Democrats who claim to be deficit hawks. If this budget passes in anything close to Mr. Obama's form, Republicans will spend the next two or three generations doing little more than collecting higher taxes from the middle class to finance the Obama revolution.
Hey, what's a little rounding error among friends?
Mr. Obama keeps saying he has "inherited a trillion dollar deficit," which is true. But he's hardly an innocent bystander. CBO shows that the President is seeing that $1 trillion and raising it again and again, as far as the eye can see. In only two months, since the last CBO budget review in January, Democrats have passed laws that increase spending by $134 billion in the last six months of this fiscal year alone, and $1.2 trillion over the next 10 years. And that's all before his 2010 budget proposals.
The White House responded that CBO, which is also now run by Democrats, has a more pessimistic economic forecast than do White House economists. But not by much. CBO expects growth this year to decline by 3%, while the White House's rosy scenario has it falling by only 1.2%. Both predict roughly the same growth rates in 2010 (2.9% for CBO vs. 3.2% for the White House) and 2011 (both 4%).
The big difference between the two guesstimates is in spending, with CBO calculating that Mr. Obama's proposals will increase federal outlays by $1.7 trillion more than the White House projects. Entitlement spending -- Medicare, Medicaid, and so on -- will increase by $1.1 trillion. In 2009 and 2010 alone, CBO estimates that Mr. Obama's budget will increase spending by $347 billion more than the White House claims.
As a share of GDP, CBO says this means spending will hit an astounding 28.5% in fiscal 2009, which ends this September, and still be at 25.5% next year, staying at close to 23% to 24% of the economy for the next decade. As CBO dryly notes, this is "above the average of 20.7 percent over the past 40 years." Even CBO's estimate is conservative because it assumes that most of the spending in the stimulus bill will be temporary, though Democrats are already planning to make much of it a permanent part of the budget baseline.
Where does this take the Obama budget deficit? Up into the great beyond. This year's deficit will hit 13.1% of GDP and next year's will still be at 9.6%, assuming a healthy recovery, and then never get below 4.1% for the entire decade. These deficits assume the passage of Mr. Obama's enormous tax increases in 2011 and $629 billion in new cap-and-tax carbon revenues. The share of debt held by the public will double -- to 82.4% in 2019 from 40.8% in 2008 (see nearby chart).
And by the way, all of this is without including the costs of Mr. Obama's plan to offer "free" health care for the middle class. The White House budget includes only a "down payment" on health care, with every serious person figuring it will cost at least $1.2 trillion, and probably more. Incredibly, Democrats on Capitol Hill are, with White House encouragement, talking about jamming health care through Congress with a special procedure that requires only 50 Senate votes.
At least after World War II, spending could, and did, decline rapidly when the country demobilized. In this case, with the bulk of federal spending geared toward income maintenance and transfer payments that have political constituencies, that won't happen. And that is part of Mr. Obama's plan. One unstated but clearly implicit goal of his budget is to put in place spending programs that make ever-more Americans dependent on government and that will require a permanently higher level of taxation to finance. All of this is being done in the name of addressing income inequality.
Republicans have an obligation to slow down this express train to a European welfare state, and to educate Americans so that they put pressure on Democrats who claim to be deficit hawks. If this budget passes in anything close to Mr. Obama's form, Republicans will spend the next two or three generations doing little more than collecting higher taxes from the middle class to finance the Obama revolution.
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