President Obama’s Budget: A Better Magic Show Than Las Vegas
Rory Cooper /
Classic Tax and Spend Budget
- Increase, Raise and Hike: The President’s budget proposal increases taxes by $1.3 trillion; raises entitlement spending by $700 billion (including the health care fund), and hikes discretionary spending by a steep 12%.
- Creating Deficits, Not Eliminating Them: Given the budget deficit has already quadrupled in one year, the President’s pledge to halve it by 2013 is hardly ambitious. Even with the assumption of peace and prosperity, the 2013 budget deficit target of $533 billion would exceed any under President Bush.
- Taxes Spent: Before the recession, revenues were 18% of GDP and spending was 20%. After the recession, the President would maintain revenues at 19% of GDP and spending at 22%. All new tax revenues would finance new spending, not deficit reduction.
- Big Government at 22%: The proposed post-recession spending level of 22% of GDP has been exceeded only eight times in the post-war era. This is hardly setting the stage for fiscal responsibility.
- False Assumptions: The budget assumes economic growth rates a full third faster than the consensus of private forecasters. Obama’s revenue forecast is too high by as much as $200 billion a year, an excess he needs desperately to reach his deficit reduction target. His budget would keep unemployment high, depress revenues, and hold the budget deficit stubbornly around a trillion dollars.