The Congressional Budget Office (CBO) has completed its initial review of President Barack Obama’s budget request and found that the White House significantly understated the cost of and red ink in its budget.
While President Obama claimed his budget would produce $7.2 trillion in deficits (a staggering figure) over the next decade, CBO calculated $9.5 trillion in deficits. That is more debt than the federal government accumulated from 1789–2010 combined. Overall, CBO estimates that the national debt held by the public—40 percent of GDP before the recession—would soar past 87 percent of GDP in a decade.
President Obama harshly criticized his predecessor for overseeing $300 billion budget deficits even while financing a war. Yet the President’s budget would run annual deficits reaching $1.2 trillion by 2021— and that assumes peace and prosperity. Annual deficits would never fall below $748 billion.
These large deficits will persist because the President’s steep tax hikes cannot keep up with his runaway spending. Relative to the historical averages (which were also pre-recession levels), President Obama would raise taxes by 1.3 percent of GDP, yet increase spending by 4 percent of GDP. The main drivers of runaway spending – surging Social Security, Medicare, and Medicaid costs – would not be reformed at all. Accordingly, the annual cost of interest on the national debt would quadruple.
As expected, the CBO rejected the numerous gimmicks in President Obama’s budget. His budget assumed large revenue increases from an economic boom that few economists foresee, as well as $643 billion in deficit reduction from transportation and health policies that the White House never actually proposed. By rejecting these gimmicks, CBO exposed the budget’s larger deficits.
Under President Obama’s budget proposal, taxpayers would see large tax increases, bigger government, and slower economic growth. The President who declared that “I didn’t come here to pass our problems on to the next President or the next generation—I’m here to solve them,” would, over the next decade, drop an additional $80,000 per household in debt onto the laps of our children and grandchildren. This is an irresponsible budget proposal by any standard.