The Obama administration put out the word this weekend that the president’s new budget will end several years of “austerity” in Washington.
Austerity? Since 2009, federal borrowing has skyrocketed by $6 trillion. This year’s budget deficit is expected to fall to somewhere near $500 billion, which sadly is progress, because the first-term Obama deficits all exceeded $1 trillion.
It is true that federal spending has trended downward since 2011, but this is only because in 2009 and 2010, the $830 billion of federal stimulus spending drove federal outlays from about $3.5 trillion to just below $4 trillion. Yes, federal spending has come down in the last several years, though the federal empire still commands a $3.8 trillion price tag. Most of the “austerity” cuts Obama complains of are merely a result of the reductions in Pentagon spending due to winding down the wars in Afghanistan and Iraq.
Programs like infrastructure, housing, education, job training, community development, and others have been on a decade-long shopping spree, with many programs up more than 50 percent when counting stimulus funds. President Obama would spend $56 billion more on these “neglected” programs in his latest budget. And he would finance the new spending with even more tax increases (which he calls loophole closings). This comes on top of his demands for more food stamps and extended unemployment insurance funding.
Don’t forget that $1 trillion in Obamacare subsidies are also just kicking in and will grow every year. The president who pouts about austerity also boasts of putting 5 million to 7 million new recipients into Obamacare’s Medicaid expansion.
Meanwhile, the now discredited Keynesians in and outside the White House continue to complain of a “fiscal drag” that is holding back the economy and condemning the U.S. to this tortoise-paced 2 percent growth path. But under the Keynesian model, the juice comes from the excess of spending over taxes collected. For five years, the deficit has averaged more than 6 percent of GDP. This year the deficit shrank, but before the end of the decade it is headed again to again level out at $1 trillion, according to the Congressional Budget Office. That same report tells us that entitlement programs are forecast to rise by another 50 percent over the next decade.
If all of this is austerity, God help us if we see a binge.