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  • The Obama Budget: Spend, Entitle, Borrow

    Last Friday, the Congressional Budget Office (CBO) released its analysis of the president’s 2011 budget submission to Congress. This report hasn’t gotten nearly the attention it deserves.

    When the administration released its budget in early February, the news seemed bad enough. By its own reckoning, the Obama administration’s budget plan would result in massive deficits and borrowing if adopted in full. According to the administration’s estimates, the president’s budget plan would produce deficits totaling $10.1 trillion over the period 2010 to 2020, and by 2020 federal debt would reach $18.6 trillion.

    But now we learn that that was the rosy scenario.

    According to CBO, the Obama budget plan would run up much larger budget deficits and pile up even more debt than the administration reported in February.

    Over the period 2010 to 2020, CBO expects the Obama budget would run a cumulative deficit of $11.3 trillion — $1.2 trillion more than the administration predicted. By 2020, total federal debt would reach an astonishing $20.3 trillion — up from $5.8 trillion at the end of 2008.

    The president likes to say he inherited a mess. He did in fact enter office during a deep recession that sent deficits soaring on a temporary basis. But his policies have unquestionably made an already difficult medium- and long-term budget outlook much, much worse. The problem is that President Obama is a world-class spender. He wants to pile massive new commitments on top of a bloated and unreformed government. He is willing to raise taxes to pay for some of his wish list, but far from all of it. For the rest, he plans to run up the nation’s debt with reckless abandon.

    CBO’s numbers tell the story.

    Over the next ten years, CBO says the Obama budget would increase federal spending by $2.3 trillion, including $0.8 trillion in net interest costs on the additional borrowing that would be required.

    Bad as that is, it’s a lowball estimate. The president’s budget assumes that war-fighting funds will plummet from $130 billion in 2010 to just $50 billion in 2012 and every year thereafter. No one believes this will happen. More realistic assumptions would add $500 billion or more to the president’s defense funding request over a ten-year period.

    The biggest problem in the federal budget is runaway entitlement spending. And so what would the Obama budget do? Increase entitlement spending, of course. By $1.9 trillion over ten years, according to CBO. In 2020, federal entitlement spending would reach $3.3 trillion, up from $2.1 trillion in 2009.

    The administration has been touting a supposed three-year spending “freeze” as evidence of its determination to cut the budget back. But only a very small portion of the budget would be frozen, and only after the administration had spent two years stuffing in more funding. CBO expects that discretionary spending under the Obama budget, excluding war funds and Pell Grants (which would become an entitlement), will increase by $0.5 trillion over ten years.

    Two years ago, CBO expected total federal spending to reach $4.3 trillion in 2018. Now, if the president’s budget plan were adopted, CBO projects spending would exceed $5.0 trillion in 2018.

    Between 2010 and 2030, the population age 65 and older is expected to rise from 41 million to 71 million people. CBO projects spending on Social Security, Medicare, and Medicaid in 2030 will reach 14.4 percent of GDP, up from 9.8 percent today. That will be like adding a whole new Social Security program to the budget without any additional revenue to pay for it.

    The federal government is drowning in unaffordable entitlement commitments. President Obama’s response is to spend, entitle, and borrow even more, while he can. And then, with an even bigger government locked into the “baseline,” he plans to pivot and use the prospect of a debt crisis he made much more probable to push for a massive tax increase.

    Unfortunately for the president, the public is already onto this game. And they want no part of it.

    Cross-posted at The Corner.

    Posted in Economics [slideshow_deploy]

    8 Responses to The Obama Budget: Spend, Entitle, Borrow

    1. Pingback: Bates for Senate » Blog Archive » Washington Must Stop Wasteful Spending

    2. Pingback: IS FHTM a SCAM? Review by Tom Harrington

    3. Pingback: The Obama Budget: Spend, Entitle, Borrow | The Foundry … : PlanetTalk.net - Learn the truth , no more lies

    4. Tom Lewellen, Scotts says:

      The budget deficits are even more underestimated than you might think.

      SSA's budget projections are based on an increase in life expectancy of 9 years this century. For most, 9 years might seem a bit low just because of all the research in stem cells and in the genome.

      Statistically, though, 9 is a bit hard to swallow because last century life expectancy increased 29 years. The century before, the increase was 12 years. Plug a number between 9 and 29 into the SSA budget equations and the deficits get remarkably worse. (Don't bother asking the SSA for these projections, I have asked many times and have received no response.)

      Tom

    5. Pingback: Choosing A Private Label Rights Package | PLR Gangster

    6. Greg Benedict says:

      The presidents actions over the last year are nothing more then corruption. When the republicans take back the congress in november, two things need to happen.

      Get our economy rolling again (something Obama shows no concern for) and start impeachment proceedings against him for all the closed door dealings he made to get democratic senators vote on obamacare. I know, your thought is that that will put biden in charge. It doesn't matter, whether is obama or biden, they will be a lame duck president.

    7. Greg Benedict, balti says:

      The presidents actions over the last year are nothing more than corruption and reckless spending. When the republicans regain control of the congress in november, and they will, there are two things that need to start immediately. One is to get our economy rolling again because obama sure doesn't care about the economy and what he doing to our childrens future and secondly start impeachment proceedings against obama for the closed door dealings with democratic senators to "buy" their votes on his obamacare.

    8. Judi L Machak says:

      i would like to know where I could find what the last two presidents spent before this mad man got into power.

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