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  • Mr. President: “We Can’t Wait” for the FY 2013 Budget

    President Obama will release his annual budget proposal late yet again. Choosing the date is not merely a convention. By law, the President must release the budget by the first Monday in February, which falls on February 6 this year. Yet yesterday the Administration announced it will release its fiscal year (FY) 2013 budget a week late, marking the third such delay in four years. Right now, when the economy is struggling, annual deficits consistently exceed $1 trillion, and Americans are demanding that Washington govern responsibly, this delay is beyond frustrating. Especially after last year’s protracted budget battle, a prompt submission would have signaled that the President is ready to get down to business. Unfortunately, the opposite now seems imminent.

    The budget provides the President a formal venue in which to communicate his priorities, and it illuminates the fiscal path down which he would lead the country. If this year President Obama proposes the same failed policies of past budgets, the country will plod deeper into the present fiscal crisis—not out of it.

    For example, Obama’s 2012 budget would have put debt held by the public on track to rise from its current level of about 70 percent of gross domestic product (GDP) to more than 87 percent of GDP by 2021. As this Budget Chart Book chart by The Heritage Foundation shows, that amounts to double the post–WWII average.

    That same budget failed to include the kinds of rational, market-based solutions necessary to fix the three major entitlement programs—Medicare, Medicaid, and Social Security—which are currently set on spending autopilot. The chart below shows that more than half of the President’s 2012 budget would have been spent on entitlement programs.

    The picture only gets worse from here. The nonpartisan Congressional Budget Office (CBO) projects that annual spending on all entitlement programs will increase from $2 trillion in 2011 to nearly $3.3 trillion in 2021. That’s almost the size of all federal spending today.

    CBO estimates that spending on just the three major entitlement programs will increase from 10.4 percent of GDP in 2011 to 12.4 percent of GDP in 2021. With baby boomers starting to retire and health care costs rising, that figure will jump to 16.4 percent of GDP by 2035 and to nearly 19 percent of GDP by 2050.

    Because Obama’s past budgets put off reforming entitlements, more debt (or taxpayer dollars) will go toward them than would be needed otherwise. Delay is not the solution. What is needed are good ideas and political will from the President and Congress to reform these programs so they work better and are more affordable. Entitlement reform means the programs will actually be around for seniors who need them, and it means future generations won’t find themselves saddled with sky-high tax rates to pay for entitlements. In the President’s budget proposal this year, he should be honest about what doing nothing to tackle entitlement programs means for the country’s spending and debt crisis. Then he should offer his plan to solve that problem.

    President Obama’s past budget proposals did little if anything to address Washington’s spending crisis. Ignoring entitlements—the real drivers of future deficits—only made things worse. This time around, the President should lay out a truly bold vision for America: one that will tackle the grave challenges presented by entitlement programs, fully fund the nation’s defense capabilities, and lay the groundwork for a robust, thriving economy though fundamental tax reform. If the President needs ideas, he should look to The Heritage Foundation’s Saving the American Dream plan, which would accomplish all of these goals.

    Posted in Economics [slideshow_deploy]

    2 Responses to Mr. President: “We Can’t Wait” for the FY 2013 Budget

    1. West Texan says:

      Let's see, 58% of so called federal entitlements spread over 50 state budgets as per respective populations? Sounds like true federalism to me. Returning entitlements and/or private market offerings to the states where these domestic affairs constitutionally belong. Maybe then the Beltway boys, and gals, will do their jobs as America's agents for national defense and foreign policy. It's so fundamental. Dang!

    2. @gdthomp01 says:

      And it looks even worse when you frame those entitlement spending dollars as a percentage of tax revenue instead of spending. Last time I checked I used 2009 IRS data and found that spending for SS, Welfare, Medicare, Medicaid and Unemplyment Insurance accounted for over 90% of all tax revenues.

      To put it another way, 53% of Americans pay the taxes that in turn fund mostly those in America who don't pay taxes. Is this how we want our country to operate? Half the country pays the taxes and the other half get that money via the government.

      And as this post points out, it wlll only get worse if we don't do something now.

      My backup to my statements can be found here. http://cosmoscon.com/2011/10/31/is-this-how-we-ru

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