The Obama Debt Machine
The Congressional Budget Office (CBO) has suddenly become Barack Obama’s worst enemy. Over the last week to ten days they have released a series of reports on the fiscal policies of the administration. The latest report details how the Obama administration has become the biggest debt machine in the history of the United States.
In ‘the numbers to know and numbers to show’ category, these were definitely not the numbers to show. The CBO has produced a new estimate of the Obama administration’s budget with the premise that it would raise the deficit by $365 billion next year.
The 2013 Obama budget would have a ten year impact of $3.5 trillion to annual deficits through 2022. The estimate is in sharp contrast to White House claims last month that the Obama budget would reduce deficits by $3.2 trillion over the next decade.
So, who’s right? Well, it depends on the assumptions that are made and the baselines that are used. You see, government budgeting is like like the budgeting that you and I do. If you’ve been following the on-going battle you’ve probably figured that out.
Government budgets start with a baseline which uses existing spending levels as the basis for establishing future funding requirements. In layman’s terms, this concept assumes that the government is going in the right direction and only minor tweaks are necessary.
Is that what we should use for our assumptions? Or do we need to radically change the direction that this country’s spending is going? I don’t know about you but the fiscal insanity in the United States has to be stopped. Our financial health is starting to look more and more like Greece’s every day.
The CBO is using assumptions that sound familiar. They are assuming that Congress will not pass big tax increases or severely cut spending They haven’t taken these actions up to now and they’re certainly not going to do them in an election year.
The administration is using a different set of assumptions and baselines to show that the deficit will drop by $4.3 trillion over the next ten years. In this scenario, for example, all of the Bush-era tax rates are extended and the Alternative Minimum Tax is “patched” to prevent it from falling on millions of middle-class taxpayers.
Here’s the real insanity about all of these numbers, over ten years, CBO says the Obama budget contains $6.4 trillion in new deficits. That is better than the White House had predicted, it has foreseen new deficits of $6.7 trillion. How nuts is this?
But be careful with these numbers because some of the assumptions from both the CBO and the White House are simply not valid. In addition to extending the Bush-era tax rates for the middle class, Obama’s budget also proposes to to limit the reach of the Alternative Minimum Tax and restore the estate and gift taxes to 2009 levels.
Those tax changes alone reduce revenue and increase spending by $3.5 trillion over ten years. Does anyone believe that the Republicans will restore the estate and gift taxes to their previously high levels?
CBO assumes that a 27 percent cut to Medicare physician payments will start to reduce expenses in January 2013, even though Congress regularly passes a “doc fix” to avoid this automatic payment cut. Because Obama proposes a “doc fix” that simply freezes payments at 2010 levels, his budget is scored as increasing deficits by $271 billion over ten years.
It’s obvious we’re all heading in the wrong direction. The country can not sustain continuing high deficits for much longer without action on the spending side. The Congress needs to have the political courage to cut the budget in meaningful ways. This will require a change in the philosophy that government is all things to all people.
Departments that don’t fit into the small government model must be eliminated. Programs that are currently at the Federal level should be devolved to the state and local level. We need to take a hard look at defense, particularly at overseas basing of troops and their families.
It’s time to produce 100% of our own energy instead of shipping dollars overseas to people that don’t like us and cause us to be involved in dangerous foreign adventures.
This coming election will be among the most important in American history. Benjamin Franklin was asked after the signing of the Constitution if the sun on the President of the Convention’s chair was rising or setting. As reported by James Madison, Franklin opined that the sun was definitely rising. Let’s keep it rising.
I am a conservative commentator who lives in Central Virginia near Charlottesville, the home of Thomas Jefferson.