President Obama's Budget - Increased Spending and Taxes

The President’s budget is out today.  Do not believe the hype that the President is cutting spending and balancing the budget.  A cursory review of the budget tables in his proposal indicates that the free spending Obama Administration is going to increase spending and taxes, yet claim that they are freezing spending and cutting the deficit.


The President even has the Wall Street Journal parroting the President’s promised cuts to spending over the next 10 years:

President Barack Obama released a $3.73 trillion budget for fiscal-year 2012 Monday where he sought to balance two competing and conflicting agendas: dramatic cuts to federal spending while also investing in programs to improve U.S. competitiveness. He ended up with a product that offers up more than $1 trillion in deficit reductions over a 10-year period—three-quarters coming from spending cuts and the balance from tax increases or the elimination of existing tax breaks.

The fact of the matter is that the President is using fuzzy math to create an inflated budgetary baseline (in other words he has inflated projected spending over a 10 year period) so that he can claim cuts that don’t exist.  Today is the President’s day to pitch his plan, but the Obama Administration has to answer why his baseline is so inflated and why he is planning to raise taxes at a time of economic pain.

The President’s budget has something called the “Bridge From Budget Enforcement Act Baseline to Adjusted Baseline.”  This is the math theory used to create the fiction of cuts to the deficit.  This document has a “Budget Enforcement Act Baseline” deficit of $5.5 trillion over the 2012-2021 period and adds in some calculations to inflate that deficit baseline. 


The President is actually cutting the projected deficit using projections created by his own administration.  This is a great way to make it look like he is going to balance the budget in 2021, a date where he will be far away from the Oval Office and in no way can he be blamed if his numbers do not pan out.

The Obama Administration adds in a factor, the “indexing to inflation the 2011 parameters of the Alternative Minimum Tax” which adds $1.5 trillion to the Obama baseline.  Then the Obama numbers crunchers add a continuation of the tax cuts for middle income taxpayers to the tune of $1.3 trillion.  Please note that this projection does not calculate in an extension of tax cuts for job creators — this is an projected increase in taxes starting in the first year of President Obama’s replacement.

More Obama math.  Add in a $3.3 trillion in program adjustments and $642 billion in debt services on adjustments.  Add in all of these projections to the baseline and you have adjusted the baseline from $5.5 trillion to $9.39 trillion in debt from 2012-2021.  That is how you adjust debt upward to make it look like the President’s budget is cutting spending.  You inflate projected spending over the next 10 years then increase spending at a lower rate than the baseline, you can create a “cut.”

On taxes, the President has hidden a massive increase in the gas tax.  There is a line item in the President’s budget summary tables titled “Bipartisan financing for Transportation Trust Fund” that adds up to $328 billion from 2012-2021.  In the President’s Bipartisan Debt Commission Report, they recommended a 15 cent increase in the gas tax.  The President’s budget seems to assume that his commission’s report is implemented by Congress and send to his desk.  This is an implicit endorsement of a massive increase in the price of gas at the pump in the form of increasing the federal gas tax from $18.4 cents.  If this idea does not pass, then you have a $328 billion shortfall in the projected transportation budget.


According to the Wall Street Journal the President punted on entitlement reform and his promised decrease in corporate taxes.

The Obama budget reductions don’t come close to the $4 trillion in savings recommended by a White House-appointed deficit commission. This is largely because the president’s budget shies away from pushing for any substantial changes to entitlement programs Medicare, Medicaid or Social Security. Nor does it include a specific outline for overhauling either the corporate or individual tax codes.

Other increased taxes include, according to the AP, an assumed expiration of tax cuts for job creators and an increase in taxes on energy producers.

The plan includes tax increases for oil, gas and coal producers, investment managers and U.S.-based multinational corporations. The plan would allow Bush-era tax cuts to expire at the end of 2012 for individuals making more than $200,000 and married couples making more than $250,000. Wealthy taxpayers would have their itemized deductions limited, including deductions for mortgage interest, charitable contributions and state and local taxes.

You are going to hear the Republican talking point that the President’s budget “spends too much, borrows too much, and taxes too much.”  That is true, yet the President’s budget is usually relegated to the book shelf or as a paper weight in most Congressional offices a few days after it is submitted to Congress.  Now it is on the shoulders of conservaive leaders in Congress to use the power of the purse to put forth a budget that cuts spending, stops borrowing from future generations and just says no to tax increases.


UPDATE 12:10 pm – Senate Budget Committee has published a claim that the President has proposed $8.7 trillion in new spending.

Despite this year’s $1.6 trillion deficit, the president still refuses to change course and reduce spending. Under his budget, the size of government will nearly double since the day he took office. Ignoring both economists’ warnings and the public’s demands for restraint, the president’s explosive growth of government crushes private-sector investment, fuels uncertainty for job creators, and guarantees a less prosperous future for all Americans. The price tag of the president’s budget for the next ten years: 

Total spending: $46 trillion; $8.7 trillion in new spending;  New entitlement spending, beyond assumed growth: $404 billion Increase in non-defense discretionary spending since 2008: 24% (excluding stimulus) Increase in discretionary spending above president’s own deficit commission: $353 billion Spending this year under the president’s budget: Record $3.8 trillion; 25.3% of GDP (highest since WWII).

UPDATE 12:30 pm – According to Sam Stein over at The Huffington Post, the Dems are circulating these talking points to promote the President’s budget.

The President’s budget is designed to strengthen our nation, invest in the future, help create jobs and grow our economy, while reducing the deficit by $1.1 trillion. We agree with the President that we must out-innovate, out-educate, and out-build the rest of the world.

Republicans will bring legislation to the floor this week that cuts jobs, threatens American innovation, hampers our global competitiveness, and diminishes investments in rebuilding America.

· The GOP spending bill harms the people hurting most: middle class families, students, seniors, and veterans.

· The GOP proposal ends construction projects to rebuild our nation, costing good paying American jobs; halts innovation and disease research; and takes cops off the street, making our neighborhoods less secure

Democrats are committed to living within our means, while investing in the future and cutting the deficit. Instead Republicans have proposed policies that will add $5 trillion to the deficit, and have not presented a serious plan for actually addressing the deficit.

Democrats will continue to measure every effort by whether it creates jobs, strengthens the middle class, and reduces the deficit.


According to these talking points, liberals will be saying that the President is going to use your tax dollars and borrowed money to “invest in the future,” while at the same time reducing the deficit by $1.1 trillion.

Dan Spencer had a great Red State post on this very issue yesterday.


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