President Obama’s budget for the next fiscal year is slated to be released on March 4. While the budget is not yet public, the administration leaked a description of it to the Washington Post: “With 2015 budget request, Obama will call for an end to era of austerity:”
President Obama’s forthcoming budget request will seek tens of billions of dollars in fresh spending for domestic priorities while abandoning a compromise proposal to tame the national debt in part by trimming Social Security benefits.
With the 2015 budget request, Obama will call for an end to the era of austerity that has dogged much of his presidency and to his efforts to find common ground with Republicans.
Have you noticed that we are living in an era of austerity? Federal spending in FY 2014 is projected at $3.8 trillion, the most in our history. In what way is this “austere”?
The lack of conflict is due in part to the collapse of the deficit as a political issue. While annual budget deficits remain high by historical standards, they have shrunken rapidly over the past few years as the economy recovered and Congress acted to cut spending.
When the Post says that the deficit had “collapsed as a political issue,” it is engaging in wishful thinking. The national debt has grown to more than $17 trillion. The projected deficit for the current fiscal year is $514 billion. That is indeed smaller than the out-of-control deficits of the past few years, but it is larger than any deficit that has ever been incurred when the president was anyone other than Barack Obama. This chart, from the CBO report that was released a week or two, shows deficits as a percentage of GDP. Note how the deficits run up by the Democratic Congress after it took control in 2007 worsened at the onset of the Obama administration and have dwarfed anything in our history. This profligate spending represents “austerity?”
The other striking fact about Obama’s proposed budget is that it reneges on all spending agreements that the Democrats and Republicans have agreed on, going back to the Budget Control Act of 2011:
Obama would fully pay for proposed new spending in his budget request, administration officials said, including $56 billion for what they called “Opportunity, Growth and Security Initiative.” The package, which would be split between domestic programs and defense, will include fresh cash for 45 new manufacturing institutes; a “Race to the Top” for states that promote energy efficiency; new job training programs and apprenticeships; and expanded educational programs for preschoolers.
But wait! Democrats and Republicans agreed on discretionary spending levels that supposedly were binding for a decade to come in the Budget Control Act, which included the sequester. Just a few months ago, the Ryan-Murray compromise modified the sequester and increased discretionary spending. That bipartisan agreement was supposed to put spending debates to rest for at least the next couple of years. Now, apparently, the Obama administration intends to throw all prior agreements into the trash can, and demand still higher spending.
This illustrates a point that I have made over and over: all budget agreements that purport to achieve savings over a long period of time, usually a decade, are a farce. The savings always come in the “out years,” but the out years never arrive. Once you get past the current fiscal year, budget agreements are not worth the paper they are printed on. For Republicans to agree to more spending today in exchange for hypothetical cuts in later years is folly–those cuts will never come.
Obama’s budget promises to be fraudulent in other ways as well. No surprise there:
Officials said Obama’s budget request will include other nuggets of note. For example, it assumes that an overhaul of the nation’s immigration laws will pass Congress despite deep divisions in Republican ranks. It also assumes that a sharp, but somewhat mysterious slowdown in health-care spending will continue throughout the next decade.
Bear that in mind when Obama says that he has proposed a budget that controls future deficits: deficits will be contained if Obamacare magically reduces health care spending–assuming that Obamacare even exists a year from now–and if vast numbers of new immigrants somehow contribute more to the federal coffers than they cost. None of that is going to happen. Obama’s budget, as usual, is an exercise in magical thinking.