Obama unveils new budget with record spending and record deficits

Posted on February 1, 2010

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President Obama unveiled his budget for 2011 which weighs in at a record $3.8 trillion and sets yet another record – a $1.56 trillion budget deficit for our current fiscal year, 10.6% of the nation’s GDP. The budget includes the President’s much ballyhooed partial spending freeze, which freezes a portion of discretionary spending at high 2010 levels. It also includes tax credits and tax cuts which are designed to help spur job creation, which is a nice thought, but even according to the administration, unemployment would still be at 9.8% in a perfect world if everything went according to plan.

Even more surprising is the assumptions that the budget makes in savings – for instance, the budget assumes that health care reform will pass and simply took an average dollar amount between the House and Senate versions. The budget also assumes the passage of a deficit-neutral cap-and-trade bill, which is itself a revision from projections last year that cap-and-trade would rake in $646 billion for the federal government (never mind what it would do to the rest of the economy). Both of those seem like risky election-year proposals, and it seems more than a tad irresponsible to include potential savings from bills that haven’t been passed yet – or if they do, may be vastly different from what is assumed.

Obama’s actual 2011 budget is $400 billion more than what the administration projected in March, and the 2012 projections are up by $500 billion as well. The spin is already out that it’s all Bush’s and the Republicans’ fault, and it’s true that they do deserve blame for deficit spending over the eight years of Bush’s term. It’s also true that previous administrations (Clinton, Bush Sr., Reagan, Carter) are also to blame by posting deficits and adding to our national debt as well.

But Obama’s last two budgets take it to an entirely different level. In two budgets he will have added over $3 trillion to the national debt, just about equal to what Bush racked up in eight years with two of those years under a Democratic Congress in control of the purse strings. To suggest that all the spending is necessary to further “stimulate” the economy or to prevent further slippage misses a larger point – a nation cannot sustain its economy when its government posts a hefty deficit that is a double-digit percentage of the GDP, whatever the reason. Any short-terms gains bought by government spending now (which have thus far been somewhat negligible) will be erased by a more and more uncertain economic outlook from a heavily indebted federal government.

It’s almost insulting that the President has the gall to release a budget like this and then claim to be concerned about deficits. In fact, his exact words were:

We simply cannot continue to spend as if deficits don’t have consequences, as if waste doesn’t matter, as if the hard-earned tax dollars of the American people can be treated like Monopoly money, as if we can ignore this challenge for another generation.

Words and reality could not be more disparate. The administration has applied a shotgun spending approach, throwing money everywhere in the hope something will happen. It’s not a legitimate strategy to help the economy, and if deficits are such a pressing issue, then do more to tackle them in the present.

But then, everything is a pressing issue to this administration, and they are usually quickly swept aside after being sufficiently demagogued for political points. Whatever the intentions for doing so, as a nation, we cannot sustain deficits on this magnitude, and this administration doesn’t seem keen on bringing them down by in any meaningful way.

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Posted in: News, Politics