March 7, 2012

Where’s the Focus on Obama’s Budget?

Since last summer, the various GOP primary opponents have offered a myriad of tax and budget proposals. Different pundits, think tanks, campaigns and others have come up with their own numbers on the budget-balancing sincerity of all of the GOP candidates, and this has caused many of the candidates to spend a vast amount of time, ink and money defending (or in the case of Romney, expanding and then semi-retreating from) their respective plans. However, I think the candidates have erred in doing so. Rather than spend time on their own flawed proposals (with the exception of Ron Paul, whose cuts are so necessarily massive the budget would actually balance, and quickly), the candidates should focus on a four-prong attack on President Obama’s FY 2013 budget proposal, which is far worse than any of the candidates’ plans.

The first attack point should hit the economic growth projections of the President. I used this attack last evening in a post on the Reason Foundation blog:

[T]he President’s FY 2013 budget assumes 3 percent “Real GDP” growth for 2013 and “around 4 percent annually” in 2014. This projection is far greater than the non-partisan Congressional Budget Office’s (CBO) expectations, which as of January 31, 2012 were that: “real GDP [will grow] by 2.0 percent this year and 1.1 percent next year [2013].”

The wish-based estimation by the President is consistent with the inaccurate projections in the President’s FY 2012 budget, which said 2011 would have economic growth of 3.1 percent and 2012 would grow at 4 percent. The CBO, which said in 2011 that growth in 2011 would be 2.7 percent and 2012 will be 3.1 percent, was far closer to the actual GDP growth of 1.7 percent in 2011, as currently calculated by the Bureau of Economic Analysis.

Since the President’s proposal was intended as an election budget instead of a true starting point on the upcoming budget debates of FY 2013, I think it’s safe to assume CBO is going to continue being more accurate when it comes to economic growth expectations than the White House.

The second point of attack should focus on the President’s tax hikes, both those explicitly stated and manipulatively unstated. In his proposed FY 2013 budget, the President claims the intention of enacting tax increases of $1.561 trillion over the next ten years. However, as pointed out by Curtis Dubay of The Heritage Foundation, the President claims credit for extending a number of current tax policies…but in doing so he claims he is cutting taxes. Clearly, extending current policy (in this case, the Bush-era tax rates for those making less than $250,000 annually) cannot be considered a new tax cut. Between this misleading statement and actual tax increases Dubay found, President Obama’s tax increases are far closer to $2 trillion than $1.6 trillion.

Third, of the $4 trillion in deficit “cuts” over the next ten years, over a majority consist of those mandated in the Budget Control Act and winding down military actions Iraq and Afghanistan (for the record, the latter is a bipartisan trick, used by both parties in the last three years alone). As noted here:

Similarly, the President says in his budget message, “[T]his budget will cut the deficit by $4 trillion over the next decade.” But that includes $2 trillion in deficit reduction already enacted into current law under the Budget Control Act of 2011 and other measures last year. The President can’t claim savings for his new budget that were already enacted into law last year.

Moreover, the President is taking credit here for the spending cuts Tea Party Republicans forced on him to get his debt ceiling increase…over his demand for a “clean” debt limit increase. President Obama rhetorically blowtorched the Republicans for forcing him to the wall over the debt limit increase to get those spending cuts, and continues to do so. But in his budget message, he wants to take credit for those results.

The President also includes in his supposed $4 trillion in deficit reduction another trillion in savings from winding down the wars in Iraq and Afghanistan. But those funds were never requested and were never going to be spent…

The President’s budget also doesn’t include over $300 billion in additional spending just enacted in the Medicare “doc-fix”…But the budget does include $300 billion in assumed debt interest savings from all of these supposed deficit reductions in the budget that are not new deficit reductions.

That leaves an actual net deficit reduction proposed in this budget of $400 billion over 10 years, only about 10% of what Obama claims, and less than 5% of the additional deficits and debt that would otherwise result over the next 10 years.

The fourth attack is a simple one: Does the President actually think a tax hike of nearly $2 trillion is in any way plausible, given the current makeup of the House and Senate, especially in a year when Senate Democrats are desperate to keep their majority? (To those who are opposed to the candidacy of Ron Paul, yes, I am aware that his proposed cuts are unrealistic as well. However, he is not the President of the United States, and therefore can propose what he wants as opposed to what can pass into law.)

The fact is that most of the remaining candidates’ tax and budget plans nibble at the edges of our vast tax and spending problems – again, with the exception of Paul. Rather than let an Obama-friendly media dictate the course of the economic and spending debates, the candidates should relentlessly and aggressively note the obvious: “The President put forth a budget that fudges the numbers, hides the facts and is a campaign document instead of a governing proposal. This is irresponsible, and I can do better. “

by @ 7:49 pm. Filed under 2012 Misc., Barack Obama, Mitt Romney, Newt Gingrich, Rick Santorum, Ron Paul, Spending
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22 Responses to “Where’s the Focus on Obama’s Budget?”

  1. Sean Says:

    $4 trillion over a decade really isn’t a whole lot considering the fiscal mess we are in.

  2. Meh Romney Says:

    Problem is, every analysis I have seen comparing the prez’ budget to the plans of Santorum, Gingrich and Romney concludes the prez’ plan is better because the tax cuts the candidates propose would only increase the debt and deficit.

  3. Paul Revere Says:

    Sean, agreed. It’s not even close to enough.

    Meh, they are probably (and I have not done a full viewing of all the studies and analyses) using the President’s stated numbers, which I tried to point out are very unreasonable to take at face value. The candidates do have bad plans- except for Paul- and they are assuming a LOT of growth from their tax cuts and limited elimination of loopholes.

  4. Spud Says:

    You make some good points. Here’s a couple more.

    Independent group Committee for a Responsible Federal Budget did an analysis of each candidates budget plans, and (with the exception of Paul) nobody comes near balancing the budget, as you said. Gingrich would add 7 trillion to the debt over the next decade, Santorum adds 4.5 trillion. Here’s a link: http://crfb.org/document/primary-numbers-gop-candidates-and-national-debt Romney made some additional remarks causing them to go back and update their review of his plan, link here: http://crfb.org/sites/default/files/Primary_Numbers_–_Romney_add.pdf Romney would add 2.6 trillion to the debt. Paul’s plan would reduce the debt by 2.2 trillion. All numbers I posted here were from an intermediate-debt scenario (there’s also a high debt and low debt for each).

    Couple that with the CBO prediction that in 2037 all federal revenues will be consumed by just Social Security, Medicare, and Medicaid, and what do we get? We get lots of people voting for people who will make the problem worse, rather than solving it. Good job us. We’re going to have an interesting road to 2037. Oh, notice there’s no money left for national defense in that scenario, too.

  5. Spud Says:

    Hm. Guess my comment is stuck in moderation waiting for two links to be verified or what not.

    @2: I haven’t seen an analysis like that, got a link?

  6. Liz Says:

    Impeach. If you can’t do the job, get out of the White House.

  7. John Mark Says:

    There seems to me to be a very good reason our candidates don’t want to get into a nitty gritty debate about the President’s budget policy vs. their own. All the Republicans’ tax plans have been written under the Norquist intedict against increasing revenue. Meanwhile the public supports increasing revenue over decreasing the safety net benefits by percentages ranging from the mid 60s to the high 80s when it comes to entitlements like SS. This is why we hear the candidates talk about jobs, and out of control spending…while avoiding too much of a detailed policy discussion. Their best hope is that the economy stays rotten enough that they don’t have to get specific.

  8. Paul Revere Says:

    Spud, sorry for the delay. I was busy with a couple of things. :o)

    The CRFB does indeed say that. However- and I have to hit the hay, so I’m going to make an educated guess or two here- I suspect they are using static analysis instead of dynamic analysis for the tax analyses, and I wonder if they are using the President’s numbers as presented. The latter, of course, is really dishonestly presented, so I have to question the President’s alleged amount of debt added.

    I think Tom Coburn’s Back in Black plan is the best one out there. It hits every part of the budget, including tax loopholes and defense.

  9. pea-jay Says:

    “The fourth attack is a simple one: Does the President actually think a tax hike of nearly $2 trillion is in any way plausible, given the current makeup of the House and Senate, especially in a year when Senate Democrats are desperate to keep their majority?”

    The lame duck session will be one of the most substantial ones in a long time. Whether or not Obama wins, the Bush Tax Cuts sunset. Automatically. As in, if there is no agreement to extend, modify, whatever, they’re gone, history. Win or lose, Obama can make a huge impact on the next ten years of projections by simply doing nothing and not have to worry about facing voters. The make up of the next congress may help determine what might happen next. An incoming Romney presidency and fully Republican congress may try and extend them retroactively (but short of sixty votes in the senate, it won’t be permanent). If the dems control even one chamber, then all bets are off.

    So yes, a tax hike is completely plausible. Only complete control by republicans or some kind of dealmaking by both parties can prevent it.

  10. Paul Revere Says:

    Spud, here’s a piece I did on taxes for American Thinker a little while ago: http://www.americanthinker.com/2012/02/tax_reality_vs_liberal_propaganda.html

    If you look at my last paragraph, I’ve linked to some BEA data. My calculations- not shown, but based upon the data- show a 20% flat individual income tax and a 20% flat corporate tax (no loopholes in each) would bring in more revenue than our current tax code. I also think it would help the economy grow very quickly.

  11. Paul Revere Says:

    Spud, final comment- if you follow the link to my Reason piece, I link to a Krugman piece that claims exactly Meh Romney says about the comparison between the respective proposals.

  12. NoMoreModerates Says:

    I share the desire for the campaigns to focus on the budget, debt and deficits, but the truth is no candidate wants to get that specific because it requires tough choices. Specifically, it requires indicating what will be cut.

  13. Dave Says:

    Until recently, Mitt was the only candidate who planned to balance the budget within a single term. Since introducing his 20%, across the board, tax cut, he has now promised to balance the budget by the end of a second term, while still planning to cut Federal spending to less than 20% of GDP.

    On top of his other planks to increase economic vitality and growth, the additional tax cut on top of the others he had already proposed will reduce revenue. Scored dynamically, and in addition to massive cuts in Federal spending, it will generate a higher level of growth, which will enable a fully balanced budget within 2 terms.

    All of the numbers have been validated by Glenn Hubbard, of Columbia, and Greg Mankiw, of Harvard….2 former Chairmen of the Council of Economic Advisers. The Cap, and the BBA, will, of course, require help from Congress….so we need to pick up the Senate.

  14. pea-jay Says:

    Pick up the Senate for the BBA? Ha! You need 2/3rds majority for an amendment and 3/4 of all states. Not. Gonna. Happen.

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