THE DEFICIT: MUCH WORSE THAN YOU THINK
Ouch. The Wall Street Journal notes the details of the masive Obama-Pelosi debt tsunami:
Many of the current budget assumptions are laughably implausible. Both the White House and CBO predict that Congress will hold federal spending at the rate of inflation over the next decade. This is the same Democratic Congress that awarded a 47% increase in domestic discretionary spending in 2009 when counting stimulus funds. And the appropriations bills now speeding through Congress for 2010 serve up an 8% increase in domestic spending after inflation.
Another doozy is that Nancy Pelosi and friends are going to allow a one-third or more reduction in liberal priorities like Head Start, food stamps and child nutrition after 2011 when the stimulus expires. CBO actually has overall spending falling between 2009 and 2012, which is less likely than an asteroid hitting the Earth.
At what point does the Democrats’ sheer arrogance in pressing ahead with new spending programs during a budget meltdown become an issue unto itself? The fact that they’ve dug us deeper into a hole is one thing; that they refuse to change course now that they know full well how deep the hole’s become is something else entirely. When does the debate over ObamaCare become a debate about the left’s fundamental seriousness in addressing a looming fiscal catastrophe?
*The 22 percent spending increase projected for 2009 represents the largest government expansion since the 1952 height of the Korean War (adjusted for inflation). Federal spending is up 57 percent since 2001.
*While the costs of the financial bailouts and economic stimulus bills are staggering, they are only a fraction of the coming costs from Social Security, Medicare, and Medicaid. Over the next decade, the Congressional Budget Office (CBO) projects that each year Medicaid will expand by 7 percent, Medicare by 6 percent, and Social Security by 5 percent. These programs face a 75-year shortfall of $43 trillion--60 times greater than the gross cost of the $700 billion TARP financial bailout.
*President Obama claims that "we have already identified $2 trillion in savings over the next decade." This is not true. The President first creates a fantasy baseline that assumes the Iraq surge continues forever (which was never U.S. policy) and then "saves" $1.5 trillion against that baseline by ending the surge as scheduled. It is like a family "saving" $10,000 by first assuming an expensive vacation and then not taking it. Another $1 trillion in "savings" is actually tax increases (in other words, savings for government, not taxpayers).
*The President's budget figures exclude his health care plan, which could add another trillion dollars in taxes and spending. *Tax revenues have historically remained between 17 and 19 percent of GDP. This year, the recession has reduced them to 14.7 percent of GDP. The CBO has estimated that once the recession ends, maintaining current tax policies would keep revenues at around 17.6 percent of GDP (slightly below the 18.3 historical average). President Obama's proposed tax increases would push revenues up to 19.2 percent of GDP by 2019 (not counting his proposed tax increases to finance health care reform).
*Federal spending per household (adjusted for inflation) remained constant at $21,000 throughout the 1980s and 1990s, before President Bush hiked it to $25,000. In 2009, Washington will spend $30,958 per household--the highest level in American history--and under President Obama's budget, the figure will rise above $33,000 by 2019.
*As the budget deficit increases over the next decade, so will net interest spending, from $173 billion (1.2 percent of GDP) in 2009 to a record-level of $774 billion (3.4 percent of GDP) by 2019. In fact, net interest costs will account for 84 percent of the 2019 budget deficit. *President Obama's budget includes $1.4 trillion in tax increases, all of which would go toward new spending rather than deficit reduction.