Wed, 25 Mar 2009 15:51:20 +0000 – By Peter FerraraDirector of Entitlement and Budget Policy, Institute for Policy Innovation
At his press conference last night, President Obama insisted once again that he inherited the budget deficit, and "we're doing everything we can to reduce that deficit."
But the deficits over the next 10 years that Obama proposed in his budget are not George Bush's deficits. They are the deficits thatObamahas proposed, resulting from the $1 trillion in increased spending he adopted in the no-stimulus stimulus bill, and the $400 billion supplemental spending bill he supported and also adopted the following week, and the $275 billion housing bailout he proposed the next week, and the $1 trillion bank bailout plan his Treasury Secretary just proposed this week, and the $638 billion he has proposed as a "downpayment" on a new national health insurance entitlement. The health insurance plan will be the most expensive entitlement of all -- serious estimates are that it will cost at least $1.2 trillion or more. Does this sound like he is "doing everything we can to reduce that deficit?"
more than double
Does this sound like we're "moving from an era of borrow-and-spend to one where we save and invest," as Obama also said last night?
In fact, there is not one item in Obama's budget that promotes actual saving and investment. Quite to the contrary, the tax rate increases he proposes for the top income tax brackets, for capital gains, and for dividends will all reducesaving and investment.
The budget Obama proposes for this year increases federal spending by a fiscally insane 34% over the budget adopted for last year, with a total of $4 trillion in federal spending, the highest ever. That spending would equal 28.5% of GDP, an increase in the size of the federal government in Obama's first year of 42% compared to the postwar average relative to GDP.
The deficit would reach a $1.845 trillion this year, according to the CBO -- the highest ever except for World War II. That would be more than 4 times Reagan's largest deficit, which caused so much howling among liberals and Democrats.
The CBO further estimates that this Obama budget deficit will total an astounding 13.1% of GDP, more than one-eighth of the entire U.S. economy, for the federal deficit alone!That is again the largest in U.S. history except for World War II and more than twice Reagan's highest deficit as a percent of GDP.
Reagan adopted budget cuts soon after he entered office equal to close to 5% of the federal budget at the time. Even with his defense buildup -- which won the Cold War without firing a shot -- total federal spending declined from a high of 23.5% of GDP in 1983 to 21.3% in 1988 and 21.2% in 1989. That's a real reduction in the size of government relative to the economy of 10%.
Obama last night also taunted Republican critics of his budget, saying, "we haven't seen an alternative budget out of them." But next week when Congress starts debating the budget, Rep. Paul Ryan (R-Wis.), the ranking Republican on the House Budget Committee, will present precisely such an alternative budget. Then we will see what we could have had if we hadn't elected left-wing extremists to the White House and to run the Congress.
Peter Ferrara is Director of Entitlement and Budget Policy for the Institute for Policy Innovation, among other posts. He served in President Reagan's White House Office of Policy Development, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School.
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