OBAMA STICKER SHOCK
March 24, 2009
President Obama's 2010 budget looks more astounding by the day, especially when someone other than the White House budget office is analyzing it, says the Wall Street Journal. The latest case of epic sticker shock came last week when the Congressional Budget Office published its assessment, which found that the proposals would increase the federal deficit by $2.3 trillion more over 10 years than the White House had claimed.
Obama keeps saying he has "inherited a trillion dollar deficit," which is true. But he's hardly an innocent bystander. The Congressional Budget Office (CBO) shows that the President is seeing that $1 trillion and raising it again and again. Since January, Democrats have passed laws that increase spending by $134 billion in the last six months, and $1.2 trillion over the next 10 years.
The White House responded that CBO has a more pessimistic economic forecast than do White House economists. But not by much, says the Wall Street Journal:
- CBO expects growth to decline by 3 percent, while the White House has it falling by only 1.2 percent.
- Both predict roughly the same growth rates in 2010 (2.9 percent for CBO and 3.2 percent for the White House) and 2011 (both 4 percent).
The big difference between the two guesstimates is in spending:
- CBO calculates that Obama's proposals will increase federal outlays by $1.7 trillion more than the White House projects and entitlement spending will increase by $1.1 trillion.
- In 2009 and 2010 alone, Obama's budget will increase spending by $347 billion.
- As a share of gross domestic product (GDP), this means spending will hit an astounding 28.5 percent in 2009 and 25.5 percent in 2010, staying at close to 23 percent to 24 percent of the economy for the next decade.
So, where does this take the Obama budget deficit? Up, says the Journal:
- This year's deficit will hit 13.1 percent of GDP and next year's will still be at 9.6 percent, assuming a healthy recovery, and then never get below 4.1 percent for the entire decade.
- The share of debt held by the public will double -- to 82.4 percent in 2019 from 40.8 percent in 2008.
- And all of this is without including the costs of Obama's plan to offer "free" health care for the middle class.
Source: Editorial, "Obama Sticker Shock," Wall Street Journal, March 23, 2009.
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