During the bloggers’ call held with House Budget Chair Paul Ryan (WI-01, and my Congressman) and House Republican Conference Vice Chair Cathy McMorris Rodgers (WA-05), it was briefly mentioned, and noted by Ed Morrissey, that the latest Obama budget was worse than doing nothing. Unfortunately, that wasn’t explored in the limited time available in the call. Allow me to rectify that.
Last month, the Congressional Budget Office released their Budget and Economic Outlook for FY2011-FY2021. That pretty much assumes things continue on auto-pilot, with no new laws being passed, taxes and “mandatory” spending increasing (or in some cases, decreasing) as specified while laws affecting them are allowed to expire on schedule, and “discretionary” spending increasing at the rate of inflation. Hence, one can fairly use it as the “do nothing” case.
First, let’s take a look at the top-line numbers for FY2012…
The “do-nothing” case assumes $3,655 billion of spending on $2,555 billion of revenues, for a deficit of $1,100 billion. For reference, the FY2010 numbers were $3,456 billion of spending on $2,162 billion of revenues and a deficit of $1,294 billion. It also assumes the debt held by the public at $11,598 billion (73.91% of GDP) and gross debt of $16,389 billlion (104.44% of GDP). Obama’s budget would jack up spending to $3,729 billion, while revenues would only increase to $2,627 billion, for a deficit of $1,102 billion. Meanwhile, the debt held by the public would increase to $11,881 billion (75.13% of a higher GDP estimate) and gross debt would increase to $16,654 billion (105.32% of GDP).
Next, let’s take things out to FY2016 (click for the full-size chart)…
By the end of FY2016, Obama’s budget would spend $18 billion more than leaving things on “auto-pilot”, while reducing revenues by $205 billion and resulting in a 5-year deficit of $3,770 billion ($223 billion more than “doing nothing”).
On the debt end, while the gross debt would be just slighly less at the end of 2016 in terms of GDP than it would be at the end of FY2012 (105.22% of GDP), it would still be significantly higher than at the end of FY2012 ($20,825 billion). Worse, the publicly-held debt would increase to $15,064 billion, or 76.12% of GDP. All of those are higher than the “do-nothing” scenario.
You might have noticed the deficit for FY2016 in the Obama budget would be $10 billion less than the “do-nothing” scenario. With that in mind, let’s take a look at the second half-decade, from FY2017-FY2021 to see whether that continues to hold true (once again, click for the full-sized chart)…
There isn’t exactly austerity in the second half of the decade either. While spending over the full decade would decrease somewhat over the “do-nothing” scenario ($102 billion, to a “mere” $45,953 billion), a larger drop in revenue ($338 billion) would leave a 10-year deficit of $7,207 billion, $236 billion more than “doing nothing”). Specifically for FY2017-FY2021, the 5-year deficit would increase by $13 billion versus “doing nothing” to $3,437 billion.
On the debt end, things aren’t rosy either. Debt held by the public would increase to $18,967 billion ($714 billion more than “doing nothing”), while gross debt would increase to $26,346 billion ($1,290 billion more than “doing nothing”). Once again, the projected increase in GDP doesn’t cover the increased debt, as debt held by the public would increase from 76.66% of GDP to 77.00% of GDP, and gross debt would increase from 105.23% of GDP to 106.95% of GDP.
In short, that wasn’t a chainsaw, an axe, or even a dull, rusted butter knife Obama used on the budget. It was a heaping of lard.
Revisions/extensions (11:48 am 2/15/2011) - Thanks to Bruce McQuain, Memeorandum, Ed Morrissey for the links. Hopefully my host won’t kill me because you fine folks are swamping the server so much I couldn’t get this update up.
Related (H/T – Mitch Berg) – I’m not the only one to catch the sham. The Heritage Foundation’s J.D. Foster has a longer explanation of why the numbers above don’t match up to the claimed “cuts”. To wit, for this year, Pell grants and some surface transportation spending are reclassified as “mandatory” spending, while the Iraq/Afghanistan operations (freshly re-classified to “regular discretionary” spending), get cut. Meanwhile, the 10-year increase in total spending is 30% above inflation (49% total).