No Runny Eggs

The following statement from the House leadership and Rep. Paul Ryan sure makes it sound like at least elements of Ryan’s Roadmap for America’s Future will be part of the FY2012 budget process:

The American people are ready to get serious about tackling our fiscal challenges, but President Obama’s budget fails to lead. The President’s budget punts on entitlement reform and actually makes matters worse by spending too much, taxing too much, and borrowing too much – stifling job growth today and threatening our economic future.

The President says that he wants to win the future, but we can’t win the future by repeating the mistakes of the past or putting off our responsibilities in the present. Our budget will lead where the President has failed, and it will include real entitlement reforms so that we can have a conversation with the American people about the challenges we face and the need to chart a new path to prosperity. Our reforms will focus both on saving these programs for current and future generations of Americans and on getting our debt under control and our economy growing. By taking critical steps forward now, we can fulfill the mission of health and retirement security for all Americans without making changes for those in or near retirement. We hope the President and Democratic leaders in Congress will demonstrate leadership and join us in working toward responsible solutions to confront the fiscal and economic challenges before us.

Stephen Hayes notes that this inclusion in the FY2012 budget, due out of Ryan’s committee near the end of March, is a victory for Ryan and the freshmen. Even better, there’s rumors that the Senate Republicans will follow suit. Of course, Senate Democrat/Majority leader Harry Reid won’t let that see the light of day, but that will just show the difference between the off-the-cliff Democrats and the stop-the-madness Republicans.

As for the timing, need I remind people that, at least on a combined basis, Social Security will never run a cash surplus on its current trajectory again, or that the only reason the remainder of Medicare isn’t following the Hospital Insurance (Part A) into the black hole is that their funding mechanisms automatically increase the taxes, fees, and draws from the Treasury?

Byron York reports NPR has thanked Obama for increasing the FY2014 advance appropriation for the Corporation for Public Broadcasting. That’s right; not only does public broadcasting, a major arm of which has shown it is nothing more than a bought-and-paid-for subsidary of $oro$ Inc., get an increase, but it gets guaranteed funding two years in advance.

Rep. Ryan, appropriators; if you’re looking for a cheap 3-year/$1 billion-plus cut, here it is.

…a whole heap of the editorial board members on a wide cross-section of newspapers nationwide, both right-leaning and left-leaning. House Budget Committee communications director Conor Sweeney sent over the list this morning, and some of the commentary is extremely surprising:

• The Washington Post editorial board – They noted that the Office of Budget and Management assumes a far-rosier rate of growth in the economy in the middle years than the Congressional Budget Office just a month ago, with a warning that if it’s closer to the 3.4% the CBO is assuming than the 3.9% the OMB assumes, that will blow a rather large hole in the revenue projections, much like the recession did for 2008 through the present. They also note the OMB used PlaceboCare math, assuming 10 years of revenues to offset 2 years of the Medicare “doc fix” and 3 years of the AMT fix. Their most-devastating words, however, are reserved for the end, when they call Obama out for punting on the lions’ share of the budget hole.
• The USA Today editorial board – They pointed out that the $1.1 billion in “deficit savings” (note; that’s not exactly happening versus the CBO baseline) over the next decade is wiped out by just the $1.1 billion FY2012 budget deficit. The money quote – “It’s becoming hard not to conclude that Obama doesn’t much care about the debt threat or has decided to wait until after the 2012 elections. Either would be a shame, and economically risky.”
• The Detroit News editorial board – They point out that not only does Obama have an open-ended committment on “high-speed” rail and a notion that he can socialize the private-sector economy, but that the third of his “deficit reduction” that is dependent on new taxes isn’t exactly going to bring in the full $1.6 billion in new taxes he thinks it will. The money quote – “Something more along the order of gastric bypass surgery is called for if the United States is to stabilize its fiscal health.”
• The Chicago Tribune editorial board – They really hit on the complete lack of entitlement reform. The close, addressed to Congress:
  

  Here’s what they really need to do. They need to grab each other’s arms, hold each other up, tell the American people what it will really take to return the federal government to fiscal balance.

  And do it. Then they can — all together now — make a grand bipartisan shudder as the public screams. But they have to do it. They have to.

• The Los Angeles Times editorial board – Even though they think that $1.5-$1.65 trillion of deficit spending is appropriate for FY2011, they think $1.1 trillion is far too high for 2012. Their close – “White House officials have said that the budget is just a down payment on more significant, bipartisan deficit-reduction efforts to come. But as the housing crisis showed, a down payment that’s too small can leave borrowers with a debt they cannot afford.”
• The New York Times editorial board – Even though they like the budget, they slammed the lack of a long-term vision – “What Mr. Obama’s budget is most definitely not is a blueprint for dealing with the real long-term problems that feed the budget deficit: rising health care costs, an aging population and a refusal by lawmakers to face the inescapable need to raise taxes at some point.”
• The Investor’s Business Daily editorial board – They were bright enough to use the scare quotes around “deficit cuts” (which, as I’ll point out again and again, are not cuts at all against “doing nothing”), and point out why Obama was “gutless” – he wants to blame the Republicans for the pain from the necessary hard work.
• The Wall Street Journal editorial board – They point out that the White House-claimed “deficit reduction” happens only in the “out” years, with 95% happening after Obama’s first term is over and nearly 2/3rds happening after a potential second term. Like their upstart West Coast competitors, they see the real reason for the punting – to ambush the Republicans who will (hopefully) do the heavy lifting.

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).