Obama’s deficit reduction a major hypothetical
White House Budget Director Peter Orszag didn’t exactly sound bullish about the prospects for health care reform when asked Monday how its passage, or non passage, would factor into the federal budget deficit.
“It’s a very small share of the more than $1.2 trillion in deficit reduction [over 10 years] that’s contained in the budget,” Orszag said, noting that he had factored in about $100 billion over the next 10 years as savings from a health care bill.
Orszag appeared to be downplaying the impact on the deficit – projected to be $1.6 trillion this year and about $9 trillion over the next decade – if health care does not pass. White House staff pushed back hard Monday against such a characterization, and pointed to numerous statements by Orszag saying that he thinks health care will pass the Congress.
But that looks increasingly unlikely. In any event, the $100 billion toward deficit reduction is only one of several items in President Obama’s budget that the White House says will cut down the nation’s budget imbalance, but which very likely might not happen.
There is another $630 billion in additional deficit-cutting measures that is by no means a certainty, depending on whether Congress passes Obama’s proposals into law.
The reduction of itemized deductions for charitable giving, for those making $250,000 or more, would bring in $291 billion over the next decade. But Obama proposed that a year ago and the idea went nowhere, because of opposition in the Congress.
A tax on banks that received money from the $700 billion TARP bailout would bring in $90 billion. But that idea also faces a fight in Congress. And even then, the Obama administration has already extended TARP beyond its original expiration date at the end of 2009 and could do so again in October, when most of the $700 billion is scheduled to go toward debt reduction.
And a freeze on spending for non-discretionary, non-defense spending – about 17 percent of the budget – would yield $250 billion in savings. But Democrats in Congress want the military to be included in the freeze, and could pose a problem for the White House if the president refuses to budge.
Those four items alone – health care reform, reduced itemized deductions for charitable giving by wealthy Americans, the bank tax, and the spending freeze – amount to $730 billion in deficit reductions over the next decade that are highly uncertain.
Orszag acknowledged that “there’s going to be lots of questions about the political economy of what can get enacted and what can’t.”
“We’re going to fight for the things that we put forward,” he said.
Even if Obama were to pass all of the deficit reduction measures included in his budget, however, it would still be only a little more than 10 percent of the deficit over the next decade. And the long-term fiscal picture is even more grim, with entitlement costs for Medicare, Medicaid and Social Security projected to swamp the nation’s ability to pay for them.
Orszag admitted that deficit reduction measures are merely a prelude to the long-term systemic budget imbalances that need to be addressed, but said a fiscal commission appointed by the president will take care of that.
“We do face a substantial medium-term deficit problem. And what we have said is we put forward proposals to get us part of the way there,” he said. “The commission will have to get us the rest of the way there.”
The problem with a commission created by the president, however, is that it will not have binding authority on Congress forcing them to vote up or down on its recommendations, as a panel created by Congress itself would have had.
Budget experts said that the partisan politics of the moment prevent Obama from really being honest in his budget about what needs to be cut.
“The truth is that the partisanship that goes on right now would kill all those ideas,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Indeed, even Rep. Paul Ryan, the Wisconsin Republican who has received plaudits from the president and from Orszag for detailing his own budget blueprint for the future, was also reticent, during an interview with The Daily Caller, to detail where he would cut from the federal budget right now.
Ryan promised more details in March, when he said he will release a budget alternative.
Despite the difficult political environment, MacGuineas said that Obama “hasn’t done nearly enough to set the stage for what needs to happen.”
She listed a major new tax, perhaps on energy consumption, tax code reform and entitlement reform as three of the major things that need to be done for long-term deficits.
Ryan told The Daily Caller that his plan would not require tax increases, but said a credible plan for the country’s long term fiscal future is vital to sustaining the nation’s credit rating and its ability to continue borrowing from debtor nations such as China.
“What matters most for the credit markets is if we’re putting a plan in place that shows we’re getting it under control and that we’re literally going to pay it off,” he said.
Gautham Nagesh contributed to this story.
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President Obama sent Congress a $3.8 trillion budget Monday, February 1, 2010, for fiscal year 2011, pushing a plan that includes new jobs-creation programs but is projected to add nearly $1.3 trillion in deficit spending on top of the current 2010’s projected $1.6 trillion deficit. According to the plan, the 2011 deficit of $1.267 trillion would fund nearly the entirety of the year’s discretionary spending, which is $1.415 trillion or 37 percent of the government’s total outlays. Mandatory spending on items such as entitlements and interest payments make up the rest. The Senate moved last week to extend the nation’s debt limit to $14.3 trillion to accommodate the projected gap for the current spending year, which ends September 30, but with another $1.3 trillion hole next year, the nation’s debt could reach $15.6 trillion by October 1, 2011.That would surpass the nation’s TOTAL annual gross domestic product!!! A $1.6 trillion deficit would represent 10.6 percent of current GDP, while 2011’s budget deficit would be 8.3% of GDP. The White House says over the next 10 years, the average deficit will represent only 4.5 percent of GDP annually. Last year’s deficit was $1.42 trillion. The total deficit through October 2011, $4.32 Trillion Dollars! In three years, that is $1 Trillion more than the entire deficit during the 8 years of the Bush Administration of $3.3 Trillion. Obama claims that his budget saves $1.3 Trillion, but does not tell the American People how he gets them…TAXES!!! Taxing Investment Managers – Taxing Capital Gains $24 Billion, Financial Services Industry – Tax Banks $90 Billion, Allow the Bush Tax Cuts for Households Earning More Than $250,000 to Expire, roughly $600 Billion, and Reduce the Itemized Deduction Write-off (Charitable Contributions) for Families with Incomes over $250,000, $291 Billion. Mr. President, try China, We the People are buying. (http://online.wsj.com/article/SB10001424052748704107204575038733246595218.html?mod=WSJ_hpp_LEFTTopStories )
We can easily save a trillion $ by cutting down our empire and invest that money in paying the debt, putting people back to work and investigating the federal reserve.
We are mired, tired and exhausting ourselves in nation building, we are addicted to cheap goods and labor from mexico and China and we are unable to face the reality.
Thank God people are beginning to wake up and smell the coffee! Taking back the House next November will render this idiot a Lame Duck so he can’t do too much more harm to our country until we can toss his butt out in 2012!
Obama’s Cloward-Piven Strategy is now no longer just a conspiracy theory; it is now a very, very painful reality. We have been so,so stupid, and we really are going to pay the price for not connecting all the dots.
If Mr. Obama would have ever run any non-Government entity, he either 1) wouldn’t have promised these phantom spending cuts in the first place, or 2) had enough business sense to avoid multi-billion-dollar pitfalls like the TARP disaster and untold billions worth of stimulus spending, which hasn’t accomplished its goals!
No matter your political party, one thing you gotta give Obama credit for, is he’s been an inspiration to a whole lot of youngsters, of all colors and creeds. After seeing his financial statements, thousands of kids are signing-up for Community Organizer courses, convinced C.O. jobs must pay as well as Financial Industry executives, without having to steal.
Can it really be considered ‘Charity’, if a Financial Industry Mogul-Crook ‘donates’ a used yacht (instead of sinking it to collect the insurance) worth only $100,000, and has his appraiser value it at $1,000,000 for ‘donation purposes’, writes it off on his taxes, and, since he is in the 25% bracket (after all his other ‘business’ deductions), save himself $250,000 (minus the $100,000 the yacht was worth), and depriving the treasury of $250,000 he would otherwise have had to pay in taxes? So what his good, ‘charitable’ contribution has done, is have US, the taxpayers, have to come up with (or add to our debt), a quarter of a million bucks he gave to his charity (which is run by his wife, who draws a fat salary from the do-gooding hoax they’ve set-up as a ‘Non-Profit’)
You know, any time you try to predict the future, it can be called ‘Hypothetical’. Wanna predict the exact time when you’ll take your next pee? Hypothetically, of course? Wanna guess how much money you’ll have in the bank come the fourth of July? Wanna bet? You know the exact odds on you living another five years? How much you willing to risk on that? Saying what’s gonna happen is an opinion. And you know the old saying, everybody has one.
Ummm.
The entire idea behind budgeting is to make very specific allocations of funds for very specific uses so that there is very little discretion for those who spend our money to spend as they like.
Same goes for where you get the money – it must be very specific and realistic.
Otherwise you get a circus of spending that creates all sorts of opportunity for corruption and unpleasant surprises when shortfalls suddenly show up.
Obama campaigned on bringing in experts and disinterested managers so as to create pragmatic and responsible government who would do away with budget tricks and gimmickry.
He didn’t.
Now he is lecturing us on the virtues of frugality while proposing the largest budget ever with the largest deficit ever compounding the largest debt ever coupled with the largest public employee numbers ever. We even now have union membership being majority public employee – a mind blowing evolution when you consider that Unions were formed to end abusive management practices – what aspect of public employment is so abusive that it requires unions to protect worker interests?
The thin veneer of justification for what are clearly abuses of the public purse to reward political cronies is not hard to scratch away.
Well, I think you’ll agree that one thing you can predict with certainty, beside death and taxes, is continuing inflation, a truth since kings started shaving slivers of gold off coins to make more (free) coins. But no matter the purpose of a budget, or forecast, it is still an estimate of the future. As a general rule, it can be considered a good assumption that the closer in time you are to the period of the forecast, the more accurate you are likely to be. Another fairly good assumption is that the smaller the value of the forecast, the lesser the deviation you could expect. So, when you are dealing with Trillion$+ ‘budgets’, extending for years+, it’s safe to assume that reality will differ from the forecast by significant amounts. Especially since the variables include whether the fuse on a stick of dynamite shoved up some Arab’s a** will burn properly if he farts, and send (or not send) the massive aircraft he is inhabiting plunging into the yacht in Biscayne Bay the republican and democratic leadership councils are using for a secret confab on ear-marks.
If one were to take all this seriously, it would be depressing to acknowledge that the ‘thin veneer’ you refer to has been discarded, and the blatant actions of the bribers and the bribees running our government-by-bribery are out in the open, that they are oblivious to criticism. And that they are secure in the belief (some might say ‘certain knowledge’) that they can depend on the combination of public ADD, public ignorance, and public apparent indifference, to continue to survive and prosper in the corrupt milieu they have established and inhabit. And also certain, that if by some miniscule chance, they are caught-up, they will be able to escape their just deserts in the same manner they have prospered, by hook and by crook. (BTW, I do not disagree with your budget concept. Surely you can use a forecast to establish a firm budget, and stick to it. But since a budget should not only include financial parameters, but also performance goals, if circumstances change significantly, and the financial limits are maintained, then the only thing adjustable for the deviance is the performance attained. Which, in my view, is as important to the ‘budget’ as the financial limits).
One of the problems has been is that when Lil’ Timmy Geithner does math, he has to use his fingers and toes. And when he adds them all up, he comes up with 27. Not a big surprise, we all knew he was weird, but it does account for some of our problems. That, plus the fact that he never met a Too Big to Fail banker he didn’t love, and envy. Seems he’s soon to be shown the door. Good times, they may be a’comin’. The sooner we see Lil’ Timmy’s a** goin’ out the door, the better-off we can become. Then, if we can just push Summer into a Fall….