Beyond defense savings, Obama’s speech continues tax-and-spend trend

Doug Kellogg Comm. Manager, National Taxpayers Union
Font Size:

In his speech Tuesday night, President Obama managed to carry on his habit of advocating for bigger federal programs. Yet, at the same time he was the first president to deliver a State of the Union that technically included more savings than spending. How is this possible?

The National Taxpayers Union Foundation (NTUF) conducts a study of every State of the Union address, assessing the cost of the president’s proposals for America’s taxpayers. This year President Obama continued his trend of asking for major non-defense domestic spending programs, seeking $20.7 billion per year in new outlays. In 2010 he sought $59.2 billion and in 2011 $36.9 billion (Bill Clinton holds the record: a whopping $305 billion in his 1999 State of the Union address).

However, according to NTUF’s analysis, the reduction in defense spending the president proposed offsets that domestic spending, for a final savings of $27.99 billion per year. That is, if all the president’s State of the Union proposals were enacted at once, the net result would be $27.99 billion in savings. Shocked? Not so fast …

The president made two key references to military savings during the speech. First, he said we should take the “money we’re no longer spending at war, use half of it to pay down our debt and use the rest to do some nation-building right here at home.”

As the Associated Press correctly notes, “the idea of taking war ‘savings’ to pay for other programs is budgetary sleight of hand.”

In NTUF’s cost analysis, the president did not get credit for these savings because they are the result of previous policies and do not represent a new proposal.

However, his proposal for further defense cuts — calling upon the military to focus on smaller, limited-duration actions involving fewer troops — brings the president’s proposals into the black thanks to $487 billion in estimated savings over 10 years.

All told, the president proposed $128 in defense cuts for every dollar of domestic savings. That is $48.7 billion per year compared to just $380 million (that’s million with an “m”) in domestic savings, and only a vague, conditional mention of reforming certain entitlement programs.

As NTUF Senior Policy Analyst Demian Brady cleverly stated, the president’s agenda is about “soldiers to subsidies” more than it is about “swords to plowshares.”

Whatever one thinks of the defense situation, taxpayers will be on guard for massive tax hikes sought by the president: a 30 percent “Buffett tax,” a minimum tax on multi-national firms and (once again) highly selective and discriminatory repeal of tax provisions that aid energy companies’ competitiveness. These additions to an already burdensome tax code are another sign that the president is looking for fuel to continue government expansion.

That’s not all. Taxpayers cannot sleep on proposals that are incalculable at this time. The president once again offered a number of proposals too murky for their cost to be tabulated. His new “Financial Crimes Unit” seems to fit the definition of a redundant program (we already have the SEC, FBI, etc.). This new “unit” could require new hires, space and expenses, and new bureaucracies have a tendency to grow. The Department of Homeland Security went from a $35 billion budget in 2003 to a total budget authority of $56.9 billion in 2011. Other mysteries include the cost of a new Veterans Job Corps, and opening public land to “clean energy” development.

These developing costs emphasize the need to constantly look beyond the rhetorical moment. NTUF and other watchdogs will certainly be doing so as they await the president’s budget proposal in the coming months.

In last year’s State of the Union address, President Obama called for freezing certain domestic spending programs for five years. His budget proposal this year must now provide offsets to the $20.7 billion of domestic spending increases proposed in the State of the Union address, or he risks the appearance of inconsistency.

While almost any savings, even reduced debt, is welcome in this era of budgetary crisis, the president’s insistence on bloating the federal budget and raising taxes is likely to have far more of an impact on American businesses, taxpayers and investors.

Doug Kellogg is the communications manager for the 362,000-member National Taxpayers Union.