President Barack Obama on Feb. 15 held a news conference to defend his proposed budget, which features a deficit that nearly matches total federal spending just 10 years ago.
Imagine if almost none of the federal spending 10 years ago had been paid for. The nation — the world — would have been appalled. Now our president and many of his backers shrug at a projected deficit of $1.65 trillion. They also shrug at a budget of $3.7 trillion, double federal spending in 2001.
Federal spending has grown faster than price inflation, wage inflation, population, gross domestic product or virtually any other economic measure. It has grown from about 18 percent of the total economy in 2001 to about 25.3 percent today.
The last time the national government consumed this much of the economy was during World War II. The end of the war was followed by a sharp decrease in government spending and big increases in regulatory freedom as commodities rationing ended, wage and price controls were lifted, and business and industry were freed to return to business and industry.
Contrast that with last week’s budget. Obama laughably projects nearly $2.2 trillion in deficit reduction over the next decade. It’s laughable because most of the “cuts” are from last year’s projected budget and still represent an increase in real spending. Furthermore, about 95 percent of the so-called cuts would happen at the end of his first term in office and more than 60 percent after 2016, when he would leave office if he wins a second term.
Meanwhile, he pledges tens of billions of dollars to his pet boondoggle known as high-speed rail. Instead of reducing regulatory burdens, he insists on pushing “health care reform” with its burdens on employers and insurers and its mandate forcing everyone to buy insurance.
Obama also wants more spending for the Securities and Exchange Commission, which spectacularly failed to foil Ponzi artists and no doubt will continue its practice of cozying up to the largest and most powerful financial institutions, the very ones that contributed so mightily to the ongoing economic malaise.
The IRS’s own taxpayer advocate, Nina Olson, recently reported Americans in 2008 spent approximately $163 billion to file their tax returns — “a staggering 11 percent of aggregate income tax receipts.” Instead of looking for ways to reduce that burden, Obama wants money for more than 5,000 additional harassing IRS agents.
The president’s budget does virtually nothing to control entitlement spending, which already consumes approximately 60 percent of total spending and will eat up far more as the baby boomers retire. It also includes almost no meaningful cuts to military spending or to corporate welfare in agriculture and other programs.
Obama’s own deficit commission late last year presented some useful ideas for reining in entitlement costs, yet the president ignored them. Erskine Bowles, the Obama-appointed Democrat co-chairman, said the president’s budget proposal goes “nowhere near where they will have to go to resolve our fiscal nightmare.”
Obama wants to raise taxes on American companies with overseas operations and on energy companies, which would raise the prices we pay for gasoline, electricity and natural gas. He wants to raise taxes on capital gains and dividends and income taxes on high-income earners.
The irresponsibility, cynicism and contempt for citizens in this budget are breathtaking.
Steve Stanek is a research fellow for budget and tax policy at The Heartland Institute in Chicago.