When looking at a document which is supposed to tell us about our president’s plan for the financial future of our government in what is still the world’s largest economy, my natural instinct is always to set aside the skepticism and try to take it seriously.
I attempted to do that with the budget proposal the White House released on Monday; what’s at stake in the coming months and years is too important not to. I deliberately avoided the potentially prejudicial blather and went straight to the administration’s ten-year projection. Before looking at future years, I saw a figure for estimated spending in fiscal 2012 — $3.796 trillion — which has almost no conceivable basis in reality. As I see it, the White House deliberately overstated that amount by $150 billion or more. All too conveniently, it makes mammoth increases in planned future spending look a bit less frightening.
Thus, the effort to give President Obama’s budget serious treatment as a national roadmap was over in less than a minute. That said, we ignore an electoral strategy the administration has given away at our peril.
The reason the spending figure is so obviously overstated is that outlays during the first four months of the fiscal year through January have “only” been $1.139 trillion. While that’s at least 15% above where it would be if Obama and Congress were even trying to rein in our runaway government, the currently relevant points are:
- First, year-to-date spending is about 3% lower than it was through the first four months of fiscal 2011. (If you need to take a minute to find the smelling salts, I understand. You might want to keep them handy.)
- Second, Uncle Sam would have to spend $332 billion a month for the next eight months for full-year outlays to reach the White House’s projected amount. That would require a 10% year-over-year increase for the rest of the year. Though you never would want to completely rule that possibility out with this bunch, the failure of Harry Reid’s Senate to pass a real budget for over 1,000 days accompanied by his clear intention not to attempt one this year means that federal agencies are largely running on autopilot. Most of them couldn’t open the spending spigots by double-digit percentages even if they wanted to.
Pegging this year’s estimated outlays at $3.796 trillion makes the administration look as if it will actually be doing something to control spending in fiscal 2013, as that year’s projected total is a nearly identical $3.803 trillion. Horse manure. That amount would really be a ramp-up of 4%-8% over where this year’s outlays will most likely end up ($3.50-$3.65 trillion).
Last year, Investor’s Business Daily characterized the White House’s budget proposal as “gutless.” This year’s is a pathetic farce, partially explained in a cheerleading CNN email alert I received this week: “Obama unveils $3.8 trillion budget that calls for tax hikes on the rich and increased spending on infrastructure and teachers.” Call the people who run the Guinness Book of Records; I think we’ve just discovered the world’s oldest political playbook: “Failed Stimulus and Rich-Bashing.” The Obama lovers at CNN somehow forgot to tell its email’s recipients that the White House’s proposal projects yet another $1.3 trillion deficit (that would mark four years in a row of $1.29 trillion or more), and that it increases spending by over 60% during the next ten years (from the credible midpoint estimate of this year’s spending) to $5.82 trillion (remember those smelling salts I suggested?) while deeply cutting outlays for defense.
It would be one thing if Barack Obama’s charade was occurring in a relatively tranquil economic and financial environment; but that is of course not the case. The federal government is already carrying an almost unfathomable level of debt. Obama’s budget not only betrays the fact that he couldn’t care less about endangering the nation’s long-term fiscal health; it also reveals the frightening likelihood that he and his party plan to ruinously run up the debt even further so it can be used as a political weapon in the fall election campaign.
Because it is so obviously based on artificially inflated spending, it would be tempting to believe that the White House is crying wolf when it predicts that the nation will hit its currently legislated debt ceiling of $16.394 trillion in October. But two other significant holes in the administration’s assumptions must be considered:
- The first is that receipts during the next eight months will come in almost 9% ahead of last year’s comparable period. That won’t happen if January’s performance is any indication. Receipts during January 2012 were only 3.4% higher than January 2011. The two months are legitimately comparable; both had five high-collection days (mostly Mondays), and both were affected by payroll tax reductions. If receipts run only 4% higher than last year from now until September, there will be a shortfall of over $70 billion.
- Far more important is the assumption that the government will incur no additional off-budget debt during the next eight months. It will be a real surprise if that happens. Through this year’s first four months alone, the $566 billion increase in the national debt far exceeded the same period’s reported $349 billion budget deficit.
Hiccups in receipts combined with significant increases in off-budget debt could indeed cause the government to run out of borrowing capacity just in time for general election balloting.
David Axelrod would probably consider it a perfect storm if a debt crunch inflicts fall mayhem. In combination with other worldwide events, hitting the ceiling before November could even create a pretext for another ginned-up “financial crisis.” These developments have the potential to motivate currently apathetic left-leaning voters and on-the-fence moderates to turn out in droves to ensure that Dear Leader saves them from the scary people who want the government to at least try to live within its means.
To say that the debt situation needs to be monitored closely by every Republican and conservative candidate for national office from this point forward is a huge understatement. Obama’s Republican challenger and his party had better have a unified rapid-response strategy ready for such a contingency. In 2008, John McCain clearly wasn’t prepared, and as a result lost any chance he may have had of defeating Obama. This time, the country literally cannot afford for Obama’s opponent to fail.