He’s nothing if not consistent.
President Obama will release his ten year budget projection tomorrow that envisions budget deficits rising to $687 billion by 2025 while adding $6 trillion to the national debt. The White House will project a budget deficit of $474 billion for this fiscal year which is 2.5% of GDP. The deficit is supposed to increase but the percentage of the deficit relative to GDP is predicted to remain fairly stable.
This is a political document, not a serious economic statement. The Congressional Budget Office, which is not usually given to flights of political fancy, had an entirely different outlook on the next ten years of budgeting:
In CBO’s projections, outlays rise from a little more than 20 percent of GDP this year (which is about what federal spending has averaged over the past 50 years) to a little more than 22 percent in 2025. Four key factors underlie that increase:
The retirement of the baby-boom generation,
The expansion of federal subsidies for health insurance,
Increasing health care costs per beneficiary, and
Rising interest rates on federal debt.
Consequently, under current law, spending will grow faster than the economy for Social Security; the major health care programs, including Medicare, Medicaid, and subsidies offered through insurance exchanges; and net interest costs. In contrast, mandatory spending other than that for Social Security and health care, as well as both defense and nondefense discretionary spending, will shrink relative to the size of the economy. By 2019, outlays in those three categories taken together will fall below the percentage of GDP they were from 1998 through 2001, when such spending was the lowest since at least 1940 (the earliest year for which comparable data have been reported).
Where the White House sees deficits rising gently through 2025, the CBO sees a massive increase in the deficit by 2025 with red ink climbing to more than $1 trillion.
The budget outlook by CBO envisions more than a trillion dollars in increased revenue by 2025 — every single dime spent by government and then some.
The New York Times explains why we needn’t worry about deficits or the national debt; they aren’t as important as income inequality:
The central question Mr. Obama’s budget will pose to Congress is this: Should Washington worry about what may be the defining economic issue of the era — the rising gap between the rich and everyone else — or should policy makers primarily seek to address a mountain of debt that the White House hopes to control but only marginally reduce as a share of the economy?
The president’s budget — thicker than a phone book in multiple volumes — will be just the starting point for that discussion with the newly elected Republican Congress, a document representing Mr. Obama’s aspirations, not the final word. Criticism of the president’s intentions arrived even before the budget was presented.
“We’re six years into the Obama economic policies, and he’s proposing more of the same, more tax increases that kill investment and jobs, and policies which are hardly aspirational,” said Representative Paul D. Ryan of Wisconsin, chairman of the House Ways and Means Committee, in an interview this weekend.
The idea that these pinpricks will reduce the gap between rich and poor is a study in delusional thinking. It’s political chicanery. The gap is so massive that only out and out confiscation of wealth would make a dent in the gap. The president and liberals know this, which is why they don’t dare suggest it. Instead, they demagogue the issue and propose miniscule “solutions” that don’t even move a decimal point on the balance sheet.
And that’s if you believe income inequality is “the defining economic issue of the era” as the Times suggests. Rather than confiscate property, perhaps the president could concentrate on creating lots of high paying jobs so the Middle Class can recover the ground they’ve lost in the economy over these last three decades. Creating wealth is always preferable to stealing it, and the reason that liberals blanch at the thought of actually helping the Middle Class in ways that would empower them and give them dignity is that they have no faith in the capitalist system. The faith of their fathers and grandfathers in that system created the most astonishing engine for wealth and job creation in the history of human civilization. But that faith has been tossed aside by their offspring in favor of a redistributive philosophy that creates nothing, secures nothing, and cynically exploits class differences for political and financial gain.
The CBO’s projections take into account a modest rise in interest rates that the Fed is promising to begin later this year. But what if the increase in interest rates isn’t “modest”? What if inflation becomes a problem? Then both the CBO and Obama administration estimates for budget deficits go out the window and the cost to service the debt on a yearly basis will skyrocket.
No entitlement reform, no serious attempt to balance the budget, no end in sight to an ever-rising national debt — this is not serious governance. The president has prioritized the wrong issue and we will probably pay for it before too long.