So how do we get $4 trillion in savings over ten years? Pure legerdemain. $1.2 trillion in “savings” comes from funds sequestered by the Budget Control Act, passed as a result of the debt ceiling battle last summer. Yet after taking credit for the reductions, the president restores the spending elsewhere in the budget by increasing taxes–and then fails to count the additional spending against the savings! Second, he counts as “saved” money we’ll no longer be spending prosecuting the wars in Iraq and Afghanistan. That’s tantamount to saying that if one decides not to buy a million dollar home next year, one has saved a million dollars. Third, is the so-called “doc fix” that currently calls for a 27 percent reduction in payments for Medicare providers. Congress has kicked this can down the road for years, knowing the most doctors would stop taking Medicare patients as a result. The administration knows that Congress will never enact the cuts, yet it ignores the additional $522 billion in Medicare physician reimbursement costs that accrues without them. Toss in the $1.9 trillion in additional taxes and fees and the Obama administration has “saved” $4 trillion.
Even the New York Times recognizes the gamesmanship, noting that “the indignation that greeted Mr. Obama’s budget on Monday seemed to be amplified by the presidential election, debt crises already rocking Europe and the sheer size of the additional debt envisioned by the president’s plan: $6.7 trillion through 2022” (italic mine). Thus it is no surprise that, despite all of the “savings,” the non-partisan CBO has projected that America’s debt will reach $21.7 trillion by 2022, an increase of more than 50 percent.
That’s if all goes well. Right now our debt is being financed with historically low interest rates the Federal Reserve insists will remain low until 2014. If rates go up, which could happen under a number of scenarios, such as another downgrade, a stock market swoon, or another debt ceiling battle, the national debt level could skyrocket. If interest rates were to return to 2000 levels, America could be saddled with $26 trillion of debt–not in 2022, but five years earlier in 2017.
And for those who blanch at the ever-expanding nature of our federal government, it should be noted that federal spending never falls much below 22 percent of GDP over the next decade, despite a historical average of 18 percent. In fact, if Obama serves two terms, he would be the first president in history to spend 22 percent or more of GDP for eight straight years.
Jeff Sessions (R-AL), the ranking Republican on the Senate Budget Committee, reveals the scope of a budget he characterizes “one of the most spectacular fiscal cover-ups in American history.” “By the end of his first term President Obama will have overseen four straight deficits in excess of a trillion dollars and the accumulation of $6.4 trillion in new gross debt,” said Sessions in a released statement. “Yet 1.2 million fewer Americans are working today than when he took office. “The vision the president has laid out today leads to a bigger government, a smaller middle class, and a painful debt crisis.”
Yet perhaps the most egregious lie of all with regard to this budget is best debunked by Human Events staff writer John Hayward. “If there’s one argument this fairy-tale budget should resolve, it’s the mythology that deficits can be eliminated through tax increases,” Hayward writes. Obama’s proposal is loaded with tax hikes…but he’s still running trillion-dollar deficits.”
Class warfare, coupled with budgetary gimmicks, may resonate with some Americans, but math can only be manipulated for so long. Moreover, human behavior, especially with respect to tax avoidance, is inherently unpredictable. What is predictable is the reality that we are on the road to fiscal Armageddon–and this budget represents nothing more than the Obama administration’s effort to press down harder on the accelerator.
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