I can’t help but be bemused by the YahooNews headline “Obama promises to slash spending by $2 trillion,” which accompanies an AP story quite contrary to that.
President Barack Obama unveiled a multi-trillion-dollar spending plan Thursday that would boost taxes on the wealthy, curtail Medicare, lay the groundwork for universal health care and leave a string of deficits dwarfing any in the nation’s history.
In addition to sending Congress his $3.55 trillion budget plan for 2010, Obama proposed more immediate changes that would push spending to $3.94 trillion in the current year. That would result in a record deficit Obama projects will hit $1.75 trillion, reflecting the massive spending being undertaken to battle a severe recession and the worst financial crisis in seven decades.
As part of the effort to end the crisis, the administration proposes boosting the deficit by an additional $250 billion this year, enough to support as much as $750 billion in increased spending under the government’s rescue program for banks and other financial institutions. That would more than double the $700 billion bank bailout passed by Congress last October.
He’s proposing record levels of spending. (I mean, what does he think a stimulus is? It’s spending — that’s the whole point! Seriously.) Yet, he’s getting credit for slashing spending?! Dave Schuler attempts to translate:
He’s also pledged to cut the deficit in half by the end of his first term. Another sleight of hand?
In doing that he’s pledging that the deficits over the next four years will be larger, again in dollar terms, than the deficits of any of his predecessors. At the end of the budget-cutting process, if any, halving the budget would mean a deficit of just under $1 trillion and he’d have increased the public debt by 40% in just four years. If the GDP actually contracts over the next couple of years, those deficits could end up being larger than any previous deficits as a percentage of GDP as well. And, depending on how much the defense budget is cut (if at all) and what interests rates are in four years, it’s not beyond the realm of possibility that debt service could exceed defense as a proportion of the total budget.
So, sure, he’s massively increasingly the budget. But he has pledged to cut it later. So, in the out years, spending will be lower than it will be after he’s increased spending. QED: A budget cut.
Gotta love Washington.
Photo: DavidDMuir.
