Stephen Moore, writing for Political Diary, has this illuminating summary of Obama’s new budget proposal:
President Obama and his budget chief Jack Lew are telling anyone who will listen that the president’s budget released on Monday has $4 trillion in deficit reduction. They even argue this is one of the thriftiest budgets in recent history. But House Budget Committee Chairman Paul Ryan isn’t buying it and has been busy running the numbers.
One revelation is that taxes wouldn’t just go up by $1.5 trillion. In fact, the number is closer to $1.9 trillion, or nearly half the savings that the White House is claiming in deficit reduction. The $400 billion difference is that the Obama budget counts billions of dollars of new revenue, such as the new tax on bank profits, as a user fee, not a tax. He also subtracts refundable tax credits from the tax increase, when everyone agrees that refundable credits — where people get a check from the government — are not a negative tax cut but a federal outlay.
According to Mr. Ryan, because most of the spending cuts are phony, and because the actual Obama budget adds to the baseline of spending over the next 10 years, all of the deficit reduction comes from tax increases. In fact, Senate Budget Committee ranking member Jeff Sessions has released an analysis that reaches the same conclusion. It finds that compared to current law, the Obama budget does not reduce the deficit by one penny over 10 years. Even worse, the “Obama budget increases short-term gross debt accumulation through 2014 by nearly $500 billion.” Yet the White House still claims that its proposal includes nearly $3 of spending cuts for every $2 of tax hikes. Must be the new math.
So how does Mr. Obama come up with $4 trillion in savings? First, he assumes $848 billion in “cuts” by inflating the defense baseline for the wars in Iraq and Afghanistan and them claiming the planned troop withdrawals as a budget savings.
Another $1.6 trillion from the deficit comes from the debt deal last August that calls for steep reductions in future spending on discretionary programs. But those are cuts that are already built into the spending baseline, not new cuts. A bigger problem is that almost no one believes those nine years of promised across-the-board cuts will ever happen after the first year, 2013, and they may not even happen then.
Then there is $429 billion in planned cuts in doctor reimbursements in Medicare that everyone in Congress and the White House has agreed to fix, but Mr. Obama still claims as fictitious savings.
The joke circulating on Capitol Hill is that this is a budget that gives blue smoke and mirrors a bad name.