While the rest of the world focused on the New Hampshire primary, the White House dropped a budget bomb. Congress will get a $4.1 trillion spending plan for FY2017 from Barack Obama, complete with a massive $2.8 trillion tax hike and a set of assumptions that boggles the imagination nearly as much as the topline spending number:
“The budget that we’re releasing today reflects my priorities and the priorities that I believe will help advance security and prosperity in America for many years to come,” Obama told reporters at the White House. “It adheres to last year’s bipartisan budget agreement. It drives down the deficit. It includes smart savings on health care, immigration, tax reform.”
But that vision will come at a cost. Budget deficits will grow to 2.8% of the economy, with a cumulative effect of increasing the national debt from $19 trillion to $27.4 trillion over the next decade, according to the Office of Management and Budget.
And although the Obama administration expects the debt to remain relatively stable as a share of the economy, that projection is based on a set of assumptions: The economy will continue to grow by about 2.5% over the next decade. Congress will enact a $10-a-barrel tax on fuel oil, raising $319 billion over 10 years. Congress will pass immigration reform, resulting in another $170 billion in new revenue over the next decade. And off-budget war spending will decrease by $636 billion through 2026.
Er …. suuuuuure. The last condition sounds the most distanced from reality. The Obama administration ignored the rise of ISIS, which has grown in the vacuum Obama left in Iraq, Syria, and Libya, and now reaches even Afghanistan. Are we supposed to believe that Obama’s plan still commits to “degrading and ultimately destroying ISIS” while scaling down war spending?
Cracking the $4 trillion mark is hardly a sign of fiscal responsibility, either. As I point out in my column for The Fiscal Times, the growth of the budget under Obama outstrips economic growth and population growth, and sanity:
Put aside the components of the budget, though, and focus more on the astounding expansion of it during the years in which Obama controlled the outcomes of the budget. The final federal budget signed by a Republican president was FY2008, when Democrats negotiated with George W. Bush on the spending plan. For FY2009, Democrats passed a series of continuing resolutions to exclude Bush from exercising his authority on the budgets, delaying it until Obama could sign an omnibus bill in March 2009 to complete the budget process.
In FY2008, the federal government had outlays of $2.98 trillion, amounting to slightly over 20 percent of GDP for 2008. By FY2015, outlays had risen nearly 24 percent, while economic output during the same period rose only 10.1 percent. The population grew only 5.3 percent in the same period. The FY2016 budget pushed the increase in outlays to 32.4 percent of the FY2008 budget, nearly a third more spending in just eight years and an increase of 7.1 percent over the previous year – when the economy grew at only 2.4 percent.
Those who claim to be mystified by the rise of anti-establishment populist fervor need look no further than this.
Obama gave voters four trillion reasons for their anti-establishment fervor, especially younger voters. The rise of Bernie Sanders may be fueled by that demographic, but they’re not all economic illiterates, and they are despairing about a future of irresolvable debt:
Younger voters are especially sensitive to this. While conducting research for my book Going Red in New Hampshire in 2015, I spoke with a young man who had cast his first two presidential votes for Obama. Recently, though, the rapid increase in national debt has frightened him – as does Obama’s insistence that the proper response is to spend more. “It needs to be fixed,” he told me.
But where are the proposals to scale back the budget and eliminate deficits? Neither party in Washington has seriously proposed a plan to fix this, which means younger voters will inherit the fruits of their parents’ and grandparents’ profligacy. Both parties have contributed to the rapid increase of federal spending. That leaves voters with few choices but radical disruptors such as Donald Trump and Bernie Sanders, or maybe Ted Cruz or Marco Rubio, as outsiders willing to take on entrenched interests to end the debt cycle and get back to fiscal responsibility.
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