Christine Romer and Peter Orszag have been gone for months, but in some ways it’s as if they never left … especially in math. For the second time in eighteen months, the Obama administration has been caught making a $2-trillion error in its deficit projections, this time attached to its latest budget proposal. The CBO yesterday released a report showing that the White House far overstated economic growth and blew the whistle yet again on ObamaCare projections:
The difference is chiefly because CBO has a less optimistic estimate of how much the government will collect in tax revenues, partly because the administration has rosier economic projections.
But the agency also rejects the administration’s claims of more than $300 billion of that savings — to pay for preventing a cut in Medicare payments to doctors — because it doesn’t specify where it would come from. Likewise, CBO fails to credit the White House with an additional $328 billion that would come from unspecified “bipartisan financing” to pay for transportation infrastructure projects such as high speed rail lines and road and bridge construction.
Friday’s report actually predicts the deficit for the current budget year, which ends Sept. 30, won’t be as bad as the $1.6 trillion predicted by the administration and will instead register $200 billion less. But 10 years from now, CBO sees a $1.2 trillion deficit that’s almost $400 billion above White House projections.
The administration’s nominee for deputy director of its budget office, Heather Higginbottom, tried defending the White House budget even with these projections and ended up admitting that the White House notion that their budget “stabilizes” deficits was false after a classic cross-examination from Senator Jeff Sessions. If she has to return to the Senate to defend the budget again, Jacob Lew will probably need to look for a new deputy.
The findings in this puncture two myths perpetrated by Barack Obama. First, ObamaCare is not “deficit neutral” in the first ten years, let alone constitutes a savings over the decade. That was true even before the “doctor fix,” but the suspension of reductions in payments that came later sends ObamaCare well into red ink. Next, the White House is inflating future revenue projections in order to protect its plans for expanded federal spending. The difference in this case comes to $400 billion in year 10 of the projections, a difference that almost equals the worst total budget deficit under George W. Bush.
The first $2 trillion math error in the summer of 2009 was extraordinary enough. No administration in my recollection has ever had to issue a $2 trillion correction to its fiscal projections, and that should have resulted in resignations at the time from Obama’s economic team. A second such “error” in less than two years either indicates extraordinary incompetence, or something more deliberate in action at the White House.
Rovin has more thoughts on Obama’s “fuzzy math” in our Green Room.
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