So who is President Obama going to blame for our deficits now?
Last September, in an interview with “60 Minutes,” Obama laid the blame for the federal budget deficit on the policies he inherited from President George W. Bush. “Over the last four years, the deficit has gone up, but 90 percent of that is as a consequence of two wars that weren’t paid for, as a consequence of tax cuts that weren’t paid for, a prescription drug plan that was not paid for, and then the worst economic crisis since the Great Depression,” Obama declared.
Well, if those policies were responsible for 90 percent of the deficit, shouldn’t ending those policies bring the deficit back down?
In January, during the “fiscal-cliff” standoff, Obama succeeded in repealing most of the Bush tax cuts for the rich. Yes, Obama agreed to raise the cutoff to $450,000 (rather than the $250,000 he had wanted), but the vast majority of the tax cuts he opposed are now history. So he can’t blame the Bush tax cuts anymore.
He also can’t blame “two wars that weren’t paid for.” Obama has withdrawn all U.S. forces from Iraq and is on track to withdraw most, and possibly all, U.S. troops from Afghanistan during his second term. War spending, which was once as high as $186 billion, is now projected to fall to $37 billion annually from 2015 to 2021 — and zero after that under Obama’s budget. So war spending should no longer be driving the deficit.
How about Medicare Part D? Despite his complaints, Obama supports keeping the program in its current form. He has proposed reforms that would save about $13 billion annually.
As for the “worst economic crisis since the Great Depression,” the recession formally ended in June 2009. And while Obama presided over the weakest recovery since the Great Depression during his first term, his new budget projects that we will finally turn a corner next year and return to robust 3 percent growth beginning in 2014. So under Obama’s own economic projections, a weak economy should no longer be driving deficits.
In other words, the policies and problems that Obama blamed for most of the budget deficit are mostly gone. We should be headed back to the pre-Bush surpluses of the 1990s, before the tax cuts and wars and economic crisis that Bush wrought caused our deficit and debt to skyrocket.
Problems solved, right?
Heck, we should be doing even better than the 1990s. In 2010, President Obama signed the Budget Control Act, which includes $2.1 trillion in spending cuts over 10 years. With that, we are now almost at the Simpson-Bowles recommended deficit reduction ratio of $3 in spending cuts for every $1 of tax increases. If anything, our projected surpluses should be even bigger than they were during the 1990s.
So why, then, does President Obama’s budget project $5.3 trillion in deficits, and $8.1 trillion in new debt, over the next decade?
Despite peace, prosperity and the wealthy paying their “fair share,” under Obama’s budget deficits will remain in the $500 billion range for the next 10 years. And by the president’s own projections, the federal debt will double during his presidency — from $10 trillion when he took office to $20 trillion when he leaves.
How can that be?
Maybe it’s because the policies President Obama blamed were never the drivers of our long-term deficit in the first place. According to the Congressional Budget Office (CBO), entitlement costs (and the resulting higher interest on the debt) are responsible for 100 percent of the rising long-term deficits.
Over the next decade, CBO projects record revenue that will average 18.9 percent of GDP — well above the 18 percent historical average. Indeed, revenue in the next 10 years are expected to match the pre-Bush period of 1993-2002 as the highest revenue period in U.S. history. So revenue is not the problem.
The problem is the unrestrained growth in spending on entitlements — Social Security, Medicaid, Medicare and, now, Obamacare. Entitlement programs, which constituted just 7.5 percent of GDP in 2000, have already risen to 10.4 percent of GDP. And according to CBO, they are projected to reach 17 percent of GDP within three decades.
So entitlement spending — not tax cuts for the rich or war spending or a weak economy — are responsible for our soaring debt and continuing deficits. Yet Obama is doing little to tackle the uncontrolled growth of entitlement spending (beyond offering to base annual Social Security cost of living adjustments on a chained Consumer Price Index instead of inflation).
In the 2008 campaign, Obama blasted Bush driving up our national debt by $4 trillion in eight years, calling that “irresponsible” and “unpatriotic.” And in his first term (as he exceeded Bush’s debt accumulation in half the time), he continued blaming his predecessor for his failure to tame our debt and deficits.
Well, he can’t do that any longer. Obama succeeded in repealing the Bush policies he once blamed. The $8.3 trillion in new debt, and $5.3 trillion in deficits, Obama is projecting for the coming decade — those are his, and his alone.