12.31.2009 0

Obama’s Debt Dud

  • On: 01/27/2010 09:29:06
  • In: Fiscal Responsibility
  • By Robert Romano

    Leave it to Barack Obama to pass up on the political opportunity of a lifetime. Guess the 2010 election cycle just isn’t that important.

    Tomorrow, at the State of the Union Address, Obama will propose to “freezing” spending at its current levels.

    That sounds nice.

    That is, until one takes a closer look at the current budget deficit: a whopping $1.4 trillion more was spent last year than was taken in via revenue. So what is being frozen in place, and institutionalized? A $1.4 trillion annual deficit.

    In fact, the Congressional Budget Office projects a $1.35 trillion budget deficit for 2010 alone.

    By leaving spending as high as it is — the current budget is $3.6 trillion — the “freeze” will leave no possibility of ever paying off the gargantuan $12.3 trillion national debt. Instead, the debt will continue to grow on an annual basis, as it has done for every single year since 1958.

    This is kind of like renewing a degenerate gambler’s one-year contract by giving him a spending bonus.

    As reported by the Washington Post, a senior administration official said, “We’re not here to tell you that we’ve solved the deficit.” No kidding. The Post reports, “the freeze would shave no more than $15 billion off next year’s budget—barely denting a deficit projected to exceed $1 trillion for the third year in a row.”

    “But you have to take steps to control spending,” the official perfunctorily added. Well, that might be reassuring — if it had any bearing on what is actually taking place in Congress.

    The Obama “freeze” proposal comes amid a U.S. Senate bill to increase by $1.9 trillion the national debt ceiling, which would raise the national debt limit to $14.29 trillion. It’s a bill that Obama is fully prepared to sign.

    It also comes amid Obama’s laughable “create-a-commission” approach to addressing the debt. Yesterday, the Senate failed invoke cloture on the creation of such a commission, which would not have produced any real solutions anyway.

    Everyone already knows why the debt is exploding anyway. And no one needs a costly commission to tell them. The growth of entitlement spending is outpacing the growth of the budget as a whole.

    The national debt has grown by over 295 percent since 1992, and will have grown by over 492 percent by 2020. Entitlement spending has grown by over 351 percent since 1992, and will have grown by over 642 percent by 2020.

    According to an Americans for Limited Government analysis of Office of Management and Budget (OMB) data, annual entitlement spending has grown from $386.4 billion in 1992 (27.98 percent of budget outlays totaling $1.381 trillion) to $1.36 trillion in 2009 (38.17 percent of budget outlays totaling $3.653 trillion). (Sources: www.gpoaccess.gov/usbudget/fy10/pdf/hist.pdf, and http://www.whitehouse.gov/omb/asset.aspx?AssetId=1702.)

    According to OMB data, entitlement spending as a percent of budget outlays will continue to increase, while defense spending will decrease. In 2019, OMB projects that entitlements spending will stand at $2.482 trillion (45.93 percent of outlays totaling $5.403 trillion).

    Meanwhile, interest payments on the $12 trillion debt are set rapidly become intractable. According to the New York Times, “the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically.”

    As noted yesterday by Americans for Limited Government President Bill Wilson, “The real solution is to draw down entitlement spending, balance the budget, and pay off the debt.”

    Do we really need a commission to tell us that? And what makes anyone think the tone-deaf, tin ear Barack Obama would actually listen?

    Currently, the national debt stands at $12.3 trillion and is projected to top 100 percent of the Gross Domestic Product (GDP) in 2011 at over $14 trillion. By 2020, it will top $20 trillion.

    In short, the nation is going bankrupt. With this critical problem is a political opportunity that the powers-that-be in Washington, including Barack Obama, could be blunt and honest about.

    Instead, the American people are being treated to spending “freezes” that institutionalize borrowing money from China, and commissions to state the obvious. This is no “change,” it’s same-old-Washington. It’s a sham. And a shame.

    Robert Romano is the ALG Senior News Editor.

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