For the first time since 2009, we have three budget proposals: one from the House of Representatives, one from the Senate, and most recently one from the President. Now we’ll find out if an agreement can be reached.
Out of the three budgets, only the House proposal balances… and it takes 10 years to do so. All three budgets increase spending each year faster than projected inflation. The only way any budget reduces the annual deficit is through higher revenue projections. These come from predictions of a stronger economy, and in the case of the Senate and President’s budget, higher taxes.
Obama’s most notable “concession” to Republicans is to change the measure of inflation to chained CPI for the purposes of Social Security payouts. This amounts to $130 billion less in outlays over 10 years. Put another way, it reduces Social Security payouts by 0.25%. As even the White House has admitted chained CPI is a more accurate index of inflation, this amounts to correcting a mistake which currently overpays Social Security beneficiaries.
As far as new spending goes, the President’s budget has plenty. Some examples include $50 billion for road construction in FY 2014 alone, adding up to $1.04 trillion over the next 10 years. Another $1 billion will go toward “manufacturing innovation institutes.” The next installment of the High Speed Rail dream will cost $40 billion over 5 years. In all, outlays for FY 2014 equal $3.778 trillion, compared to $3.53 trillion for the house budget. Spending under the President’s budget grows by an average of 3.8% per year. The House budget has spending growing 3.4% per year (inflation is projected at 2.4%).
Currently, public debt is 76.6% of GDP (over $12 trillion). Under the President’s budget, that is projected to go down to 73% (19 trillion) in FY 2023, depending upon stronger GDP. Comparatively, the House budget will put debt at 54.8% of GDP ($14 trillion) that year.
A fiscally responsible federal government is still a long way off in the U.S. At least now the parties have put their cards on the table. This may be only a small step forward, but it’s a start.
The White House Office of Management and Budget, The Budget: http://www.whitehouse.gov/omb/budget/Overview
The Wall Street Journal, Obama Budget Plan Would Curb Social Security Growth: http://online.wsj.com/article/SB10001424127887324600704578404240080001504.html?mod=WSJ_hp_LEFTWhatsNewsCollection
The Washington Post, The Battle Over the 2014 Budget: http://www.washingtonpost.com/wp-srv/special/politics/2014-budget-comparisons/
The Wall Street Journal, Sundown in America? http://live.wsj.com/video/seib–wessel-sundown-in-america/FA4F65FB-E865-4568-9EE6-EEC9637B9238.html#!FA4F65FB-E865-4568-9EE6-EEC9637B9238
The New York Times, Obama’s Budget Revives Benefits as Divisive Issue: http://www.nytimes.com/2013/04/14/us/politics/president-obamas-budget-revives-benefits-as-divisive-issue.html?pagewanted=all
Bankrupting America, FY 2014 Budgets Side-By-Side: http://www.bankruptingamerica.org/fact-sheet/fy-2014-budgets-side-by-side/#.UWwMXcqQsrM
The Washington Post, The Obama Budget and the Appearance of Reform: http://articles.washingtonpost.com/2013-04-11/opinions/38463903_1_entitlement-reform-obama-budget-calls-president-obama