President Obama is expected to give us the first summary of his budget this Thursday, but the administration has already leaked some of the broad components to the press, including the pledge to reduce the $1.3 trillion deficit by more than half to $533 billion by the end of his term in office.
At first glance, it’s difficult to see how his math adds up. The Obama administration expects to reduce the deficit by allowing Bush tax cuts to expire on wealthier Americans and saving money in Iraq and Afghanistan. But according to a Tax Policy Center analysis (a group whose work was frequently cited by the Obama campaign during the election), Obama would only be generating $68 billion in additional revenue by 2013 compared to maintaing all of the Bush tax cuts. Also, in FY 2008, the entire cost of the wars in Iraq and Afghanistan was $188 billion. In other words, even if we reduce our presence in both countries to zero and roll back the Bush tax cuts on the wealthy, it doesn’t get the deficit to under $1 trillion under the most charitable of assumptions. In reality, Obama just announced an increase in our pressence in Afghanistan and even during the campaign, he spoke of continuing non-combat operations in Iraq. So while the total cost of the wars is likely to go down, it won’t bottom out to zero. Plus, his own tax plans come with a price tag, and during the campaign, the Obama team boasted that it would keep tax revenue at a lower rate than prevailed during the Reagan administration.
In addition, President Obama wants to establish universal health care, and in every state that this has been attempted, costs wildly exceeded projections. This doesn’t take into account the costs of any future bailouts, stimulus packages, or other foreign entanglements. And of course, such analysis does not take into account the fact that the weak economy is certain to put a drain on tax revenue over the time period in question, and at the very minimum render any sort of deficit projections useless.
But this is good. It’s part of being a chief executive. President Obama will put out a series of numbers setting clear budgetary goals, and if his numbers don’t add up (which we know they won’t) he’ll be held accountable.
