Obama oops at news conference
In 2006, we criticized President Bush for bragging about reducing "nondefense discretionary spending" without mentioning that overall spending had increased dramatically. Obama is adopting at least that page of the Bush playbook. He said:
Obama: [A]s a percentage of gross domestic product, we are reducing non-defense discretionary spending to its lowest level since the '60s, lower than it was under Reagan, lower than it was under Clinton, lower than it was under Bush, or both Bushes.
Even if Obama’s claim were accurate, it would be misleading. Nondefense discretionary spending amounts to just under 20 percent of total spending in Obama’s 2010 budget proposal. It excludes military spending, homeland security spending and rapidly rising "mandatory" spending including Social Security and Medicare.
And anyway, it's not exactly true that the figure would be "lower than it was under Clinton" or any of the other presidents he mentions. Using Obama’s own GDP and spending projections (scroll to the summary tables at the bottom), we found that nondefense discretionary spending would be 3.8 percent of GDP in fiscal 2013, the last budget of Obama's four-year term. That's actually higher than it was during Ronald Reagan's last four years, George H.W. Bush's first three years, Bill Clinton's entire eight years and at least one year of President George W. Bush's time in office, fiscal 2002, when it was 3.7 percent. See table 8.4 from the historical tables in last year's federal budget, on page 137.
Bush may also have achieved a lower figure in fiscal 2007, 2008 and 2009, the current fiscal year, for which he was projecting a 3.6 percent figure. New historical tables are expected soon from the Office of Management and Budget, which may revise the estimates for those years.
Obama's OMB is projecting that the figure will drop to 3.3 percent of GDP by 2018. That’s still higher than the 3.2 percent achieved under Clinton in 1999. Anyway, the fiscal 2018 budget won’t be Obama’s. Even if he runs for a second term and wins, his last budget would cover fiscal 2017.
Obama repeated his claim that his proposed budget will "cut our deficit in half by the end of my first term, even under the most pessimistic estimates." But cut in half compared with what? And according to whom?
Obama starts with a figure of $1.3 trillion, saying "some of those Republican critics have a short memory, because, as I recall, I'm inheriting a $1.3 trillion deficit, annual deficit, from them." He did inherit a huge deficit, but not entirely from Republicans. Democrats have controlled both houses of Congress for the past two years. Furthermore, the size is a bit slippery. The Congressional Budget Office projected a $1.18 trillion deficit on Jan. 8, 2009, its last estimate before Obama took office Jan. 20. That was the CBO's estimate for the current fiscal year, which ends in September.
The president's $1.3 trillion figure comes from an analysis released by Obama's Office of Management and Budget in late February. We can assume that part of the reason for the higher estimate is that the economy worsened more than expected, which will reduce the government's revenue from taxes even more than CBO had projected earlier.
If $1.3 trillion is the starting point, it is roughly accurate to say that Obama is proposing to cut the figure in half. CBO's most recent projections of Obama's budget put the deficit in fiscal 2013 (the last budget that would come from Obama's current term in office) at $672 billion. That's a 48 percent reduction from $1.3 trillion. The reduction would be even greater under the more optimistic projections from his own Office of Management and Budget. OMB projects the deficit will be about $533 billion in fiscal 2013, amounting to a cut of 59 percent.
However, both OMB and CBO predict that deficits would begin to shoot up again after the initial four-year period. OMB predicts a rise to $712 billion in 2019, and CBO forecasts a much sharper rise, reaching more than $1 trillion in fiscal 2018 and nearly $1.19 trillion in 2019 – about the same amount Obama inherited upon entering office.
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