The economy remains stuck in neutral and the budget stuck in reverse. So with what does the administration want to move forward? Guns and immigration. The White House’s nonchalance about money matters that matter seems nothing new. However, this year’s belated budget submission underscores it to an unprecedented degree. This cannot be what the administration intended.
Most Americans, finding their financial affairs in the level of disarray of Washington’s, would drop everything to address it. During the past four years, spending spiked almost 20 percent — from 2008’s already recession-heightened level — and stayed there. As a result, the federal budget has run deficits of more than $1 trillion in each of these years — averaging $1.27 trillion. Over that time, the debt held by the public has doubled.
Putting this into the context of family finances, the federal government has overspent its income in the following fashion: in 2009, by 67 percent; in 2010, by 60 percent; in 2011, by 56 percent; and in 2012, by 45 percent. To do this, it has been forced to borrow massively: In 2009, 40 cents of every dollar it spent was borrowed; in 2010, 37 cents; in 2011, 36 cents; and in 2012, 31 cents.
The administration’s response to what to the average family would rightly deem a budgetary crisis has been complacency rather than a sense of urgency. In its budget released earlier this month, we got an almost passive-aggressive answer to profligacy.
Instead of “a day late and a dollar short,” the White House’s budget came two months late and $744 billion short (its projected 2014 deficit). Perhaps this would have seemed more acceptable if the budget had been worth the wait — offering a new path to balance. Yet it is essentially the same offer from last year’s fiscal cliff negotiations, and it never gets closer than $439 billion short of balance — in 2023. For the remainder of this administration’s tenure, it only gets within a half-trillion dollars of balancing.
To understand this budget, compare it to the administration’s favorite foil: its predecessor. By this White House’s reckoning, the George W. Bush years saw America woefully undertaxed — at least at the top levels. At the end of last year, when all the Bush tax cuts expired, it had the opportunity to do something about this and did — raising $620 billion in new revenues by letting the top two tax brackets return.
However, its recent budget takes that amount and almost doubles it — including $1.1 trillion in new revenues.
Where does all this additional revenue put us in comparison to the Bush deficits? In nominal deficits, the figures are not even close: The highest deficit of the Bush years was $459 billion in 2008; the lowest projected level of the Obama years is $528 billion in 2016.
A comparison of the deficit levels as percentages of gross domestic product is only slightly less divergent. Not counting the Bush administration’s 1.3 percent surplus in 2001, its deficits as percentages of the economy were: 1.5 percent in 2002; 3.4 percent in 2003; 3.5 percent in 2004; 2.6 percent in 2005; 1.9 percent in 2006; 1.2 percent in 2007; and 3.2 percent in 2008.
The Obama deficits so far have been: in 2009, 10.1 percent; in 2010, 9 percent; in 2011, 8.7 percent; and in 2012, 7 percent. Under the administration’s own assumptions — including the fiscal cliff tax hikes and its assumed $1.1 trillion in additional revenue — the deficits will be: 6 percent in 2013; 4.4 percent in 2014; 3.2 percent in 2015; and 2.8 percent in 2016.
Over the last four years of the two administrations, the average deficits were 2.2 percent for Mr. Bush and would be 4.1 percent for Mr. Obama — almost double — and this despite the fact that this is a comparison between what actually happened under Mr. Bush, and simply what the Obama administration would like to have happen under its own policies preferences and its own assumptions.
If our hypothetical family were driving down the road and discovered their car on fire, their logical response would be to stop and get out as fast as they could. It would not be to simply slow down and change the channel on the radio — to an easier listening, nonfiscal format station — as the White House appears to be doing.
Instead of stopping and getting out, the administration seems quite content to go right on driving. Apparently, it is satisfied in its assumption that the car fire, which is Washington’s four-year fiscal inferno, will burn out on its own.
This budget does not serve the president well. In its best light, it is seen as a negotiating position for a grand fiscal deal with Republicans. However, as that deal continues to prove ever more elusive, Mr. Obama runs the risk of appearing unserious about applying the brakes to America’s unsustainable budget trajectory.
J.T. Young served in the Treasury Department and the Office of Management and Budget from 2001 to 2004 and as a congressional staff member from 1987 to 2000).