Budgetology: Smoke N’ Mirrors

| April 13 2013

Budgetology: Smoke N’ Mirrors

Yesterday the president said his budget didn’t have “a lot of smoke and mirrors” but it seems all it takes is a little digging to uncover the hidden gimmicks. Between accounting for “an explosion of economic growth” or counting savings from cuts that will never pass, the meaningful change amounts to more of an optical illusion. If this isn’t a lot of smoke and mirrors, will the real cuts to spending please stand up?

 

PRESIDENT’S BUDGET HAS SMOKE N’ MIRRORS EVERYWHERE

“When President Barack Obama unveiled his budget Wednesday morning in the Rose Garden he announced ‘there’s not a lot of smoke and mirrors in here’ — almost daring you to look for the sleight of hand.”(David Nather, Obama’s budget fantasyland,” POLITICO, 4/11/13)

“Just like most budget proposals, which reflect the world as their authors would like to see it, Obama’s $3.78 trillion proposal relies on a few tricks to make the numbers work.” (David Nather, “Obama’s budget fantasyland,” POLITICO, 4/11/13)

Unrealistic Tax Hikes:

More Spending Would Come From Unlikely Cigarette Tax. “Obama is calling for $750 million in discretionary spending, funded by a big increase in the federal tax on cigarettes. Of course, there’s no guarantee that a future Congress won’t just pull the plug, even if he could get it through this time.” (David Nather, Obama’s budget fantasyland,” POLITICO, 4/11/13)

…And From Raising An Already ‘Permanent’ Tax. “He would raise the estate tax rate to 45 percent from 40 percent in 2018 while lowering the per-person exemption to $3.5 million from $5.25 million.” (Richard Ruben, “Obama Budget Shows $1 Trillion Tax Gap With Republicans,” Bloomberg, 4/11/13)

Fake Spending Cuts:

“Another Favorite Budget Trick: Count Savings From Cuts That Congress Will Never Approve.” (David Nather, Obama’s budget fantasyland,” POLITICO, 4/11/13)

·      Energy Assistance. “Obama’s proposing a $452 million cut to the Low Income Home Energy Assistance Program, the program that helps needy families heat and cool their homes. … He can try, but neither cut is very likely in this Congress — especially LIHEAP, one of the most politically popular social programs in the budget.” (David Nather, Obama’s budget fantasyland,” POLITICO, 4/11/13) 

·      EPA. “He also wants to cut $472 million, compared to his last budget, for EPA’s state revolving loan funds for wastewater and drinking water. … And environmentally conscious lawmakers would be sure to fight for the EPA funding, too.” (David Nather, Obama’s budget fantasyland,” POLITICO, 4/11/13)

·       Crop Insurance. “Obama’s budget also suggests making a dent in the deficit through almost $38 billion in cuts over a decade for a popular crop insurance program and an end to so-called direct payments to farmers. But farm subsidies aren’t exactly the easiest programs to cut, either, and it won’t be any easier with a Democratic Senate.” (David Nather, “Obama’s budget fantasyland,” POLITICO, 4/11/13)

Sequester Never Happened:

“Poof – The Sequester IS Gone.” “Budgets don’t need to apply the laws of physics — or even the laws on the books. In Obama’s case, he wishes the sequester didn’t happen, so — poof — the sequester is gone.” (David Nather, “Obama’s budget fantasyland,” POLITICO, 4/11/13)

·       Obama Assumes The Sequester Has Been Replaced. “Obama’s budget doesn’t just assume the president and Congress can reach a deal on the sequester — it uses months-old economic forecasts that assume the sequester would have been replaced by now.” (David Nather, “Obama’s budget fantasyland,” POLITICO, 4/11/13)

·      Inflated Sequester Claims Are Another Gimmick. “Obama inflates his claimed savings by first canceling the automatic sequester spending cuts he previously signed into law, then reclaiming them as new savings, and by adding in cuts in interest payments on the debt.” (Investors Business Daily, “6 Ways Obama’s Budget Is Worse Than Everyone Thinks,” 4/10/13)

Explosive Growth In 60 Years?

Predictions Of “Explosive Economic Growth”. “One White House official said the new, rosier prediction is based on explosive economic growth that the administration predicts would ensue if the president’s budget is adopted. (The chart shows debt as a percentage of gross domestic product.) Also part of the picture: the deficit reduction already in place and the higher taxes included in the fiscal cliff deal.” (Donovan Slack, “A tale of two charts: Busted to balanced in one year?,” POLITICO, 4/10/13)

… Based On Growth President’s Budget Claims To Cut Debt Drastically. “Tucked deep inside President Obama’s budgets last year and this year are charts extrapolating the effects on publicly held debt some 70 years in the future, but they paint vastly different pictures, going from out-of-control, exploding debt to dropping-like-a-stone, into-negative-territory debt.” (Donovan Slack, “A tale of two charts: Busted to balanced in one year?,” POLITICO, 4/10/13)

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