Out of Control Policy Blog

Weak Budget Cut Proposal Pits President vs. Congress, Taxpayers Lose Either Way

I don't know what should be more offensive to American taxpayers—the Obama administration's utterly underwhelming $17 billion in proposed budget cuts (amounting to a whopping 0.48 percent of his proposed $3.5 trillion budget), or the fact that members of Congress are starting to scream that these cuts are way too much.

Too much? You've got to be kidding. By way of comparison, states are in the process of closing budget gaps ranging from 1 to 30 percent of their general funds, and at least 34 states have enacted budget cuts thus far. Also, there are eight states that have either proposed or passed across-the-board budget cuts ranging between 3.5 to 10 percent.

States actually have to make difficult choices and painful cuts because they're constitutionally required to balance their budgets, unlike the feds. Meanwhile, the federal government is facing a fiscal train wreck the scale of which is unfathomable to states, with ongoing, trillion-plus-dollar structural deficits under the adminstration's multi-year budget plan, not to mention some major timebombs in the looming entitlement crises and higher debt service payments to cover the doubling of the national debt over the next ten years, etc.

Yet we're supposed to be grateful that they're cutting a paltry 0.48 percent when the overall budget package would increase spending by 25 percent (as Heritage's Brian Reidl points out in this sharp and utterly depressing analysis of the President's budget plan)?

As I've said before, I'm willing to give the administration some time and room to come up with real net spending reductions, as was promised during the campaign. But so far, I'm not seeing anything remotely resembling the type of fiscal stewardship that's needed in D.C. today.

No one's backing away from the trough—instead they're expanding it—and at the same time we're seeing numerous attempts in both Congress and the White House to thwart privatization and competitive sourcing, proven policy tools that save taxpayer dollars.

Perhaps even more puzzling is that the administration could have proposed a mere $1 billion in cuts, yet they'd still face resistance from Congressmen more interested in protecting pork projects in their districts or maintaining spending on nonsensical programs with small, but loud, squeaky wheel consituencies. As a basic tactic in negotiation, wouldn't it have made much more sense to roll out $50-100 billion in proposed cuts as the opening gambit, knowing full well that Congress would ineveitably whittle it down by magnitudes? You've already got a built-in fight anyway, so why not set the bar high to demonstrate to taxpayers that you're actually serious when talking about the imperative for fiscal responsbility?

From a quick blog scan, here are a handful of worthy reads on the proposed cuts:

  • Heritage's Brian Reidl: "$17 billion is relatively little money. [...] By contrast, President Bush sought $34 billion in annual cuts and terminations even when the federal government and budget deficit were substantially smaller than today. Furthermore, the Congressional Budget Office (CBO) regularly releases "Budget Options" books recommending as much as $140 billion in low priority spending cuts. [...] No one could reasonably believe that only 0.5 of 1 percent of the federal budget is wasted. Congress should use the President's proposals as a starting point to reform..."
  • Cato's Ted DeHaven: "Current and future taxpayers deserved a serious proposal to reduce the government's burden on their wallets and the struggling economy. Instead, the president's first budget represents an attempt to shove the government's hand deeper into the American peoples' pockets and lives."
  • Cato's Chris Edwards, writing in Heartland's Budget & Tax News: "Even after the current spike in spending caused by the stimulus bill and financial bailouts, Obama is planning to spend at permanently higher levels. By 2019, nondefense spending would hit 17 percent of GDP, a 30 percent higher share of the economy than under President Bill Clinton in the late 1990s. [...] Obama's budget has tiny spending cuts marketed as if they were big reforms, a political strategy formerly used by Bush. For example, Obama is proposing to trim subsidies for wealthy farmers. The idea is to signal that one is a reformer without actually having to do the heavy lifting of serious budget cuts."
  • Heritage's Conn Carroll: "Obama has described these program terminations as spending 'cuts'. This is simply not true. Every dollar that Obama "cuts" he has immediately turned into new spending elsewhere in the budget."
  • Over at National Review's The Corner, Marc Thiessen puts the $17 billion in cuts into perspective.
  • And last but not least, ABC's Jake Tapper recalls President Obama taking subtle digs at Senator McCain on the campaign trail for complaining about $18 billion in earmarks (emphasis mine): "'The total amount of earmarks even broadly defined comes to about $18 billion,' Mr. Obama said on the campaign trail in June in Wayne, Pennsylvania. 'Now, I'm not a math whiz, but if you're giving $300 billion in tax breaks, and lets say you eliminated all earmarks ... even assuming all $18 billion is delivered, you've still got to, let's see my math, $282 billion short and he hasn't specified where else he'd get the money. And what's likely is that he'd get the money the same way that George Bush got the money, which is to take out a credit card from the bank of China in the name of our kids and add a few extra trillion dollars extra worth of national debt.'"

Those words may ultimately come back to bite the President. Instead of the "change" and fiscal responsibility promised, thus far all we've seen is a perpetuation of the failed fiscal policies of George W. Bush.

Leonard Gilroy is Director of Government Reform


« A Story About Canadian Banks | Main | Chicago Exploring Alternative Privatization Models… »




Out of Control Policy Archives