Boy, wouldn’t it be nice if the main stream media was independent from the White House? If so, they would probably question President Obama when he makes statements like this:
“It’s a budget that doesn’t spend beyond our means, and it’s a budget that doesn’t make harsh and unnecessary cuts that only serve to slow our economy,” Obama said Saturday during his weekly address. “We’ll keep our promise to an aging generation by shoring up Medicare, and we’ll keep our promise to the next generation by investing in the fundamentals that always made America strong–manufacturing, innovation, energy and education.” (Read More)
His own press secretary just said the other day that his budget never balances, meaning every year it covers has the government spending more money than it takes in. That’s the definition of spending beyond one’s means. Congress is just as guilty, as William Poole pointed out in his WSJ op-ed in this morning’s paper, but that doesn’t make Obama any less culpable.
President Obama will release his overdue budget on Wednesday. It will doubtless project a reduction in the federal budget deficit—a projection that journalists, commentators and policy makers should ignore. To do otherwise is to be complicit in fraud. Strong statement? Not really.
For 50 years or so the federal government has deliberately and to an increasing extent misstated probable future budget deficits. Democrats and Republicans are guilty. The White House is guilty. And so is Congress. Private firms that deliberately misrepresent their financial statements in this fashion would be guilty of a crime.
The magnitude of the misrepresentation is breathtaking. For one example, the bitterly contested “fiscal cliff” legislation (the American Taxpayer Relief Act of 2012) raised the top income tax rate to 39.6%. However, the Congressional Budget Office’s latest (early February) deficit projection for 2013-22 is now $4.6 trillion higher than the baseline deficit it projected in mid-2012. After the tax increase, how can that be?
Easy. Congress requires the CBO to present its baseline budget projections on the basis of “current law.” Congress then manipulates current law to understate probable future outlays beyond the present year, and to overstate probable future revenues. These manipulations change CBO baseline budget projections based on current law. Voilà, actual deficits exceed projections, and the previous budget projections are rendered meaningless.
Read the whole thing so you’ll know what’s really going on when you turn on the TV and hear all about how Obama’s budget reduces the deficit. It’s a lie.