Last weekend, the Washington Post editorial board blasted Barack Obama and his administration for its foreign policy based on a “fantasy” world. The White House was caught flat-footed when Russia occupied the Crimean peninsula and threatened to invade eastern Ukraine as well. “For five years,” the editors wrote, Obama’s policies were “based more on how he thinks the world should operate than on reality.”
Secretary of State John Kerry told ABC News that Vladimir Putin has a “19th century” view of power, but The Post noted that the kind of expansionist domination has been on display for years by Russia – and China and Syria, too, where Obama seemed particularly clueless on how to exercise American power in the 21st century.
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The fantasy world inhabited by this White House is not limited to foreign policy, either. The Obama administration submitted the fifth budget proposal of its tenure, and the basis and applications of the budget demonstrate the same kind of disconnect from reality of his previous three budgets, none of which scored even a single vote from Congress when forced to the floor for consideration.
The cluelessness began two weeks ago, when the White House already was two weeks beyond the deadline for the budget submission. By that time, House Budget chair Paul Ryan (R-WI) and Senate Budget chair Patty Murray had already crafted a bipartisan budget authorization at a $3.56 trillion annual level for the next two years, setting the spending levels through the end of FY2015. Despite the baseline funding level running over the last budget of $3.44 trillion, the White House told The Washington Post that Obama’s forthcoming budget proposal would “end the era of austerity”.
“With the 2015 budget request,” The Post wrote on February 22, “Obama will call for an end to the era of austerity that has dogged much of his presidency and to his efforts to find common ground with Republicans.” Readers could be forgiven if they began to wonder whether they had slept through the Era of Austerity that supposedly “dogged” Obama. The last budget signed by George W. Bush, for FY2008, spent $3.239 trillion.
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Democrats delayed the passage of the FY2009 budget until after Bush left office through a series of continuing resolutions, finally passing an omnibus appropriations bill in March 2009 with Obama’s signature that spent $3.772 trillion – which included the TARP bailouts. The next three budgets spent at nearly the same levels even without TARP:
- FY2010 – $3.67 trillion
- FY2011 - $3.746 trillion
- FY2012 - $3.611 trillion
The FY2012 bill contained the Budget Control Act, which restrained spending to $3.455 trillion in FY2013 and FY2014 – which was still almost 7 percent more than the FY2008 bill, the last budget not to carry Obama’s approval. This new budget proposal adds almost $100 billion to that annual spending level. No one looking at the numbers even under the sequester could claim that they lived through an “era of austerity.”
Nor is that the only fantasy concocted by the White House. The budget claims to cut publicly held national debt over a projected ten-year period to 69 percent of GDP, and annual budget deficits to 1.6 percent of GDP. The CBO, on the other hand, sees publicly held debt rising from its current 72 percent to 79 percent of GDP and budget deficits going back up to 4 percent of GDP in the same period. What creates this difference?
For starters – literally -- the Obama administration assumes a growth rate of 3.1 percent in 2014, when CBO expects 2.7 percent and the private sector consensus comes in at 2.5 percent, according to Investors Business Daily. The actual GDP growth rate for 2013 was 1.9 percent, according to the Commerce Department , down from 2012’s 2.8 percent, and leading indicators for 2014 offer little hope for any kind of sharp rebound from stagnation.
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Most of the disconnect from reality comes in revenue assumptions based on “tax reform.” The budget assumes that Congress will pass what the proposal euphemistically calls “transition revenue from pro-growth business tax reform.” What that actually means is tax increases, as Orrin Hatch explained on the Senate floor Wednesday. “The budget envisions well over $1 trillion of additional taxes,” Hatch said, “in the face of a persistently sluggish economy.”
Just how likely will Congress be to hike taxes? With Republicans in control of the House of Representatives, unlikely in the extreme, and for one good reason – tax hikes are almost never “pro-growth.” CBO projects spending and revenue on current law rather than fantasy, which explains the difference between the White House fantasy and the hard reality.
Also, the budget projects massive spending cuts as part of the claimed cost savings – more than one trillion dollars, representing half of the supposed savings in the Obama proposal. Put aside the likelihood of a Republican House cutting Pentagon spending by another trillion dollars, after two rounds of significant defense cuts over the Obama presidency. With Russia invading Ukraine and China threatening its neighbors with exaggerated air-defense claims, the idea that either party will get on board with massive cuts to defense spending now is sheer fantasy.
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What’s the cost of this fantasy? The final tally of the ten-year difference between the two budget projections is $2.7 trillion – or roughly the size of the entire FY2007 federal budget.
Why bother publishing this budget at all? White House proposals from previous years lacked credibility to such a degree that they couldn’t even attract a single Democratic vote on Capitol Hill. Don’t expect this to come to the floor any time soon, either, and it’s not even the point.
As David Graham writes at The Atlantic , this proposal accomplishes nothing except election-year posturing. That makes it exactly the same as Obama’s last several fiscal proposals. If federal budgets had fantasy leagues, this White House would win them every year.
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