President Obama’s FY 2012 re-election proposal…er…budget.

Today, President Obama has released his budgetary proposal for FY 2012 which the Politico is billing as making “the hard choices.” Well…the choices weren’t that hard and there weren’t to many of them.

The upside to the President’s request is that the $1.6 trillion deficit we are carrying for FY 2011 has been reduced to $1.1 trillion for FY 2012. The downside is how they are accomplishing it. Basically it is simple budget gimmickry and some very expensive fuzzy math. Let me elaborate.

In his proposal President Obama lowers spending from 2011 levels of $3.81 trillion to $3.72 trillion for FY 2012–approximately $90 billion lower. Revenues are just the opposite. In FY2011 government receipts were $2.17 trillion and in FY 2012 they will total $2.62 trillion–or a $453 billion increase in tax revenue. Subsequently, what you have is a meager cut in government spending coupled with an extremely large tax increase in one fiscal year. And you are still left with a deficit that is still over $1 trillion. Projections do have deficit spending dropping to $768 billion in FY 2013 and lowering all the way until FY 2019 when they start to rise once more.

However there is an even more disturbing trend when you look at the interest payments made on our national debt. In 2018 the actual amount of deficit spending–$619 billion–is overtaken by the amount we are paying on the debt in the form of interest–$685 billion. The translation is that in order to keep the government’s AAA credit rating the majority of government borrowing will have to be directed to pay on interest. All the while deficit spending still continues making the debt grow at enormous pace while further increasing the size of our interest payments. In effect the government will reach a point where interest payments could potentially “crowd out” not only the private sector, but crowd out the government as well.

Because tax receipts will have to be redirected to pay on interest, basic government services, that would have otherwise been easily funded, will have to be eliminated or severely cutback in spartan proportions in order to make good with our creditors. This is why the goal should have been the elimination of our deficit spending so at some point in the near future we could start tackling our debt and get back into the black or as close as possible to it.

For the most part, this budget is electoral driven, none of it indicates someone who is serious about tackling our nation’s fiscal problems. It is by design built to protect the President from having to make tough choices in an election year such as entitlement or tax code reform. To be blunt, like most budgets which preceded it, attempts to show illusory good faith on Washington’s behalf towards the fiscal concerns of the average American.

The committee for Responsible Federal Budget has laid out some interesting facts about the Obama 12′ budget. As they put it, “The Good, The Bad, The Troublesome

CRFB_Reacts_to_the_Presidents_FY_2012_Budget_0http://d1.scribdassets.com/ScribdViewer.swf

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About Mike Elliot

Works in Construction Engineering and Project Management. Mike has been employed by the federal government and worked extensively within the private sector as well. His interests include public policy, economics, politics, foreign policy, philosophy and other assorted mind-numbing practices. Mike can be contacted, complimented, or criticized at twe.mike@gmail.com. He is also available for speaking engagements and prefers to be paid in gum.
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5 Responses to President Obama’s FY 2012 re-election proposal…er…budget.

  1. Jason says:

    A cowardly bunch.

  2. Mike Elliot says:

    Dude,

    I was willing to give the President a chance. He seemed to be getting how deep the fiscal trouble we were getting into. But alas, it was all worthless rhetoric that amounted to this proposed debacle. I guess I started smoking too much Hopium.

    Although it isn’t that bad, instead of trillion dollar per year deficits we can look forward to three-quarter a trillion per year. YAY!!!!

  3. Pingback: President Obama’s steep-cuts in perspective. | The Western Experience

  4. Pingback: Ahead of the power curve: America’s Interest on the National Debt | The Western Experience

  5. Pingback: (Geeky): The Paul Ryan budget proposal. | The Western Experience

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