President Barack Obama is a budgetary optimist. When he announced his budget proposal last month, he framed it hopefully, as a welcome return to fiscal sanity and a path towards a better tomorrow. It was time that Washington acted “responsibly,” he said. “After a decade of rising deficits, this budget asks Washington to live within its means, while at the same time investing in our future. It cuts what we can’t afford to pay for what we cannot do without.”
If you ask me, what we could do without is misleading presidential rhetoric on the budget. Obama’s spending plan makes minor adjustments but leaves the country on an unsustainable debt trajectory. It’s like swerving an inch to avoid a pebble when you’re speeding toward a concrete wall.
Even under the rosy scenarios cooked up by the White House economic team, the national debt is projected to rise by more than $7 trillion over the next decade—hardly a model of fiscal responsibility. But should we actually believe the president's projections? Just as it’s worth checking into a manufacturer’s product claims before swiping your credit card, it’s worth verifying what the administration claims about its own budget.
That’s where the Congressional Budget Office (CBO) comes in. Think of it as Consumer Reports for economic policy. And according to a report released by the office last week, the president’s proposal doesn’t even meet the measly goals the president claimed.
For example, the president’s economic team argues that the White House budget proposal would put the federal government into “primary balance.” It’s a weasely term to begin with: It means that tax revenues are high enough to cover the current year’s spending on things like staff and programs. But as always, there’s a loophole. A budget that’s in “primary balance” ignores the money spent paying interest on the ever-rising national debt.
That’s sort of like saying that a car is in “primary working order” because all the parts are in good shape aside from the engine. America will spend $207 billion simply paying interest on the federal government’s debt this year alone. By 2021, that figure is projected to rise to $844 billion. At the same time, the CBO projects we'll add almost $9.5 trillion in new debt. Yet somehow this is what passes the president’s test for “living within our means.”
Worse, according to the CBO, the president’s budget fails even that pathetic standard. In 2018, when the government comes closest to achieving balance, the CBO still predicts a budget that’s $177 billion short of the president’s stated goal of "primary balance."
The rest of the report reveals similar discrepancies. For example, the president proposes to spend $300 billion on what’s known as the “doc fix,” and thus avoid cutting Medicare reimbursements to physicians. Obama’s budget says the spending will be paid for through spending reductions, and therefore doesn’t count the spending towards the deficit.
But what spending, exactly, will be cut in order to pay doctors? As the CBO explains in a revealing footnote, the White House proposal doesn’t actually say. It’s a magic asterisk, and so the CBO gives the administration no credit. It's a telling sign. The White House knows precisely what it wants to spend, but not what it wants to cut.
Overall, the CBO projects that total debt will rise by $2.3 trillion more than the president’s projections. The discrepancy is largely a result of differing expectations for the country's future economic performance. The White House projects a more optimistic scenario, with an economic engine humming far more powerfully than the CBO thinks is likely.
It’s true, of course, that the CBO’s growth projections may well be wrong. The CBO has been wrong before. Predictions, as they say, are hard—especially about the future. But it’s also worth remembering that the administration has a clear political incentive to project higher growth and thus inflate its numbers. Indeed, when the CBO was created in 1974, part of the intent was to provide an unbiased check on the administration’s politically-motivated projections.
What the discrepancy means, though, is that the president’s budget is, at best, a risky bet on brisk economic growth. His profligate spending plan is built around a best-case scenario, like a job-hunter signing up for a new car loan on the basis of a good feeling about a job interview. Maybe it works out. Maybe it doesn’t. But it’s not a responsible way to plan for the future. In the end, no amount of optimism will pay down America’s debts.
“Families across this country understand what it takes to manage a budget,” Obama said in February. Sadly, it’s all too clear that the president of the United States doesn’t.