Budget Background

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In 2009, President Obama predicted his policies would produce 4.2 percent growth in 2013—more than double the actual, anemic growth rate of 1.9 percent. Since making that projection, President Obama has had much of his economic agenda implemented: the $870 billion stimulus bill, Dodd-Frank financial regulations, Obamacare, restrictions on American energy, $1.7 trillion in higher taxes, unfettered regulation, etc. Our debt has soared from $10.6 trillion to $17.5 trillion on the promise that this would stimulate the economy and produce prosperity, yet now we’re left with none of the prosperity and all of the debt.

But this was not a one-time error used to sell bad policies. For 2013, the average of all four white House budget projections from 2009–2012 was 3.9 percent—still double the actual growth rate. These are not just academic figures—weakened growth means millions of lost jobs and reduced incomes. While debt has grown 64 percent since 2009, median household income has declined 4.5 percent—or $2,268 per household.

The President’s latest budget makes similar unrealistic growth assumptions. One Reuters columnist observed that “the Office of Management and Budget… maintains that the U.S. economy will be 2 percentage points bigger in 2024 than it will be in the CBO’s projection.” It should also be noted that OMB’s forecasts through 2017 are significantly higher than the private forecasts from the respected Blue Chip Economic Indicators.

Yet, the White House proposes more of the same: a spending increase of almost $1 trillion, a tax increase of more than $1 trillion, and a cumulative debt increase of $8 trillion. The result? By 2024, using their own optimistic projections, debt will rise from roughly $17 trillion to $25 trillion and annual interest costs for taxpayers will nearly quadruple, to $812 billion. Such a plan would have predictable consequences: more weak growth, more low wages, and more economic stagnation.