David R. Henderson  

Obama's Budgetary Sleight of Hand

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President Obama Double Counts

Now, I'm proposing real, serious cuts in spending. When you include the $1 trillion in cuts I've already signed into law, these would be among the biggest cuts in spending in our history. But they've got to be part of a larger plan that's balanced -- a plan that asks the most fortunate among us to pay their fair share, just like everybody else.

Did you notice Obama's opening of the second sentence? I didn't, until Keith Hennessey pointed it out. "When you include the $1 trillion in cuts I've already signed into law." So Obama is double counting by including cuts that are already part of the law.

Hennessey proceeds to do marginal analysis: He considers the combination of tax increases, tax cuts, spending increases, and spending cuts that Obama now proposes. He points out also that the spending "cuts" are actually reductions in the rate of growth of spending. The result? Obama's new proposal for the next 10 years is for net tax increases of $1.28 trillion (tax increases of $1.534 trillion minus payroll tax cuts of $254 billion) and net spending cuts of a measly $86 billion.


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CATEGORIES: Fiscal Policy , Taxation



COMMENTS (6 to date)
PrometheeFeu writes:

I think it's unfair to put that one on Obama. That's the way they do math in Washington and while it's dishonest, Obama is not personally responsible for it.

David R. Henderson writes:

@PrometheeFeu,
That’s not correct. The usual way is that you don’t double count. Once you’ve changed the law to make budget cuts in the future, you don’t then act as if the law had never been changed.

PrometheeFeu writes:

@David R. Henderson:

OK, I think I misunderstood. I was reacting to the point that 'the spending "cuts" are actually reductions in the rate of growth of spending.' My understanding is that's par for the course.

David R. Henderson writes:

@PrometheeFeu,
You’re right on the latter. The thing I highlighted, though, was the double counting. Maybe the lesson is that I should have one point per blog post. :-)

PrometheeFeu writes:

@David R. Henderson:
Or maybe it's that I should read and write more carefully. :)

According to USGovernmentSpending, year '45 spending to year '55 spending declined by a nominal $33.44 billion, and when you take the 2005$ adjusted figure and use the CPI calculator to adjust it for 2011$, the cut was $605.14 billion.

Among the biggest spending cuts, really? Seems to me he is being awfully tricky, considering the poor spending record of the U.S. government, and has a plan that is actually quite weak.

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