President Obama’s Elusive Budgetary Goal of ‘Fiscal Responsibility’

President Obama has never released a "fiscally responsible" budget.

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Jason Reed / Reuters

President Barack Obama delivers remarks on the budget alongside acting Director of Office Management and Budget Jeff Zients, in the Rose Garden of the White House in Washington, April 10, 2013.

President Obama will release a “fiscally responsible” budget for the country today, his aides say. This is not news. It happened last year. And the year before. And the year before. In Obama’s first year, he was so confident, he called his budget “A New Era of Responsibility.”

Except, it wasn’t. And never really has been. Because the fiscally responsible part is always projected to begin a few years in the future, and each year, as a new budget comes out, White House aides have also revised their projections. What they believed to be responsible before was not so responsible after all. The deficits were larger than they expected. The economy grew slower. The debt was bigger.

There is some disagreement over just what “fiscally responsible” means. Some liberals believe there is no real risk of running up too much debt, given the demonstrated willingness of the world to buy our bonds, so it is responsible to accept our high deficits. Some conservatives believe that any deficits are a moral outrage that will turn our children into chattel or preface armageddon, so it is responsible to embrace austerity. For the purposes of this post, I am defining “fiscally responsible” as it is most often meant by the White House: charting a path to deficit levels that roughly stabilizes the size of the debt as a percentage of GDP.

In 2009, Obama’s propeller heads predicted the deficits in 2012 would be about 4.6% of GDP, or just slightly higher than the growth of the economy. Three years later, Obama’s number crunchers were saying that the 2012 deficit would be 7.2% of GDP, which means the original prediction was off by about 50%. Why? The biggest reason is that the financial crisis was worse than predicted, and the recovery has been slower, lowering tax revenue. It’s also true that Congress never puts a White House budget into law, but as this chart by The Washington Post’s Dylan Matthews shows, had Obama had his way, the deficits would likely have been worse, not better. The budget that Congress passed in 2009 was 3% smaller that Obama wanted; it was 7% smaller in 2010.

But the pattern in the Obama administration has been remarkably consistent: Presidential budgets are a terrible source for predicting the fiscal responsibility of the U.S. government. Here is a line chart I made showing the deficit projections Obama made in each of his first four budgets, as a percentage of GDP. As you can see, each year the short-term projections tend to get a little worse.

Screen Shot 2013-04-10 at 10.35.39 AM copy

The number crunchers across the street from the White House are not fudging the numbers. The problem is that lawmakers do not have complete control over deficits. The economy matters, and the official numbers have not been good at predicting what will happen.

The other thing worth mentioning here is that in discussions of fiscal responsibility, the President’s budget is often a distraction. The real problems with spending and taxation have little to do with what Obama likes most to talk about: new bridges, pre-K education, tax loopholes for the very wealthy. They have to do with long term trends—a decrease in tax rates and revenue over the last decades, and an increase in the cost of health care. The graphic designers at the U.S. Treasury clearly illustrate this point:

Screen Shot 2013-04-10 at 10.49.19 AM

Any long term solution to the high deficits will most certainly arise from addressing these areas. And that deal, if it happens anytime soon, will not be found in the Obama budget document, though his recent embrace of cuts to Social Security and Medicare may be a step in that direction.

UPDATE: I have added below another line (in teal) to my chart, showing the deficit projections as a percentage of GDP from the most recent budget, fiscal year 2014, which was released Wednesday afternoon. You will see that the deficit estimates for the most immediate year are once again higher than they were predicted to be last year, the year before, the year before that, etc. Not exactly the kind of projections you want to take to the bank, or bond market. To read the whole budget, see here.

Screen Shot 2013-04-10 at 3.07.12 PM
67 comments
Libtards-UNITE
Libtards-UNITE

I don't blame Obama for being bad at this leader thing.  Before 2008, he never really had tried it before. 

reallife
reallife

"President Obama’s Elusive Budgetary Goal of ‘Fiscal Responsibility’"

hahahaha President Obama and Fiscal Responsibility in the same sentence  LOL  good one!

retiredvet
retiredvet

Have you noticed how the troll just throws insults and name calls? Pathetic.

drudown
drudown

Taken to its illogical conclusion, the proper inference is...what...it is better for the Global Community to slowly collapse on itself, not unlike how inaction over Climate Change relegates all Heroes into Kermits, as the Earth is slowly brought to a boil, I recoil at the thought of "government is not the solution but the problem" after natural disasters, dear Masters of the Universe, your collective purse stands to grow the most if REAL budgetary policy is to be metered out, e.g., a collective "write off" of debt at the Federal, Several States and municipal level through the infusion of Stimulus funds dispersed to Participating Partner nations and, of course, the People. 

(silence.)

Or are you going to look the People in the eye and lie about how "letting the _______ fail" will have some organic ending culminating into greener, or superior, form?

"Those...those...worms." - Marc Antony, 'Rome'

Only through massive, massive periodic payments to Participating Partner nations (e.g., via "Trade Agreements") will government fulfill its obligations under the Social Contract. If proponents are serious about "deregulating" anything, the People need easy access to credit and lending for small businesses which, coupled with macro-economic forces, make the world go 'round. My hope abounds, because all persons are free in the original mind; why pretend?

(enter My cousin Vinny voice: "I think I get the point")

No higher taxes. Fine, but there has to be a dispassionate acknowledgement that the ability of the United States to fashion laws that touch and concern Interstate Commerce are infinite, and why not wield it in bold strokes to ensure your progeny's future, instead of pretending we are all stuck by past debts any more than the common debtor does not receive forgiveness from Him?

Slowly losing faith in the status quo, with diminishing strength, we swim.

"Do every act of your life as if it were your last." - Marcus Aurelius 

gysgt213
gysgt213

"Except, it wasn’t. And never really has been. Because the fiscally responsible part is always projected to begin a few years in the future, and each year, as a new budget comes out, White House aides have also revised their projections."

Michael:  Do you mean to tell us that no one in the White House has a working crystal ball?  And what happen to the magic 8 ball? Did Clinton take that with him?



dregstudios1
dregstudios1

Will we ever see bipartisan politics in our country again?  The fringe element within the Republican Party has pushed them all to the far right of the isle where they’ve gridlocked our government for two years now.  Will the next two be any different?  They’ve been very public about their main goal being to block and bamboozle the President’s every move when the Middle Class NEEDS relief.  It takes many hands to paint the Blackface on Obama.  See his makeup session at http://dregstudiosart.blogspot.com/2012/10/bamboozling-obama.html

paulejb
paulejb

$1 trillion in stimulus. Never has so much been spent to so little effect. Barack Hussein Obama = EPIC FAIL.

shepherdwong
shepherdwong

"Here is a line chart I made showing the deficit projections Obama made in each of his first four budgets, as a percentage of GDP. As you can see, each year the short-term projections tend to get a little worse."

If you weren't an inexplicably well-paid Beltway hack, you might notice: 1) we're still in the worst economic downturn since the Great Depression, 2) the government should be deficit-spending in a zero-bound downturn 3) deficit-spending plunges in every proposed budget in anticipation of the end of the downturn, and 4) the congress determines actual taxes and spending, i.e., the budget deficit, not the President. 

"In general, funds for federal government programs must be authorized by an "authorizing committee" through enactment of legislation. Then, through subsequent acts by Congress, budget authority is then appropriated by the Appropriations Committee of the House. In principle, committees with jurisdiction to authorize programs make policy decisions, while the Appropriations Committees decide on funding levels, limited to a program's authorized funding level, though the amount may be any amount less than the limit."

http://en.wikipedia.org/wiki/United_States_budget_process

DonQuixotic
DonQuixotic

There are a few things I'm pretty unhappy with regarding Obama's budget proposal, but one thing that's refreshing to see is the budget plan's inclusion of $50 billion in infrastructure repair for the US.  It is sorely needed, and whatever budget we get stuck with I'd like to see it included.

PaulDirks
PaulDirks

 They have to do with long term trends—a decrease in tax rates and revenue over the last decades, and an increase in the cost of health care.

Those aren't just worth mentioning. They ought to be the freaking lede of every story on the subject.

grape_crush
grape_crush

> White House aides have also revised their projections.

Why wouldn't they? Revising projections as the future becomes now is a responsible and desirable behavior. Moaning about the fact it happens is kinda dumb, Scherer.

> Some liberals believe there is no real risk of running up too much debt...

a) Who, specifically?

b) The general take as I read it on the liberal side is that debt is a long term issue while gainful employment is the more immediate one. And it is; positive growth in the latter helps to alleviate the former.

> ...but as this chart by The Washington Post’s Dylan Matthews shows, had Obama had his way, the deficits would likely have been worse, not better.

That statement lacks context. Stimulus spending and stimulus tax cuts are temporary expenditures. Medicare Part D and the Bush tax cuts will recur in some form indefinitely.

> The real problems with spending and taxation have little to do with what Obama likes most to talk about: new bridges, pre-K education, tax loopholes for the very wealthy. 

Not true. That job building bridges produces income that is taxed, thus adding to revenue received. If our economy was booming, you'd see less debt due to the additional revenue. And closing those loopholes also increases revenue. That should be obvious to you, Scherer.

> They have to do with long term trends—a decrease in tax rates and revenue over the last decades, and an increase in the cost of health care.

That's not a bug, it's a feature.

The real question is, what's behind the long-term trends, Scherer? This isn't just happening; it's the end result of a bunch of bad policy decisions that have reduced tax rates (individual and corporate, according to your chart) enabled a reduction in revenue (loopholes, loss of good-paying jobs) and increased health care prices (nonnegotiable drug pricing, legislative roadblocks on using comparative effectiveness studies to determine what medical procedures will be paid for). This is all being intentionally done, and if we think that the trend is undesirable, then it can be reversed if there is the will to do so.

> Any long term solution to the high deficits will most certainly arise from addressing these areas.

Unfortunately you are ignoring the very things that need to be addressed, Scherer. Y'all like to talk about the symptoms and then lazily regurgitate whatever the beltway conventional wisdom is. Until the political media chooses to get real and be willing to sacrifice a few of their own sacred cows - false balance, for one - there's little need to respect their opinions.

bryanfred1
bryanfred1

Note that in all four scenarios you see an increase in spending as a percentage of GDP in the late years.  You wonder why the White House is always focused on the 10-year window?  It's because many of the proposed expenditures get pushed into year 11 and beyond.  The ACA is a great example; taxes and fees are implimented immediately but many of the services don't come on line for several years.  So you get 10 years of collections to pay for six or seven years of services.  What do you think happens in years 11 - 20?  Massive shortfalls.  By then most architects of the bill (and certainly the president) will be safely out of office, but those of us who plan to still be alive will be stuck with a huge bill - just as Medicare and Social Security shortfalls are becoming acute. 

vanilla_beenz
vanilla_beenz

@TIME @TIMEPolitics if author wants to discuss true fiscal irresponsibility, he should write about those use US debt default threat tactics

SixSixSix
SixSixSix

Did anyone notice that Health Care has gone up less than other components have gone down? Social Security has been constant which from the time that the Reaganites introduced the modern mega-deficit has been raided as a piggy bank. The Repubs are political street walkers who don't want a fair deal because the rich get that way only by stacking the decks and the Repubs are or serve their masters well. And they want to cheat those who are about to collect on having paid decades of extra taxation that the wealth evade by dint of political privilege? Why isn't FICA a true flat tax without limit? That would gain an instance "responsible budget". The fraud continues and sheep going shoveling. The commercial media abets.

YDrshivaji
YDrshivaji

@TIME @TIMEPolitics Americans have once again missed the bus. The burden will be on commoner poor citizens of world over. poor blesspreside

paulejb
paulejb

Federal Government: Too large, too controlling and too expensive.

SixSixSix
SixSixSix

Ah, why would it be irresponsible to increase corporate taxes, by which we mean the way that the 1% grab their 90% share of the wealth? Somehow it is better to cheat the people who paid twice the taxes as the wealthy having contributed to the double taxation of FICA to full bore while the wealth essentially pay nothing at 0.0001% of income and then only if "earned" income, something they do very little of.

drudown
drudown

@Libtards-UNITE 

He obviously was more credible and the policies championed more believable than the disaster once known as the GOP.

But keep telling yourself he isn't a great man.

drudown
drudown

@reallife 

I think a more laughable assertion is the GOP fiction that "cutting taxes raises revenues."

No, wait. The GOP lie that "deregulating major industries results in greater competition."

I can't tell which is more insidious- that, between the two: which one?

You, and your criticism? Like a blind man singing of the sun.

reallife
reallife

@drudown    can you be a more pompous ass? do you really think anybody is reading the crap that you post?  or that you copy and paste? do you? really? 

take a break from your laptop, really... it'll do you good

get a life

go outside, meet some regular people

 

melonheadx13
melonheadx13

@paulejb all that money went straight into the bank vaults and none of the banks refinanced mortgages as they supposed too.  now a jobs bill to fix infrastructure like safety deficient bridges that was adequately funded would put money into peoples' hands and stimulate the economy.

leehut4
leehut4

@paulejb Presidents  Nixon, Carter, Reagan, Bush I, Clinton, Bush II,  All=EPIC FAIL.  But biggest failure was Bush II, by a large margin.  BTW, seen any WMD lately?  Think maybe Junior made up the whole story to get to Saddam BEFORE Saddam got to the Bushs? 

tom.litton
tom.litton

@DonQuixotic It would be great to see the infrastructure bank get created and fully funded. 

It would be even better if it was allowed to save money during up turns and increase spending during recessions.

bryanfred1
bryanfred1

I'm inclined to agree with the sentiment, but wasn't that how the nearly $900 billion stimulus bill was sold to the American people?  Money for bridges, roads and infrastructure was front and center. 

manlyman
manlyman

Those aren't taxpayer dollars. It's called "public money".

tom.litton
tom.litton

@SixSixSix I would prefer to lower rates on the corporate rate side and make them up when corporate profits turn into income. 

bryanfred1
bryanfred1

Because the U.S. already has the highest corporate tax rate in the developed world.  In an global economy increasing it further will make investment in the U.S. that much more attractive.  Lowering rates has the opposite effect, and would probably actually result in higher collections on a dollar basis.

drudown
drudown

@reallife @drudown 

"So hot? my poor little sir." - Emerson

What's the matter? 

"Your feeble mind tricks don't work on me, boy." - Jabba the Hut

jmac
jmac

@melonheadx13 @paulejb  That stimulus package kept us from a Great Depression.  But never fear, we can still get there with the Ryan/Ayn Rand/Coolidge mindset and a Republican congress making sure no additional stimulus in the current budget ever sees the light of day - no matter the compromises to try to get one.  

jmac
jmac

@leehut4 @paulejb BUSH JR DOUBLED THE NATIONAL DEBT, which was a bigger amount than when REAGAN TRIPLED IT.  Bush was handed a surplus budget;  Bush handed Obama over a trillion in debt the year Obama took over.   Clinton's 1993 Deficit Reduction Package (not a single REpublican voted for it) worked -  while he erased the GOP budget deficits.  His last year produced  a $236 billion surplus.    

THere's a party that doesn't have a clue about "fiscal responsibility".   Wonder if the reporter can figure it out.  

DonQuixotic
DonQuixotic

@bryanfred1 

The total $900 billion was not for infrastructure improvement.  IIRC less than a fourth of it was dedicated to that, and as it was being spent Republicans were constantly pushing to have it re-allocated towards preserving the Bush tax cuts.

manlyman
manlyman

Typical swampy response, whenever a columnist dares utter even the faintest criticism of the preezy.

bryanfred1
bryanfred1

Correction:  "...make investment in the U.S. that much LESS attractive."

TyPollard
TyPollard

@manlyman

Americans call Presidents, President.

It's just what we do...at least it's just what we used to do.

jmac
jmac

@manlyman  The preezy can't do anything without the House - and the House ain't budging.  Gee, I wonder why?  Could it be because reporters will help them play the game?  Fair and balanced.  

SixSixSix
SixSixSix

@bryanfred1 What????  As an American citizen I am taxed on full world wide earning. I live d20 years abroad, turned 18, and the IRS wanted a tax return and tax each and every year after that, including FICA. The US is the only major Western nation that tries to tax its citizens aboard. I warn would-be American citizens about the "IRS curse" that never goes away, no matter where you live. So try that one again.

destor23
destor23

@bryanfred1 GE's largest tax asset is still tax loss carry forwards from GE Capital, which was the recipient of a public bailout.

bryanfred1
bryanfred1

Interesting you brought up GE.  First off, if the money is not made here it should not be taxed here.  Second, it is the largest beneficiary of 'green' tax credits due to its leading role in alternative power generation.  I'm happy for it to pay its full boat on U.S. earnings - why don't you go take that up with the environmental lobby?

SixSixSix
SixSixSix

@bryanfred1 Bull. "American" Corporations, who like GE and Apple increasingly deny any national loyalty or obligation, don't pay anywhere near the nominal rate. In fact, many like Facebook and GE manage to pay negative taxes - they get huge subsidies at "tax time" - the only tax they deal with is one on the rest of us. The percentage paid by corporation of total income tax has crashed since the Reaganites introduced corporate first tax policy and mega-deficits to go with it. Remember the "American Job Creation Act?" - what a joke, massive layoffs, outsourcing, tax losses and corporate pockets stuffed, huge bonuses and golden parachutes. Of course now they whine and complain and demand to be let to it again. At least TARP was honest in comparison. Let us borrow a line from the NRA, we don't need new tax laws, we just need to collect on existing taxes and close the absurd tax loopholes and lobbying enabled tax evasion. Now more front office "head quarters" offshore for instance. Why tax corporations? Because as Willie Sutton would say, that is where the money is. Corporations have engorged themselves with obscene amounts of cash since 2008 while sticking it to their employees and customers. They can pay. They should pay.