Say Anything Blog

According to Investor’s Business Daily:

The president promises an outline of his budget plan on Thursday, but he has already leaked some details. He says he can cut the deficit from a likely $1.4 trillion this year to $533 billion by 2013.

Much of the reduction, administration officials say, will come from fulfilling his campaign promise to repeal the Bush-era tax cuts on the “rich” and scaling back the war in Iraq.

Trouble is, those two alone won’t get the budget anywhere near where Obama wants it by 2013.

Earlier this week, the Congressional Budget Office ran the numbers. It assumed all but the middle-class portions of the Bush tax cuts would expire in 2010. And it assumed a 115,000 cutback in the number of troops deployed in Iraq, Afghanistan and elsewhere to support the war on terrorism.

The resulting deficit in 2013? $715 billion.

In other words, adopting the two main policy changes Obama has so far announced would leave him $182 billion short. But even that is wildly optimistic.

It’s wildly optimistic because while Obama is counting on lower war spending and increased tax revenue from ending the Bush tax cuts, neither of those two things are likely to happen.

As far as war spending goes, it appears that while Obama has announced troop pullbacks from Iraq he’s still requesting more money for the wars (including his troop surge into Afghanistan) than Bush has averaged over the last six years.  So while he’s claiming to cut the cost of the wars, he really seems to be increasing them.

And ending the Bush tax cuts isn’t likely to result in a lot of additional tax revenues.  Remember that after the Bush tax cuts were put in place, tax revenues soared.

And federal budget deficits shrank:

By allowing the Bush tax cuts to expire Obama is essentially jacking up taxes on an already slowing economy.  That’s going to promote the sort of economic stagnation that causes tax revenues to go down, not up.  Meaning that letting the Bush tax cuts expire is likely to exacerbate the budget deficit, not help it.

What’s sad is that Obama could probably do more to stimulate the economy than any of his spending and policy changes to date ever will just by announcing that he’s going to keep the Bush tax cuts in place.