It is no wonder that the House and Senate Budget Committees may be reluctant to hold hearings on the President's new budget. Not inviting the White House budget director to testify on the Administration's proposals would break a streak dating back to the 1970s. But this is largely a déjà vu document of deficit spending that repeats proposals and rosy economic assumptions offered time and again in Obama's previous budgets.
In his final State of the Union Address President Obama boasted that the deficit was reduced by over half: from a high of $1.4 trillion in FY 2009 to $440 billion last year. Just after that speech, the Congressional Budget Office (CBO) released its budget outlook showing that trillion dollar annual deficits will return again all too soon, adding $9.4 trillion to the debt over the next ten years.
None of the President's previous budget submissions even contemplated the notion of a balanced budget, and this new one is no different. The President's budget would add $6.1 trillion to the debt from FY 2017 to 2026, and the difference from CBO's projection is not due to spending restraint -- the President would spend $52.6 trillion over the next ten years, $1.2 trillion higher than CBO's forecast. The reduced deficits under the President's outline would result from $46.5 trillion in tax receipts – $4.5 trillion more than CBO projects.
Obama's past budgets, which like this one contained many tax and fee hike proposals, routinely overestimated the amount of tax receipts that would be generated. For example, the Administration's first budget (for FY 2010) estimated that the government would rake in $3.7 trillion in FY 2015. The actual amount was $3.3 trillion. Comparing the Administration's annual forecasts for receipts looking at least one fiscal year in the future (with the actual totals for FY 2010 through FY 2015) finds that the White House has overestimated revenues by an average of $300 billion, or 11 percent.
The new budget contains many recycled proposals including: a $6 billion pre-school program, $73 billion in energy tax hikes, increasing the passenger security user fee for air travel by $5.4 billion, a $115 billion tobacco tax hike, $61 billion for tuition-free community college (rebranded as "America's College Promise"), "middle-class" tax cuts that would require $205 billion in new spending, a prescription drug “rebate” proposal that would likely lead to higher prices for new pharmaceuticals, a $38 billion "fair share" tax hike, and a $245 billion tax hike on capital gains.
There are also a new proposals whose likelihood of passage is doubtful, including a $319 billion tax on oil (in addition to the energy hikes mentioned above) to expand infrastructure funding, an $11 billion wage insurance program, and $2 billion for a paid leave benefit program.
Not all of the re-hashed items should end up in the recycling bin with the reckless deficit spending and tax hikes among the President’s proposals. The budget repeats proposals for crop subsidy savings and business tax reform, including a one-time lower rate to incentivize corporations to repatriate funds currently withheld overseas to avoid double taxation under the U.S.’s current tax system. The Cuts, Consolidations, and Savings section of the budget – which does include some dubious proposals such as tax hikes on energy and a reinsurance tax – recommends dozens of specific reforms to reduce actual spending such as a $206 million savings on the Littoral Combat Ship and $808 million by reducing the Army Corps of Engineers low priority projects (although as we’ve noted going back to President George W. Bush’s latter budgets, these cuts are generally ignored by Congress). White House officials should be welcomed to Congressional hearings to discuss these reforms and to find other ways to restrain spending and achieve the twin goals of a growing the economy and balancing the budget.