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Press Release


Study: Proposals in State of Union Speech Would Boost Spending over $20 Billion, but Lack of Detail Obscures True Price Tag

January 26, 2011
By Pete Sepp
By Douglas Kellogg

(Alexandria, VA) – President Obama’s statement in yesterday evening’s State of the Union speech that “the rules have changed” will likely surprise many taxpayers hoping for more specifics on how much they’ll save – or pay – due to his fiscal policy proposals. According to a line-by-line analysis of his State of the Union speech by the non-partisan National Taxpayers Union Foundation (NTUF), all the quantifiable items in President Obama’s speech taken together would increase federal spending by more than $20 billion, but the large number of items whose impact is unclear could dramatically affect this total.

     “President Obama’s speech last night hinted at tax reform, and spending restraint, but also opened the door to tax increases and major spending initiatives,” said NTUF Senior Policy Analyst Demian Brady. “Americans heard encouraging words about more efficient government, but little in the way of specifics about spending priorities. This leaves taxpayers wondering not only whether the federal budget deficit is headed upward or downward, but also by how much.”

Among the findings of NTUF’s analysis:

  • President Obama outlined items whose enactment would increase federal expenditures by a net of $21.349 billion per year, compared to the $70.46 billion in higher annualized costs to taxpayers that he called for in his 2010 State of the Union speech.
  • Obama outlined 15 proposals with a fiscal impact last night, five of which would boost spending, three of which would cut them, and seven of which had costs or savings that could not be ascertained from NTUF’s accounting procedures. In 2010 NTUF concluded that about half of the spending-related items he discussed during that speech also had indeterminate fiscal consequences.
  • The single largest item Obama mentioned was increased “investment” in transportation infrastructure, which according to available sources could amount to $50 billion in additional outlays. Other large initiatives included $1.35 billion in possible higher spending for the “Race to the Top” educational program. 
  • NTUF also identified several elements that could yield budgetary reductions for taxpayers.  In 2010, Obama announced a three-year freeze on certain discretionary spending.  He now proposes to extend that freeze for another two years, for net additional savings of $15 billion annually. Furthermore, he signaled support for medical tort reform, which could save $2.06 billion per year in Medicare and Medicaid spending.
  • However, the most important fiscal policy aspects in Obama’s speech are the number of blanks the President left behind for taxpayers. For example, his highly generalized call to “merge, consolidate, and reorganize the federal government” holds potential for large reductions in expenditures, but this is by no means guaranteed. Proponents for a Department of Homeland Security argued that consolidating programs under such an agency could help streamline bureaucracy, but there is little evidence of substantial savings to taxpayers from this venture.
  • Since 1999, when NTUF began tracking Presidential addresses, the lowest recorded total was President George W. Bush’s address in 2006, coming in at under $1 billion in new spending; the highest was President Clinton’s 1999 speech, which proposed $305 billion in new outlays. Bush’s first State of the Union speech, in 2002, racked up $106 billion in higher expenditures.

Click Here to Read the Full Report

     “State of the Union speeches can’t possibly provide every detail on the future course of federal spending, but this year’s speech contained a high degree of ambiguity that could be masking tens – even hundreds – of billions in new liabilities, or, perhaps some additional savings,” Brady concluded. “This is why taxpayers may need to look beyond the words they heard last night and toward the numbers they’ll see in coming weeks, when the White House releases its budget blueprint.”

     Since 1991, NTUF has tracked the fiscal impact of proposed legislation through BillTally, an accounting database that reports the “net annual agenda cost” for each Member of Congress based on sponsorships and cosponsorships of pending legislation. For this analysis, NTUF matched Obama’s proposals with those in the BillTally system   in White House documents and other third-party sources.

NTUF is the research affiliate of the 362,000-member National Taxpayers Union, a non-profit taxpayer advocacy group founded in 1969. Note: For a spreadsheet of cost estimates for Obama’s State of the Union proposals, along with analyses of past Presidential speeches, visit www.ntu.org.