Defense “Savings”Mask $20.7 Billion in New Domestic Spending, Analysis of President‘s Speech Shows

(Alexandria,VA) – In yet another speech laden with “cost unknowns,” President Obamaproposed $20.7 billion in new spending, a price tag that could only be offsetby substantial defense reductions and major tax hikes – that’s the conclusionfrom the National Taxpayers Union Foundation’s (NTUF’s) line-by-line analysisof the 2012 State of the Union Address. NTUF has been conducting these in-depthstudies since 1999.

“President Obama laid out an agenda that wasmore about ‘soldiers to subsidies’ than ‘swords to plowshares,’” said NTUFSenior Policy Analyst Demian Brady. “Even as he reaps fiscal rewards fromcompleted military missions – such as fewer borrowing obligations going forward– the President’s domestic proposals continue to grow in their budgetary cost andburden on everyday economic activity.”

Click HERE for a detailed chart of the President's fiscal proposals

Although the NTUF project focuses on federalspending in the President’s speech, Americans will also be on the lookout fornew taxes, including a 30 percent “Buffett Rule” tax, a minimum tax onmultinational firms, and (yet again) repeal of commonly-used business taxprovisions for only certain oil and gas companies. All could have seriousconsequences for the very same job creation, tax simplification, andinternational competitiveness efforts the Administration is touting. 

Amongthe findings of NTUF’s study:

  • PresidentObama proposed 18 items with a potential impact on federal expenditures: 3 thatwould reduce the federal budget, 8 that would increase it, and 7 whose effectwas too vague to be estimated.
  • Thelargest single cost was the President’s infrastructure proposal. Based on hisplans outlined in the American Jobs Act, the projects contained in this initiativewould amount to over $11.07 billion annually.
  • The President’s defense plans would save $48.7 billion per year, a result of both conscious policy choices about the size of the military and windfalls from reduced involvement in Iraq and Afghanistan. This dwarfs the $380 million per year he offered in non-military savings. In short, for every dollar he hopes to save in domestic programs, Obama is counting on saving 128 dollars in defense.
  • Alltold, the items mentioned in the President’s speech would, if enacted at once,result in a net decrease of federaloutlays amounting to $27.99 billion per year (again, attributable mostly tomilitary program changes). 
  • ThePresident continued his trend of offering many proposals whose cost impactcould not be sufficiently quantified. One example is his proposed “FinancialCrimes Unit,” which could mean significant long-lasting (but currently unknown)costs for taxpayers depending upon its structure. 
  • Obama’srequest this year for “the authority to consolidatethe federal bureaucracy” sounds much like his call in last year’s speech to“merge, consolidate, and reorganize the federal government.”

Prior to last night, the lowest total NTUF had recorded since itbegan the analysis project was President George W. Bush’s address in 2006,coming in at under $1 billion in new spending. The highest was PresidentClinton’s 1999 speech, which proposed $327 billion in higher outlays. Last yearObama’s speech contained an annualized total of $21.35 billion in net newspending.

Brady concluded: “The ramping down of overseasmilitary operations naturally leads to reduced expenditures, but the fact thatthese actions were mostly financed through debt, combined with the President’sinsistence on continuing to increase domestic spending, means taxpayers couldsee less in the way of traditional ‘peace dividends.’ To answer this questionmore fully, taxpayers will have to see something else: whether the President’sdelayed 2013 budget will attempt to contain spending growth beyond thePentagon.”

Since 1991, NTUF has tracked the fiscal impactof proposed legislation through BillTally, an accounting database that reportsthe “net annual agenda cost” for each Member of Congress based on sponsorshipsand co-sponsorships of pending legislation. For this analysis, NTUF matchedObama’s proposals with those in the BillTally system and in White Housedocuments.

NTUF is the research affiliate of the362,000-member National Taxpayers Union, a non-profit taxpayer advocacy groupfounded in 1969. Note: For a spreadsheet of cost estimates for Obama’sState of the Union proposals, along with analyses of past Presidentialspeeches, Click HERE. For a PDF version Click HERE