1. Big deficits. Under the President’s specific proposals, deficits will total $10 trillion from 2010-2020. Oh, and if existing policies (as defined by the administration) run their course, those deficits would actually be $12 trillion. Those are gigantic numbers. Under either scenario, our debt would grow faster than the economy every single year. That’s simply not sustainable.
2. The Fiscal Commission warning label. Budget-watchers know Table S-1 as the place to go for budget totals. In today’s budget, however, Table S-1 had a new feature: a box describing the President’s Fiscal Commission:
The Administration supports the creation of a Fiscal Commission. The Fiscal Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission is charged with balancing the budget excluding interest payments on the debt by 2015. The result is projected to stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers. The magnitude and timing of the policy measures necessary to achieve this goal are subject to considerable uncertainty and will depend on the evolution of the economy. In addition, the Commission will examine policies to meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.
I think of this as a warning label because it’s trying to warn readers that the official deficit forecasts are too pessimistic if, and some would say this is a big if, the commission has an impact.
I think the commission is a step in the right direction, and I welcome the President’s willingness to set an intermediate fiscal goal, even as I might quibble about some details. In addition, I wish he had gone further and specified a target for reducing the debt-to-GDP ratio by, say, 2020.
3. The freeze on non-security discretionary spending. When this was announced last week, I was stunned by heat it generated in the blogosphere. Folks on the left decried it as harmful budget cutting in the face of a weak economy, and folks on the right decried is a sham that would have no effect. I spent about an hour trying to figure it out and decided I couldn’t find enough information to have an informed view one way or the other.
Now that the budget is out, I feel vindicated in that view. To fully understand the trajectory of non-security discretionary spending, you need to consider such obscure bits of budget arcana as the obligation limitations used for transportation funding (ob lims, to the initiated), the proposed conversion of Pell grants from discretionary to mandatory spending, the reassignment of bioshield from security to non-security spending, and the fact that Census spending is particularly high in fiscal 2010 because of the decennial census. I haven’t actually crunched the numbers, but that’s not my point tonight. Instead, my point is simply how hard it can sometimes be to match budget reality to budget communications.
4 thoughts on “Initial Thoughts on the President’s Budget”
I’m glad to see you refer to the commission as “a step in the right direction”. I have long advocated a commission, and I would rather see a presidential commission than no commission at all (I would have much preferred a Congressional, statutory commission that would guarantee a vote on any recommendation, either up-or-down or with fiscally neutral amendments, and that would be comprised with a number of non-politician, respected and trusted “wise men” along with members of Congress, and without too large a supermajority requirement for reaching a recommendation).
It is critical that Reid and Pelosi (and any other key Congressional figures) state — a priori — publicly and unconditionally that they will bring any commission recommendation to a vote. Conrad claims he has written assurances from Reid and Pelosi http://dmarron.com/2010/01/28/the-debt-limit-is-a-tax-on-the-majority/#comment-1780 . He should make these supposed assurances public, and Obama should press them to announce their commitment publicly and long before the point at which the commission may be ready to present a recommendation (ideally even before the commission begins its work).
Not that the following matters, but I’m just curious. Re: “I think of this as a warning label because it’s trying to warn readers that the official deficit forecasts are too pessimistic”, maybe I’m not getting your meaning, but I think of warning labels as indicating that some stated expectation may be too optimistic, not too pessimistic. If someone tells me he expects my results to be X, I wouldn’t call it a “warning” if he then adds “but your results could be better“. What am I missing?
I haven’t blogged about it yet, but I have gone a step further and become a member of a budget commission:
Re: The warning label idea. I mean it purely in the sense of a communications strategy (is there a more positive equivalent?). Budget forecasts always have tons of asterisks and footnotes (some of which you will see flipping through the summary tables), but those are easily overlooked and quickly forgotten.
In this case, the administration put out budget numbers that don’t include what is arguably its most important budget proposal. That’s a major nuisance, communications-wise. I think it’s interesting that one way they chose to deal with is an unmissable positive-warning label. (Which probably won’t help them that much. Numbers always manage to dissociate themselves from their accompanying words and caveats. But it was a good try.)
Re: I have gone a step further and become a member of a budget commission
Outstanding! Thank you for contributing your time, intellect and insights to that commission. Three thumbs up! (two just wouldn’t suffice)
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