Obama will run up more debt than all U.S. presidents combined

By Dan Fagan
Publisher
The Alaska Standard

The verdict is in. Our current president believes there should be little or no restraint when it comes to government spending. President Barack Obama’s new budget will spend an additional $1.7 trillion and ad another $2 trillion to the nation’s deficit.

According to the Heritage Foundation, the President's budget would:

• Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;

• Raise taxes onall Americans by more than $2 trillion over the next decade (counting health care reform and cap and trade);

• Raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade;

• Borrow 42 cents for each dollar spent in 2010;

• Run a $1.6 trillion deficit in 2010--$143 billion higher than the recession-driven 2009 deficit;

• Leave permanent deficits that top $1 trillion in as late as 2020; and

• Double the publicly held national debt to over $18 trillion.

Before the recession, federal spending totaled $24,000 per U.S. household. President Obama would hike it to $36,000 per household by 2020--an inflation-adjusted $12,000-per-household expansion of government. Even the steep tax increases planned for all taxpayers would not finance all of this spending: The President's budget would add trillions of dollars in new debt.

After harshly criticizing President Bush for running $3.3 trillion in deficits over eight years, President Obama's budget would run $7.6 trillion in deficits over what would be his eight years in the Oval Office.  Moreover, President Obama would run up more debt over his eight years than all other Presidents in American history--from George Washington through George W. Bush--combined. As a result of these deficits, net interest spending would reach $840 billion in 2020.

Addressing Runaway Spending by Raising Taxes

Over the last 40 years, budget deficits have averaged a sustainable 2.4 percent of GDP. Under a budget baseline that assumes current policies continue, nearly 90 percent of the expanded budget deficits by 2020 would be caused by higher spending, while just over 10 percent would be caused by lower revenues--and even that assumes the extension of the 2001 and 2003 tax cuts.[5]

Yet President Obama bases nearly all of his (modest) deficit reduction on tax increases. Although no economic theory justifies raising taxes during a recession, he would impose nearly $1 trillion in tax hikes for 3.2 million upper-income families and small businesses. He would eliminate tax breaks for charitable giving and the mortgage interest deduction for millions of Americans.

President Obama has endorsed a cap-and-trade bill that would cost more than $800 billion over the next decade. He has also endorsed substantial tax hikes to finance health care reform. All told, tax increases would exceed $2 trillion, yet they are still not enough to prevent a $1 trillion annual deficit by 2020.

On the plus side, President Obama would freeze discretionary spending (outside of defense, homeland security, veterans, and international affairs spending) for three years. This is somewhat helpful. The savings would not be large--perhaps $20 billion per year--but this is the low-hanging fruit. Of course, these programs comprise only one-eighth of the budget ($420 billion), and they can still feast on their 19 percent hike over the past two years, plus nearly $300 billion in mostly unspent stimulus funds.