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Thursday, May 7, 2009
5:58 PM EDT
Sandra Fabry

The President's Spending Cuts Amount to ... Drumroll Please ...

 The following is cross-posted at www.fiscalaccountability.org:

When President-elect Barack Obama announced his choice of Peter Orszag to head up the office of Management and Budget on November 25, he made the following well publicized and often-repeated statement:
We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way.
Well, after announcing a ridiculously small spending cut of $100 million in April with much fanfare, President Obama today released another part of his budget detailing spending cuts for FY 2010 – amounting to a meager $17 billion.
 
The proposed cuts (while bigger in size than the last announced cut) are still only a tiny fraction of the budget and pale in comparison to the expansion of the size of government that has already taken place recently – and largely on his watch.
  • Thanks to the Bush-Obama-Pelosi-Reid “stimulus/bailout/pork/omnibus” bills, federal spending alone this year will be almost 30 percent of GDP, according to Strategas Research Partners, LLP.
     
  • The budget resolution passed by Congress earlier this month – which is essentially the Obama budget – is a $3.55 trillion dollar budget that envisions a world where the federal government consistently spends 25 percent of economic output (historically, it’s been closer to 20 percent).
     
  • The $17 billion in proposed cuts for FY 2010 amount to about less than one-half of one percent of the $3.55 trillion budget.
     
  • The President whose theme during the campaign was “Change” is proposing cuts in similar areas as his predecessor did, and his proposed cuts are even smaller than President Bush’s proposed cuts from last year:
Obama FY’10 proposal:
$11.548 billion through 121 discretionary terminations and reductions;
$4.127 billion in mandatory terminations and savings;
$1.072 billion in “program integrity savings”
total: $16.747 billion
Bush FY’09 proposal:
$18.149 billion through 151 discretionary terminations and reductions;
$16.226 billion in mandatory terminations and savings
total $34.375 billion
  • A nugget in President Obama’s “Terminations, Reductions and Savings” list is a set of nine alleged “spending cuts” that are in fact tax energy increases:
 The termination of “oil and gas company tax preferences” (p. 47 of the pdf) is not a spending cut – these are tax increases totaling $26.4 billion over the next decade. 
 
Change we can believe in?
Posted by Sandra Fabry on Thursday, May 7, 2009 5:58 PM EDT
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