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Obama Claims $2.5 Trillion In Deficit Reduction

From The Hill:

President calls for $1.5T deficit bargain

By Erik Wasson | February 12, 2013

President Obama used the State of the Union to call on Congress to go beyond small fiscal fights, such as delaying the $85 billion sequester, and return to a grand bargain on the deficit.

And never mind that last summer John Boehner was willing to give Obama everything he wanted for a ‘grand bargain,’ and Obama walked away from the deal. Probably because he wanted to be able to beat up on the Republicans during his campaign.

Obama argued that Washington has already enacted $2.5 trillion in deficit reduction and needs only a $1.5 trillion deal to “stabilize” the debt relative to size of the economy.

“Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion — mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans.

We have previously mocked Harry Reid and Nancy Pelosi for making similar assertions. But now it’s clear they were floating trial balloons. And when their laughable claims weren’t shot down in our mainstream media, Obama decided to run with it.

As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances,” Obama said. “Now we need to finish the job.”

In an economic plan released in conjunction with the speech, the White House argued that the bargain could consist of $900 billion in spending cuts and entitlement changes and $600 billion in new revenue from corporate and individual tax reform.

Try to guess which will happen (new revenue) and which won’t (spending cuts).

To get to the $2.5 trillion figure, Democrats count savings from lower spending caps in the August 2011 Budget Control Act, but not the $1.2 trillion in savings from sequestration and other automatic cuts over nine years. They also count cuts made in the April 2011 spending resolution and some $600 billion in revenue from the fiscal cliff deal enacted in January…

Hence the expression, ‘figures lie and liars figure.’ All of this sleight of hand is based upon the giant lie called baseline budgeting.

None of these are cuts. The are lower "spending caps." That is, they are a reduction in the runaway spending that had been projected. There have been no real cuts. There has been a slight reduction in the growth of spending. And the size of that reduction is exaggerated, because the baseline being used was based on 2010 spending, which was completely out of control.

As is pointed out by the bipartisan Committee for a Responsible Federal Budget:

It is worth noting that the discretionary savings in this number are in fact calculated from the high point of discretionary spending. Measuring either from a year later or from a year earlier would result in a smaller savings number because base discretionary spending (excluding the effects of the stimulus) actually increased between 2009 and 2010 due to larger-than-projected appropriations.

In other words, the $2.5 trillion dollar savings is based on the unusually high projections of the baseline because of Obama’s one time stimulus spending. If you took a more ‘normal’ year, this reduction in the increase of spending would not be nearly as large.

But don’t worry. These cuts won’t happen anyway, even according to the leftwing FactCheck.org:

As we have written once before, the vast majority of the deficit reduction has yet to materialize. Congress is supposed to comply with the caps on discretionary spending imposed by the Budget Control Act in future appropriations bills. But whether that happens remains to be seen.

And, lest we forget, they never have in any previous spending cut deal.

And, even if Congress complies, deficit spending will continue, and the federal debt will rise — just not as quickly as it otherwise would have. The latest CBO figures show the public debt — that is, the amount the federal government owes the public — will approach $20 trillion in 2023, an increase of more than $8 trillion from its current level of $11.6 trillion.

In other words, even if by some miracle these so called deficit reductions did occur, they will not cut spending. They will just reduce the increase in spending. In fact, even with these so called spending cuts, spending will almost double in the next ten years.

But the news media will never tell us that. And the low information voters will believe that Obama really has already cut spending by more than $2.5 trillion. Which is probably the Big Lie of his Presidency so far. And that is saying something.

This article was posted by Steve on Wednesday, February 13th, 2013. Comments are currently closed.

One Response to “Obama Claims $2.5 Trillion In Deficit Reduction”

  1. Petronius says:

    Of course the divine Nerobama has actually reduced the public debt. Originally he wanted to run annual deficits of $3 trillion, but he “reduced” that number to a mere $1.3 trillion. That’s real savings if you’re a Liberal.

    Nerobama is the first president fully to understand and appreciate that the proper role of government is to function as a giant cornucopia. And that the path forward to equality is through the destruction of private wealth. And therefore that we actually need bigger deficits and more debt.

    And so what this country really needs –– demands! –– is more spending (except for defense and border security).

    We also need more Fed printing and QE. And a whole bunch of those $1 trillion coins. And why not $10 trillion coins? Or $100 trillion coins? Crank up that cornucopia!

    And more taxes on the hated rich, those Wall Street fat cats with their corporate jets and dirty oil wells, who never, never, never do their fair share, no matter how much we raise their taxes.

    And more government employees; 25 million is clearly not enough.

    More EBT cards and free contraceptives; 50 million people on food stamps is not nearly enough.

    And more immigrants. Lots and lots of immigrants. We’ve only got 9 million people on disability –– a mere pittance. More immigrants will help there, too. The Great Cornucopia is great enough to accommodate all comers, documented and undocumented.

    And if another ten million people would quit the workforce, we might finally get a handle on unemployment.

    That is what Liberals call a balanced and comprehensive approach.

    Oh yeah, and fewer guns. A famous Liberal once said: “Political power grows out of the barrel of the gun.”

    And so Liberals must make sure that the people do not have guns. Only the government and members of the Ruling Class shall have guns.

    Everybody else gets Fig Newtons and lip gloss.

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