Obama’s Pledge to Halve Deficit Still Means Huge Deficits for Years to Come
The days of passing along the costs of federal spending were over, he said.
“We cannot and will not sustain deficits like these without end,” Obama told a crowd of economists and lawmakers at the start of his fiscal responsibility summit. “Today, I pledge to cut the deficit we inherited in half by the end of my first term in office.”
But according to the Congressional Budget Office, even if Obama meets that goal – the deficit would go down, but only to a level higher than that seen during most of the George W. Bush administration.
Obama’s policies will cause the federal government to run deficits of more than $1 trillion through fiscal year 2010, meaning that any deficit-reduction measures he enacts simply will be returning federal spending to levels seen during the administration of George W. Bush.
“Contrary to the prevailing wisdom of Washington these past few years, we cannot simply spend as we please and defer the consequences to the next Congress or the next administration or the next generation,” Obama said on Monday.
The president also pledged to return to the pay-as-you-go (“PayGo”) rules of the 1990s.
“The PayGo approach was based on a very simple concept: you don’t spend what you don’t have,” he said. “If you want to spend, you have to find somewhere else to cut.”
President Obama, meanwhile, admitted that his own policies have contributed to the nation’s record deficits, saying that the stimulus, package, bank rescue, and mortgage relief plans all will push the deficit into historic territory.
“These are all extraordinary but necessary measures to address this economic emergency,” Obama said. “And, as everybody knows, they will come at a cost. This administration has inherited a $1.3 trillion deficit – the largest in our nation’s history – and our efforts will add to it in the short term.”
But according to the Congressional Budget Office, the projected deficit for 2009 was pegged at $1.2 trillion – even before the passage of Obama’s $787 billion stimulus and his pledge of $75 billion in mortgage relief spending.
Now, with the stimulus and mortgage plans in place, 2009’s deficit will be approximately $1.5 trillion, the CBO said – and further spending would push that figure higher. The 2010 deficit, which had been pegged at $703 billion, will balloon to $1.1 trillion, due to Obama’s stimulus package.
Cutting even the $1.3 trillion figure in half, as pledged by Obama, would still leave the budget with $650 billion of red ink.
By contrast, in 2006, the deficit stood at $248.2 billion; in 2007, at $162 billion; in 2008, at $410 billion, as calculated by the White House Office of Management and Budget.
Sen. Arlen Specter (R-Pa.), a summit attendee, told CNSNews.com that he thought Obama’s goals were “a stretch,” given the amount of new spending the administration had proposed.
“I think it’s a stretch for the administration to talk about fiscal responsibility with what the administration has sought to spend,” Specter said.
One of only three Republican senators to vote in favor of Obama’s economic stimulus bill, Specter said the president’s pledge still means very high deficits for a very long time.
“This business about cutting the deficit in half by the end of the term is an attractive generalization which keeps the deficit very high for a very long time,” Specter added.