The Heritage Foundation
March 17th, 2009
Speaking to House Democrats at their Kingsmill Resort & Spa retreat last month, President Barack Obama defended his economic stimulus plan, claiming: “[We] are not going to get relief by turning back to the same policies that for the last eight years doubled the national debt and threw our economy into a tailspin. … If you’re headed for a cliff, you’ve got to change direction.”
Our public policy definitely needs a change in direction. But the Obama Administration’s budget is not a change in direction. Instead, it is a foot on the accelerator taking us off that cliff. Consider:
President Bush expanded the federal budget by a historic $700 billion through 2008. President Obama would add another $1 trillion.
President Bush began a string of expensive financial bailouts. President Obama is accelerating that course.
President Bush created a Medicare drug entitlement that will cost an estimated $800 billion in its first decade. President Obama has proposed a $634 billion down payment on a new government health care fund.
President Bush increased federal education spending 58 percent faster than inflation. President Obama would double it.
President Bush became the first President to spend 3 percent of GDP on federal antipoverty programs. President Obama has already increased this spending by 20 percent.
President Bush tilted the income tax burden more toward upper-income taxpayers. President Obama would continue that trend.
President Bush presided over a $2.5 trillion increase in the public debt through 2008. Setting aside 2009 (for which Presidents Bush and Obama share responsibility for an additional $2.6 trillion in public debt), President Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016.
The only sharp break President Obama takes away from President Bush is the amount of money he takes from the American people. President Bush reduced taxes by approximately $2 trillion; President Obama has proposed raising taxes by $1.4 trillion. Yet even after taking $1.4 trillion more out of the private sector, Obama’s budget still would double the public debt level to $15.4 trillion. Between 2008 and 2013, the budget will add $5.7 trillion ($48,000 per U.S. household) in new government debt. The annual interest on this debt would nearly equal the entire U.S. defense budget by 2019.
How does the Obama budget raise taxes by $1.4 trillion yet still double the national debt? By exploding government spending. Domestic discretionary spending (including stimulus funds) has been hiked over 80 percent over 2008 levels. Even if we set aside the stimulus spending, and take the Obama Administration’s word that all of that spending will be temporary, the expansion of government under Obama’s budget is historic. In 2007, before the recession, Washington spent $24,172 per household. By 2019, the President’s budget would spend $32,463 per household—an inflation-adjusted $8,000 per household expansion of government.
Summarizing his findings Heritage Foundation Senior Policy Analyst Brian Riedl writes: “President Obama has framed his budget as a break from the “failed policies” of the Bush Administration. Actually, his budget doubles down on President George W. Bush’s borrow, spend, and bailout policies.”