Even Leftists Won’t Defend Obama’s Make-Believe $4 Trillion “Grand Bargain” Budget Plan

Daniel J. Mitchell
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Posted: Oct 26, 2012 12:01 AM

You have to give President Obama credit for chutzpah. He pushed through a faux stimulus in his first year and Obamacare in his second year, both of which significantly increased the burden of government spending.

In the past two years, he’s basically punted, proposing budgets that are so laughably unserious that they received zero votes in both the House and Senate. Including zero votes from Democrats.

But now he wants us to believe he favors a moderate-sounding deal that supposedly would reduce spending by $2.50 for every $1 of tax hikes.

This is utter fantasy and even leftists admit the President is engaging in gimmickry far beyond the smoke-and-mirrors chicanery that you normally find in Washington. Here’s some of what Reason’s Peter Suderman wrote about the topic.

President Obama described what he thought were the prospects for a big budget deal in the early part of a potential second term. “It will probably be messy,” he said. “It won’t be pleasant. But I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I’ve been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in spending, and work to reduce the costs of our health care programs.”

The president went on to suggest that such a deal could help the federal government start digging its way out of the deep debt hole it’s currently in. “And we can easily meet — ‘easily’ is the wrong word — we can credibly meet the target that the Bowles-Simpson Commission established of $4 trillion in deficit reduction…” Here’s the thing. That $4 trillion debt plan he’s offered so far? It doesn’t actually reduce deficits by $4 trillion. That’s because it’s packed with budget savings gimmicks. The Committee for a Responsible Federal Budget (CRFB) explains: “To reach his $4.3 trillion in savings through 2021, the President’s budget counts $1.6 trillion (excluding interest) of already-enacted savings…” This isn’t a lonely opinion either. As The Washington Post‘s Fact Checker Glenn Kessler wrote in September, “virtually no serious budget analyst” accepts the president’s $4 trillion deficit reduction figure. …What about the $2 trillion in deficit reduction the plan can claim to put on the scoreboard? It comes almost entirely tax increases. As James Pethokoukis of the American Enterprise Institute shows, the plan would result in about $1.735 trillion in tax hikes — and just $230 billion in spending cuts, the vast majority of which are cuts to health care provider reimbursements of dubious long-term value. That’s Obama’s idea of a grand bargain. Not $4 trillion in deficit reduction weighted toward spending cuts, but $2 trillion worth deficit reduction produced almost entirely by tax hikes.

The last part is the key. A $2 trillion package that is almost 87 percent tax hikes.

But I think Peter is being too kind, because even the changes in reimbursement rates for health care providers (which, as Peter notes, almost surely will evaporate in a very short period of time) are simply reductions in increases. In other words, spending will still grow, just not as fast as previously planned. In other words, the spending cuts are only cuts if you accept dishonest Washington terminology.

Something else that’s worth noting is that Obama pretends to embrace the Bowles-Simpson proposal, but we need to do some Clintonian parsing of what he actually said. The President carefully states that he wants to meet the “target that the Bowles-Simpson Commission established.” But that simply means a $4 trillion number, not the specifics of the Bowles-Simpson plan.

This is important because the Bowles-Simpson plan is a bad place to start, largely because it dramatically increases the double-tax burden on income that is saved and invested and it fails to include real entitlement reform.

Well, Obama clearly is signally that he wants to move this bad plan even further to the left, most notably with class-warfare increases in top tax rates, which is contrary to one of the few good features in the Bowles-Simpson plan.

If Obama is re-elected, GOPers should not get seduced into a phony budget summit that invariably would produce a bad plan. It’s not simply that I’m against higher taxes. It’s that I don’t want to give the clowns and crooks in Washington even more of our money when we won’t get any reforms that might justify that sacrifice.

It’s better to do nothing than it is to make a bad situation even worse.