Throughout my series on exposing the Obama Administration’s high costs, I have been focused on driving home the following points:
1) The discretionary budget freeze that the President committed to in the State of the Union is utterly false.
2) The pace of federal government spending over the next 5 years is totally unsustainable.
3) The source of the near bankruptcy of the federal government is mainly entitlement spending.
4) The only way the federal government is going to sustain these levels of spending is by increasing taxes (this will be examined Monday).
During the writing of my budget series, the White House updated its 2010 budget and posted its FY2011 budget onto the White House budget website. I decided to take all the costs analyzed in the FY 2010 budget and compare them to the FY 2011 budget. Let’s have a look.
International affairs spending is $10 billion higher from 2009-2014 than predicted in the FY 2010 budget. So far, that’s $10 billion in additional debt over the next five years.
Energy spending has been reduced by $21 billion from 2009-2014. So far, we have $11 billion less debt than in the old budget. I wonder why the administration changed the format. It appears as if they plan on focusing on nuclear energy and perhaps taking climate change legislation off the table.
Transportation spending is going to go up by $45 billion from 2009-14. I cannot say that I am surprised, as I predicted in a previous article that the administration would not be able to make the cuts they had in the FY 2010. Do not be surprised if this number goes up again in FY2012. So far, we have $34 billion in increased debt.
Education spending is going to improve by $12 billion from 2009-14. This is still a dramatic increase from 2007-09 spending levels. So far, we have a $22 billion increase in the national debt.
These charts show $60 billion in lower costs from the old to the new budget. This seems counter-intuitive as the health care bill puts tens of millions of Americans on government health care over the next decade. We’ll have to carefully monitor Medicare and Medicaid over the next several years to make sure the administration can live up to these numbers. So far, we’ve bounced back and reduced the debt by $38 billion.
Unfortunately, we’ve just wiped out that gain 10 fold. Income security is expected to increase by $302 billion over from 2009-14. So far, we have $264 billion in new debt over the next five years.
Social Security is going up in cost by $58 billion from 2009-14. This brings our new debt to $322 billion over the next five years.
This is a budget that I find totally misleading. The White House has downgraded the treasury interest expense by $258 billion from 2009-14. Are we reducing the national debt? As we can see below, that’s not the case. Therefore, the government is projecting that interest rates will be even lower than originally projected in the future. Based on the below debt levels, the government projects interest rates to be:
This is a little low, but we’ll see. As I said in a previous article, for every 1% the government is off in interest, the annual cost will increase by $130 to $170 billion. In all fairness, we’ll count the treasury downgrade and that brings us to $64 billion in spending increases over the five year period.
How about the government’s overall spending outlook?
From 2010 to 2014, the government has increased its total spending by $713 billion from FY2010 to FY2011. As you can see from the two different cost curves, the “spending freeze” appears to be out the window. So, how does this relate to the national debt?
The national debt projections have marginally increased over the time period. So how can the government increase spending by $713 billion over the next four years without an increase in the deficit?
Higher taxes anyone?