Tuesday, March 17, 2009

The Obama Budget: Spending, Taxes, and Doubling the National Debt

by Brian M. Riedl

Backgrounder #2249

During his presidential campaign, President Barack Obama promised the American people a "net spending cut."  Instead, he signed a "stimulus" bill that spends $800 billion, and he has proposed a budget that would:

·                          Increase spending by $1 trillion over the next decade;

·                          Include an additional $250 billion placeholder for another financial bailout;

·                          Likely lead to a 12 percent increase in discretion­ary spending;

·                          Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over pre-recession levels;

·                          Raise taxes on all Americans by $1.4 trillion over the next decade;

·                          Raise taxes for 3.2 million taxpayers by an average of $300,000 over the next decade;

·                          Call for a pay-as-you-go (PAYGO) law despite offering a budget that would violate it by $3.4 trillion;

·                          Assume a rosy economic scenario that few econo­mists anticipate;

·                          Leave permanent deficits averaging $600 billion even after the economy recovers; and

·                          Double the publicly held national debt to over $15 trillion ($12.5 trillion after inflation).




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