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Monday, February 21, 2011

President's sacred entitlements remain untouched

By Charles Krauthammer

Dharapak/AP
Obama discussed his plans for the budget during a news conference on Tuesday, Feb. 15.

Five days before his inauguration, President-elect Obama told The Washington Post that entitlement reform could no longer be kicked down the road. He then spent the next two years kicking - racking up $3 trillion in new debt along the way - on the grounds that massive temporary deficit spending was necessary to prevent another Great Depression.

To prove his bona fides, he later appointed a deficit reduction commission. It made its report last December, when the economy was well past recession, solemnly declaring that "the era of debt denial is over."

That lasted all of two months. The President's first post-commission budget, submitted Monday, marks a return to obliviousness. Even Erskine Bowles, Obama's Democratic debt commission co-chair, says it goes "nowhere near where they will have to go to resolve our fiscal nightmare."

The budget touts a deficit reduction of $1.1 trillion over the next decade. Where to begin? Even if you buy this number, Obama's budget adds $7.2 trillion in new debt over that same decade.

But there's a catch. The administration assumes economic growth levels higher than private economists and the Congressional Budget Office predict. Without this rosy scenario - using CBO growth estimates - $1.7 trillion of revenue disappears and U.S. debt increases $9 trillion over the next decade. This is almost $1 trillion every year.

Assume you buy the rosy scenario. Of what does this $1.1 trillion in deficit reduction consist? Painful cuts? Think again. It consists of $1.6 trillion in tax hikes, plus an odd $328 billion of some mysterious bipartisan funding for a transportation trust fund (gas taxes, one supposes) - for a grand total of nearly $2 trillion in new taxes.

Classic Obama debt reduction: Add $2 trillion in new taxes, then add another $1 trillion in new spending and, presto, you've got $1 trillion of debt reduction. It's the same kind of mad deficit accounting in Obamacare: It reduces debt by adding $540 billion in new spending, then adding $770 billion in new taxes. Presto: $230 billion of "debt reduction." Bialystock & Bloom accounting.

And what of those "painful cuts" Obama is making to programs he really cares about? The catch is that these "cuts" are from a hugely inflated new baseline created by the orgy of spending in Obama's first two years. These were supposedly catastrophe-averting, anti-Depression emergency measures. But post-recession they remain in place. As a result, discretionary non-defense budget levels today are 24% higher than before Obama - 84% higher if you add in the stimulus money.

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