Commentary

Obama’s Budget and the $1 Trillion Mistake

President Obama has introduced his budget for next year. He proposes that the government spend $3.83 trillion in fiscal 2011. To put that number into context, let’s take a trip down memory lane.

The bottom line in the chart shows the proposed spending over ten years in Pres. George W. Bush’s first budget, which was released in February 2001. Bush came into office when annual federal spending was $1.86 trillion. He proposed to increase spending at a healthy clip, rising to $2.71 trillion by 2011.

Federal Spending: Proposed and Actual

The top line in the chart is actual spending and Obama’s proposed spending for 2011. It reveals that Bush and his team started blowing their budget almost immediately. They kept spending more and more — wars, a giant new homeland-security bureaucracy, a big-government response to Katrina, the prescription-drug bill, doubling K-12 education spending, big pay raises for federal workers, financial bailouts, and so on. I can’t think of a single crisis that occurred on President Bush’s watch that the Bush-Rove team didn’t have an interventionist and big-spending response to.

In Bush’s last year, FY2009, the government spent $1 trillion more than the Bush-Rove team had originally planned. It is true that 2009 spending included $112 billion for the Obama stimulus bill, so let’s take that out. With that adjustment, the Bush-Rove team ended up spending $916 billion more annually by 2009 than they had originally planned. Note that the wars in Iraq and Afghanistan cost only about one-fifth of that 2009 excess spending amount.

Then Obama comes into office and turns out to be Bush on steroids with respect to federal spending. Obama is calling for spending $3.83 trillion in 2011, or $1.1 trillion more than the federal budget nine years ago had promised. That’s a 41 percent forecasting error.

The lesson from all this is that an administration’s promised spending beyond the first year is meaningless. Obama is proposing a freeze on a very small part of the budget, for example, but his budget plan next year will likely find reasons to break that promise. It scares the hell out of me that federal spending down the road could be 41 percent higher than even the huge increases projected by Obama. But that seems to be where we are headed unless we put in place laws or constitutional amendments to really clamp down on the spend-happy politicians of both parties.

Chris Edwards is director of tax policy at the Cato Institute and author of Downsizing the Federal Government.