A dear friend of mine posted on her Facebook page a chart which purported to demonstrate that, under President Obama, federal government spending has increased more slowly than under previous Presidents.
I wrote the following note to her:
I'm afraid you've been bamboozled. As someone who voted for President Obama, I have been very disappointed that President Obama, despite his professed concern about the deficit, has substantially increased spending. The analysis of your sources reflects some, but not all, of the following tricks President Obama has used to try to hide his spending:
1) President Obama takes credit for the repayments, but not the investments, that have occurred under what was inappropriately called the "bail-out". This was not his program, so he should not take credit for it. Furthermore, it is inappropriate for anyone to count the repayments but not the original investment. I suspect the "independent" sources you cite are guilty of this error because they are required by law to do cash accounting. Thus the expenditure is being attributed to President Bush's administration and the recoveries are being attributed to President Obama's administration. It is important to read their original documents in which they often cite the misleading nature of the results of their calculations. Such caveats, unfortunately, have been totally ignored by the administration.
2) President Obama added the war expenditures to the budget. I was glad he put the war in the budget, hoping that he would also put the entitlement costs into the budget. I was later disabused of my initial impression that he was trying to do things right. He added the war costs for the sole purpose of being able to use reductions in war spending to balance other increases in spending. It is reasonable for him to take credit for reducing war costs, but the reduction in war costs should not be used to hide increases in on-going spending. If anything is appropriate to be an off-budget item, it is war costs. I think the "independent" sources you cite are reflecting war costs as though they were like any other cost.
3) A major trick that has been used by President Obama's administration more so than previous administrations is to shift expenses off-ledger while perhaps shifting revenues from off-ledger to on-ledger. For example, he waived social security contributions for employees. Under President Obama, only employers pay for Social Security. Beyond being a radical departure for intended funding for Social Security, he has thereby significantly expanded Social Security's unfunded liability. But as that liability is off-ledger, it does not "count". This point is relevant to the broader issue of the fiscal soundness of our government. Readers of the piece on your web-site would likely conclude that it indicates that President Obama has improved fiscal soundness. Your sources ignore this issue because it is off-ledger and because your sources are limiting themselves to government expenditures and this is not technically an expenditure, but it is a very relevant issue for the future of our country.
4) Regardless of whether you support health care reform or not, there can be no denying that the administration's claim that it will not increase the deficit was based on accounting that would be punishable as fraudulent were it done by private enterprise. I consider it to be fraudulent when done by the government, but some supporters of the administration respond that the government can do anything that it wants. See the attached "10MarExCBODrtrExposesHCR.pdf". Some of these issues seem to contribute to erroneous conclusions from your cited sources. For example:
· The sources would not be counting legislated costs that are scheduled to go into effect in the future.
· The sources would not be counting increased federal government expenses which have been legislated, but not yet funded.
· They may be counting the reduction in Medicare doctors' fees that seem to be certain to be reversed by Congress and the administration, as is continually done. (In order to reduce the "cost" of Health Care Reform, the administration packaged some unrelated cost savings, such as student loan cost savings, into the Health Care Reform bill. But they put related cost increases, such as restoring Medicare doctors' fees into a separate bill.)
· To the degree that there are real Medicare savings, I don't think it is appropriate to count, as budget reduction, savings in a program that has an off-ledger unfunded liability of scores of trillions of dollars. Those savings should be applied to reduce the huge unfunded liability. Such accounting digs a deeper hole for Medicare because it removes a key avenue for reducing Medicare's shortfall in the future. As Medicare's liabilities are off-ledger, this approach results in an ability to proclaim reduction in spending while digging a deeper problem for the future. By the way, President Obama's administration has double-counted such Medicare savings on several occasions. He has repeatedly stated that he will use those savings to fund acute health care and has also repeatedly stated that those savings are critical for the solvency of Medicare.
FYI, I have attached a letter written by the CBO in 2009. Such CBO analysis has been repeatedly cited by the administration and its Congressional allies claiming that independent analysts recognize that health care reform does not add to our deficit. But note the following excerpt from page 5: " Therefore, the programs would add to budget deficits in the third decade—and in succeeding decades—by amounts on the order of tens of billions of dollars for each 10-year period." The administration and its allies have continually chosen to quote the CBO out-of-context to create a false impression about the true fiscal effect of their policies. Your sources may be doing the same thing.
5) President Obama raised spending a lot and then reduced it some, leaving it much higher than where it started. Your sources are missing the early expenditures because they are comparing the beginning and end points, ignoring the in-between expenditures. President Obama and his supporters have sometimes cited the reductions without mentioning the prior increases, trying to create the impression that he has significantly lowered government spending. That's like a retailer increasing the cost of an appliance from $59.99 to $99.99, then putting it "on sale" for $74.99.
6) The Obama administration has created unfunded liabilities for states and employers. It is true that such expenditures are not Federal government spending. So they do not belong in the statistics you cite. But, here again, the statistics are being presented to suggest fiscal prudence when that is not the case.
Your comments? Can you post my comments on your web-site so that your readers are better informed and can reach conclusions based on hearing both sides of the story?
