Posted on February 9, 2010

by

Daniel Clark

Media reports of President Obama's budget projections have called them "optimistic," but that's not quite right. You may remember that Ronald Reagan once described himself as optimistic, prompting news anchors to sniff that the definition of an optimist is someone who falls from a 50-story building, and after 40 floors says, "so far, so good." That characterization doesn't fit Obama. He'd be more apt to push you off the building, and then bore you with a speech about how much safer a distance from the ground you are than you had been just seconds earlier.

Obama has repeatedly complained that he's inherited a $1.3 trillion deficit from the Bush administration. As former Clinton adviser Dick Morris points out, however, that figure was inflated by the $700 billion Troubled Asset Relief Program (TARP) that President Bush had signed, about $500 billion of which has since been paid back. If Obama "inherited" that $700 billion in last year's deficit, then he's also "inherited" $500 billion in deficit reduction in this year's budget.

Then again, that's only true if those TARP repayments are used to pay down the deficit, as required by law. Instead, Obama wants to spend that money in his latest attempt to stimulate the economy. This would transform TARP from a loan program into a simple pork-barrel spending project, which Bush had never intended it to be. Obama could nevertheless pass the buck to his predecessor, based on the idea that the funding had already been "spent" when it was loaned out in the first place. To the president who "inherited" it, it's free money.

Just days after feigning dismay at the deficit during his State of the Union Address, Obama estimated that the FY2010 deficit would reach $1.56 trillion, due largely to the fact that the bulk of his own $787 billion stimulus package is expected to be spent this year. This outcome was easily avoidable. The simple fact that the TARP receipts, and not the outlays, will be applied to this year's totals should have reduced the deficit to about one-sixth of what the president is projecting. The record 2010 deficit is entirely unnecessary, and entirely his. Most of the media will let him dodge the responsibility, though, by depicting Bush as the creator of trillion-plus deficits.

That's not the only area in which Obama has used shifting time frames in order to understate the detrimental effects of his policies. For example, he has promised not to sign any health care bill unless it is "budget neutral." One would think, then, that the Senate bill he championed last fall must fit that description. Well, the Congressional Budget Office estimated the 10-year cost of the Senate plan, between 2010 and 2019, at $871 billion. The Democrats' characterization of this as "budget neutral" was based on highly unrealistic assumptions about Medicare savings, as well as the expiration of the Bush tax cuts.

Apart from any dispute over those assumptions, the estimate is completely irrelevant, because most of the spending provisions would not have gone into effect until 2014. The new taxes, on the other hand, would have been effective immediately, thus allowing the bill's proponents to count four years' worth of revenues before balancing them against the actual costs of the program. The more realistic estimate would have been for the first ten years after which the entire plan was enacted -- which, according to that same CBO study, was $2.5 trillion. The only way Obama and his party could frame this as budget neutral was to airbrush two thirds of the spending out of the picture.

Now, Obama is proposing a federal college loan program, under which all outstanding debts would be forgiven after 10 years for anyone who has chosen a career in "public service." Again using CBO figures for support, he estimates a savings of $87 billion from 2010-19, a time frame that conveniently ends just as the debt forgiveness provision kicks in. Fiscal responsibility on paper is easy, if you're allowed to eliminate the most significant expenses from the equation.

It would be accurate to call Obama optimistic if he believed his own calculations, but his deliberate manipulation of the data belies that possibility. Whatever merits he thinks there are to all this spending, he won't present them forthrightly, so that the American people can judge for themselves. That's not optimism, or even "hope." It's just another cynical series of obfuscations, from the man who had promised us unprecedented transparency in government.

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