In his news conference on Monday, President Obama bragged about his deficit reduction prowess. He claimed to have already cut spending $1.4 trillion. If you combine that with $600 billion in tax hikes from the fiscal cliff deal plus interest savings, it "adds up to a total of $2.5 trillion."
Try again, Barry:
But a closer look at the numbers shows that Obama is exaggerating how much deficit reduction he's actually achieved, and is being decidedly Pollyannaish about the nation's still massive long-term budget gap and what will be needed to close it.
Wrong Budget Trajectory
Obama's Bowles-Simpson debt commission, for example, said in its final report - issued in late 2010 - that a credible $4 trillion deficit reduction plan would produce red ink of just $279 billion in 2020. But the current budget trajectory puts that year's deficit at close to $600 billion, according to Congressional Budget Office data.
Meanwhile, the commission plan called for national debt to be 65% of GDP by 2020, but the current CBO forecast has it at about 75%.
Worse, while the debt commission plan produced a balanced budget by 2035, the CBO predicts that under current law annual deficits will start climbing again after 2018.
All told, federal deficits will need to be cut at least another $2.5 trillion over the next decade to reach the debt commission targets.
Nor did the commission think that achieving real deficit reduction would be as simple as Obama makes it seem. The nation, the commission said in its final report, "is on an unsustainable fiscal path" and "even after the economy recovers, federal spending is projected to increase faster than revenues."
"There is," the commission said, "no easy way out of our debt problem."
And its spending cut proposals were far more aggressive than anything Obama has proposed.
The $500 billion in interest savings over a decade assumes that the interest rate will remain near zero for all that time. Realistically, we can expect the cost of servicing the debt to rise substantially along with interest rates - a lot sooner than 10 years too.
None of Obama's numbers include whatever the true cost of Obamacare is going to be. Currently, the CBO estimates it will cost $2.6 trillion over the next decade. But with every estimate since the law was passed, the numbers have gone up. Lord knows where those estimates are going to be this time next year.
This is a man who can't face the reality of where his deficit spending is leading the nation. He has said that we don't have a spending problem - we have a health care cost problem. Anyone that deluded needs a wake up call.
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