Published for The Corner at The National Review, December 14, 2011

As the nation’s federal budget problem comes back into the spotlight, it has unfortunately been forgotten that as recently as 2008, the White House Office of Management and Budget and the Congressional Budget Office both issued spending forecasts that determined that the federal government would have a budget surplus in 2012 and continuing thereafter. Although OMB and CBO used quite different policy assumptions, both foresaw surpluses starting in 2012 — CBO projected a surplus of $87 billion for 2012; OMB projected a surplus of $48 billion for 2012.

Instead, while a recession and some temporary tax relief reduced the government’s revenues, federal spending soared, the surplus disappeared, and the federal debt increased by trillions of dollars.

During the Obama administration, instead of moving towards the projected surpluses, the federal deficit exploded to a record $1.4 trillion in 2009, $1.3 trillion in 2010, and $1.3 trillion in 2011 — a level nearly triple the highest deficit ever recorded previously. The key role of the Obama administration’s ongoing spending increases demands more attention, even though the economic assumptions of the 2008 forecasts proved mistaken and tax revenues declined. Tax revenues will increase when economic growth is restored — indeed, CBO currently projects that revenues for 2012 will rebound to 2008 levels even with no change to the Bush tax rates. But the level of spending that has generated record deficits can only be fixed by a president and Congress. So, in light of both the OMB and CBO 2008 forecasts of a surplus in 2012, it is reasonable to ask how close spending is to the 2008 path to a balanced budget.

In 2008, with the economy in recession, federal spending was just under $3 trillion. The Obama administration and the 2009–2010 Congress chose to enact extraordinary spending increases, starting with the 2009 “stimulus” bill, but then extending to various appropriations bills and new entitlement spending (such as health care spending). As a result, federal spending in 2011 alone was increased to $3.6 trillion — nearly $400 billion more than the Bush administration had contemplated, and more than $600 billion above the 2008 level.

Full Post Here

Digg This
Reddit This
Stumble Now!
Buzz This
Vote on DZone
Share on Facebook
Bookmark this on Delicious
Kick It on DotNetKicks.com
Shout it
Share on LinkedIn
Bookmark this on Technorati
Post on Twitter
Google Buzz (aka. Google Reader)