President Obama’s plan to balance the budget was a brilliant political speech—highlighting weakness in the Republican deficit reduction proposal drafted by Congressman Paul Ryan—but it offered little new or encouraging that would correct Washington’s troubled finances.
Once again, President Obama blamed President Bush for the mess—citing two wars and tax cuts that were not funded—when his own political party is more culpable.
In 2007, the last year before the financial crisis and former Speaker Nancy Pelosi and the Democrats took control of Congress, the deficit was a quite manageable $161 billion. Over the next four years, spending has increased $1.1 trillion and the deficit jumped to $1.6 trillion.
The President’s February budget projected the deficit would fall to $772 billion by 2022. However, that forecast is dubious, because it assumes 4 percent growth over the next four years, which few economists would endorse, and cuts in Medicare payments to physicians and hospitals few political observers believe will materialize. More likely, deficits will exceed $1 trillion, or even $1.5 trillion for the next decade, without further action.
In his speech the President claimed to be tabling $4 trillion in additional cuts over twelve years, but there was little new from his February budget.