Saturday, January 5, 2013

Grading Obama on fiscal policy

Back in April 2011, President Obama gave an important speech on fiscal policy. It was roundly praised by most everyone on the left as a strong statement of progressive values.

In the speech, the President laid out plans for balanced approach to achieve $4 trillion in deficit reduction over the next 12 years. Here's how he summed it up:
So this is my approach to reduce the deficit by $4 trillion over the next 12 years. It’s an approach that achieves about $2 trillion in spending cuts across the budget. It will lower our interest payments on the debt by $1 trillion. It calls for tax reform to cut about $1 trillion in tax expenditures -- spending in the tax code. And it achieves these goals while protecting the middle class, protecting our commitment to seniors, and protecting our investments in the future.
I thought it would be interesting to check in and see how he's done on those goals.

Goal 1: $2 trillion in spending cuts

As a result of the debt ceiling deal, domestic spending has been cut by $900 billion and defense spending by $350 billion for a total of $1.25 trillion - or 62.5% of the goal.

Goal 2: $1 trillion in interest spending

The total there is simply dependent on successful completion of the other 2 goals.

Goal 3: $1 trillion in tax expenditures

The fiscal cliff deal resulted in over $600 billion of additional revenue - or 60% of the goal.

When it comes to goals 1 and 3, President Obama has implemented $1.85 trillion of the $3 trillion he set as a target - or about 62%.

Not bad for 21 months of work with an obstructionist Congress.

With the sequestered cuts of $1.2 trillion set to go into effect in 2 months and President Obama promising a balanced approach of replacing them with both spending cuts and tax expenditures, I'd put pretty good odds on him reaching these goals real soon.

11 comments:

  1. Spending is declining? How do you figure that? I can't remember the last time we actually spent less than the year before.

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    1. The debt ceiling deal cut $900 billion from domestic spending over the next 10 years and $350 billion from defense spending over the same time period. That's simply a fact.

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    2. But have any of those cuts actually happened yet? Are we spending less on base programs than we did last year?

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    3. The cuts went into effect immediately. And just to repeat - they involve reductions of $1.25 trillion OVER 10 YEARS.

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    4. So how much spending have we actually cut since Obama made that speech in 2011, ie where we actually spent less on something. Actually reducing our spending is a lot different from just pledging to reduce future spending.

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    5. You seem to want to discuss something that is not relevant. Perhaps you can find another blog where folks are interested in the discussion you want to have.

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    6. How is cutting spending not relevant to reducing our massive deficits? The President's own budget that he proposed for 2013 shows spending INCREASING every year, not decreasing.

      I was very encouraged in 2009 when he said he wanted to cut the deficit in half by the end of his first term. But I actually thought he was going to cut spending as part of his plan to do that

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  2. Federal outlays were down $61B last year, or 1.7% of their previous levels. The decline was due to a smaller amount of people on unemployment insurance and the removal of personnel from Iraq.

    http://www.cbo.gov/publication/43698
    http://www.cbo.gov/publication/43697

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    1. So when you exclude one time spending from wars and the recession, spending hasn't really dropped, right?

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    2. Certainly isn't rising...

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    3. True, just stuck at 2009 levels

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