In his speech last night, President Obama once again did his reverse Harry Truman impression, showing that the buck stops anywhere but with him: “For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card.”
While we did in fact have a budget surplus in 2000 (along with 5.6 trillion in existing debt), Americans paid more in taxes that year — even as a percentage of the economy — than they had ever paid in any year since World War II: 20.6 percent of the gross domestic product (GDP). (See White House historical table 1.3.) The 2001 and 2003 tax cuts brought that number back down to the postwar historical norm of 18 percent, which is the tally that Americans paid, on average, across the 4-year span from 2005 through 2008 (see table 1.3).
But even if our levels of taxation had stayed at that postwar high of 20.6 percent, that wouldn’t have come anywhere near covering Obama’s unprecedented appetite for spending. Obama’s budget calls for spending an average of 24 percent of GDP across ten years. Pre-Obama, the last time the federal government spent 24 percent of GDP was during World War II (see table 1.3).
Obama disingenuously suggests that if he had been faced with a surplus in 2000, he would have used it to help pay off the debt. Yet three straight $1 trillion-plus deficits haven’t lessoned his appetite for “investments” (particularly in Obamacare, fast trains, and “green energy”), nor his desire to borrow another $2.4 trillion for the next year and a half.
In addition, Obama once again falsely implied that he somehow has a plan to reduce deficit spending by $4 trillion. That’s a phantom $4 trillion from a phantom plan. The only real plan Obama has put forward is his budget, and deficit spending under his budget would be $1 billion a day higher than under the Paul Ryan-authored House budget. In all, Obama’s 10-year budget calls for raising our national debt to a staggering $27.6 trillion — from $14.5 trillion today and $9.986 trillion shortly after he was elected.
In his speech, Obama nevertheless described his own “approach” as one “[that] says, let’s live within our means.” It would hard to think of a more inapt description of Obama’s fiscal approach than that.