President Obama has released his budget for 2015. As with all budgets in the last 40+ years, we can count on Congress to declare it “dead on arrival”. The budget claims that after “5 years of grit and determined effort, the United States is better positioned for the 21st Century than any other nation on Earth.” That’s tantamount to saying that we’re the best looking horse in the glue factory.
Here are the broad outlines of his budget:
- $3.9 Trillion on spending – up from $3.6B for 2014 (For an agency by agency review, see this Washington Post article.)
- $564 Billion in deficits
- Projection that deficits will be in the $500B range for the next 10 years
- By 2024, projected growth of the debt would be up to $25 Trillion from $17T today
- GDP will grow at an average rate of 4.72% with our projected GDP being over $27T in 2024. (Nominal GDP is the value of production at current market prices, measured in millions of US Dollars. Real GDP is the value of production using a given base year prices, measured in millions of US Dollars.)
I think their projections of a 4.72% of GDP average growth over the next 10 years is overly optimistic. I believe our debt, increased regulations and imposed health care taxes and mandates is a growing drag on our economy.
Looking back from 2003 to 2013 (an 11 year period), exact comparisons are difficult to do on an agency-by-agency basis because of the way agencies have been broken up or combined. But overall spending, according to this same gpo.gov site was $2.157T in 2003. In 1996, overall spending was only $1.560T. Since 2003, our spending had skyrocketed to a total of $3.455T. That’s an increase of 60% in a 10 year period and an increase of 221% in an 18 year period. This spending cannot be blamed on one party or the other – it has occurred under Presidents of both parties and Congresses controlled – at one time or another – by both parties. Frankly, I lay the responsibility at the feet of the American people – us. We have voted for these spending levels via our elected representatives.
Just the sheer fact that President Obama sends a budget to Congress with a $500B+ deficit tells me that he’s really not serious about balancing our budget and stopping the bleeding. The fact that there will be little outcry will betray our comfort with these deficit levels. We are our own worst enemy. Conventional wisdom is that our growing debt isn’t a real problem since as a percent of GDP, the deficits are not increasing that much. My take: the sheer volume of raw dollars owed will one day catch up with us, regardless of % ratio of overall deficits to GDP. It’s the total debt that is my concern.
I realize I’m in the minority in my clarion call for our government to stop deficit spending. From where I sit, our goal should not be to be the best economy in the world when compared to other economies. We should strive to be the best economy when compared to ourselves and common-sense fiscal policies, such as ensuring we don’t spend more than what we take in.
Just because we’re the best looking horse in the glue factory doesn’t mean the fact that we’re in the glue factory can be ignored. I hope someone, someday, from somewhere, rises up to lead us to a land of financial independence and solvency. Otherwise, it’s just a matter of time before we’re made into glue.
Bill English, CEO