EDITORIAL: Obama’s phony debt plan

OPINION:

Without any trace of irony, the White House’s new 10-year deficit-reduction plan is titled “Living Within Our Means and Investing in the Future.” It achieves neither of these objectives, but you would never know that by looking at the deceptively rosy future it promises.

President Obama’s agenda continues the conceit of long-term Washington budget projections that bear no relation to reality. It overstates the administration’s ability to predict and influence events. The use of smoke and mirrors is a necessary political trick because highlighting massive purported “savings,” particularly in the out years, enables Mr. Obama to claim credit for trillions in deficit reduction that are supposed to appear long after he is off the political stage. He reckons to “cut” deficits by $3 trillion in 10 years - but so long as we’re pulling numbers out of a hat, why not $6 trillion in 20 years or $30 trillion in 100 years? Ten-year economic scenarios are the height of egotism; even Soviet dictator Josef Stalin was content with overseeing five-year plans.

The base-line economic assumptions in Mr. Obama’s plan are as fantastic as any that have emerged from this White House. As with past projections, unemployment levels are too low, growth projections are too high, and deficit numbers are astronomically more optimistic than realistic. The fiscal 2010 budget projected the deficit would be $581 billion in 2012. The fiscal 2012 budget projected a federal deficit of almost double that. The proposal introduced Monday bumps that figure up to more than $1.3 trillion. The actual deficit will be even higher.

The projections are always off because the Obama team clings to highly unrealistic economic-growth assumptions. The latest deficit proposal says that “during the previous six quarters, real gross domestic product (GDP) had grown at an average rate of 3 percent,” implying that this is a robust trend that is likely to continue. Mr. Obama’s first budget projected that this year’s economic growth would be more than 5 percent, but second-quarter GDP growth in 2011 was only 1 percent, and growth almost ground to a halt in the first quarter at 0.4 percent. Rather than a push for greater spending, these facts should prompt renewed soberness and caution for economic crystal-ball gazers at 1600 Pennsylvania Ave.

The assumptions in Mr. Obama’s plan double down on already-bankrupt hopes. For Mr. Obama’s deficit numbers to make sense (using the plan as applied to the Office of Management and Budget midsession review base line) the economy is expected to grow at a rate of almost 5 percent in 2012, almost 8 percent in 2014 and 8.5 percent in 2016. If Mr. Obama could deliver that kind of growth, he wouldn’t now be trying to explain away 9 percent unemployment and approval ratings in the low 40s. These baloney growth assumptions illustrate why politicians love to talk about the wonderful, magical, faraway out years. Too bad we live in the troubling times delivered by the “fierce urgency of now.”