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At a July 22, 2010, ceremony to sign the Improper Payments Elimination and Recovery Act, President Barack Obama took the opportunity to tout his administration's approach to reining in federal spending. We’ve drafted a budget for next year that freezes all discretionary government spending outside of national security for three years, a budget, by the way, that would reduce this spending -- non-defense discretionary spending -- to its lowest level as a share of the economy in 50 years, Obama said. This isn’t talked about a lot, so I’m going to repeat it. Our budget would take non-security defense -- or non-defense spending to its lowest level since JFK -- lowest level as a percentage of the economy since JFK. If you look past his verbal false starts, we think there's a fact worth checking here -- that his budget would take ... non-defense spending to its lowest level ... as a percentage of the economy since JFK. We first turned to the president's own budget blueprint for fiscal year 2011, released in February 2010. Among the document's historical tables is one -- for budget wonks, it's Table 8.4 -- that includes a column for non-defense, discretionary spending as a percentage of GDP all the way back to 1962. This table shows non-defense, discretionary spending at 4.1 percent of GDP for fiscal year 2009 (the most recent completed year), at an estimated 4.7 percent for fiscal year 2010 and an estimated 4.4 percent for fiscal year 2011. From that point, the estimated percentage falls steadily from 3.9 percent in 2012 to 3.3 in 2015. How does that compare historically? The current numbers are actually high by historical standards; the percentage was lower than 4.1 in every single year between 1984 and 2008, and it was also lower than 4.1 percent in eight additional years going back to 1962. The lowest future projected percentage -- 3.3 in 2015 -- is close to the lowest since 1962, but not quite the lowest. So the president is close -- but not quite correct -- by these numbers. However, that's not the end of the story. Experts also pointed us to longer-term projections published in OMB's Mid-Session Review, released July 23, 2010. In Table S-5 (Proposed Budget by Category as a Percent of GDP), the line that summarizes non-security discretionary spending starts at 3.1 percent of GDP for 2009, rises to 3.6 percent for 2010, falls slightly to 3.5 percent for 2011, before declining steadily from 3.0 percent in 2012 to 2.2 in 2019 and 2020. So by this measurement, it's clear that the Obama Administration does intend to reduce non-security discretionary spending to 3.0 percent of GDP by 2012 and to 2.2 percent by 2019. That's a reduction of its current percentage by one-fifth in the span of two years and about two-fifths in the span of nine years. We need to point out that this category is called non-security discretionary spending. That's different than the term non-defense spending that's used in the President's Budget. At the risk of getting too far into the weeds, a number of programs count as non-defense in the President's Budget but as security in the Mid-Session Review, including the Department of Homeland Security, portions of the Department of Veterans Affairs, the Department of State and other international programs. So while the two statistics are similar -- defense programs account for about 80 percent of the total -- it's enough to distort the percentages in the two reports so that they are not directly comparable. When we asked the administration for a table that made an apples-to-apples comparison, they sent us one. This chart mirrors the one from the Mid-Session review, going down to 2.2 percent in 2019 and 2020. 3.2 percent recorded in 1999 stands as the record low in this calculation.It also shows the comparable figures in the Kennedy Administration as 2.2 percent in 1962 and 2.4 percent in 1963. So by these figures, Obama is right. But we should add a caveat -- that the president's budget is a statement of his intentions, not a mandate, and as such should be taken with a grain of salt. What will he require Congress to do in 2011? asked J.D. Foster, a senior fellow with the conservative Heritage Foundation. If they spend more than his budget, will he veto the bills? If they pass 'emergency' measures one after another, will he force them to offset the spending with other spending cuts? If he waves higher spending through every time, his budget becomes nothing more than a propoganda document. Indeed, Foster added that non-defense, discretionary spending has historically been in the upper 3 percent range. Exactly what cuts is he suggesting to get spending so low? he asked. Slashing education? Transportation? Health care research? And why does he think Congress would agree to them? In fact, the lowest levels of projected non-defense, discretionary spending under the Obama budget would kick in for fiscal year 2019, when he will be long out of office -- even if he wins a second term. But it does fall to lowest-since-JFK levels -- 2.5 percent -- by 2014, which would be during Obama's second term should he win one. Ultimately, we do think that Obama was careful not to over-sell his point. He said that his budget would reduce ... non-defense discretionary spending to its lowest level as a share of the economy in 50 years. That's more cautious than saying it will reduce such spending to a record-low level. But we think it's essential to keep in mind that these are the president's intentions -- not firm data. For that reason, we knock it down a notch to Mostly True.
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