Wednesday, February 03, 2010

Building a budget based on imaginiary numbers

Figuring out a budget for the country would be a lot easier if we could just make up stuff and insert those imaginary numbers into the budget as assumptions on income. Apparently, the Obama budgetmeisters have latched on to this method of writing a budget. Buried in their budget are assumptions about how much revenue the government will gain from cap-and-trade provisions even though few expect such a bill to be passed this year. They're also figuring in $100 billion of supposed savings that we'd get in the next ten years if the health care bill passed. They're nothing if not optimistic.
In any event, the $100 billion toward deficit reduction is only one of several items in President Obama’s budget that the White House says will cut down the nation’s budget imbalance, but which very likely might not happen.

There is another $630 billion in additional deficit-cutting measures that is by no means a certainty, depending on whether Congress passes Obama’s proposals into law.

The reduction of itemized deductions for charitable giving, for those making $250,000 or more, would bring in $291 billion over the next decade. But Obama proposed that a year ago and the idea went nowhere, because of opposition in the Congress.

A tax on banks that received money from the $700 billion TARP bailout would bring in $90 billion. But that idea also faces a fight in Congress. And even then, the Obama administration has already extended TARP beyond its original expiration date at the end of 2009 and could do so again in October, when most of the $700 billion is scheduled to go toward debt reduction.

And a freeze on spending for non-discretionary, non-defense spending – about 17 percent of the budget – would yield $250 billion in savings. But Democrats in Congress want the military to be included in the freeze, and could pose a problem for the White House if the president refuses to budge.

Those four items alone – health care reform, reduced itemized deductions for charitable giving by wealthy Americans, the bank tax, and the spending freeze – amount to $730 billion in deficit reductions over the next decade that are highly uncertain.
Here's a prediction that you can take to the bank. The spending increases in the Obama budget will be approved and many of the cuts in spending will be replaced. And the imaginary amounts in deficit reduction will remain mostly hypothetical.