Obama's Budget: Dubious Priorities and Fuzzy Math

Obama's Budget: Dubious Priorities and Fuzzy Math

REUTERS/Kevin Lamarque

Tucked away in the details of President Obama’s 2013 budget are a couple of relatively small but significant cuts.

One is to the D.C. Opportunity Scholarship Program that helps poor children opt out of failing public schools in the nation’s capital. In 2011, Republicans in Congress fought to restore funding to the voucher program after Obama cut it in his FY2010 budget, and they managed to restore those funds for five years in the FY2012 compromise package.
Now, Obama has removed the entire $13 million for this program in his FY2013 budget proposal, a move that his union supporters in the National Education Association will cheer, but which will create despair among parents whose children will once again be denied access to school choice in Washington D.C.
Obama’s red line has also cut the Federal Flight Deck Officer Program in half, reducing its funding from an FY2012 level of $25 million to just $12 million in FY2013.  At the same time, the budget reduces the federal Air Marshal budget by 4 percent, a reduction of $36.5 million.  FFDO trains and provides continuous certification for commercial pilots to arm themselves in the cockpit, and air marshals provide plainclothes security to intervene in any security emergency.
The White House claims that TSA screening has reduced the need for both programs, a claim that produced a scoffing response from a former pilot contacted by CNN. Mark Weiss, who served as the deputy chair for security issues with the pilot’s union while he flew for American Airlines, said it sends a signal to armed pilots that they’re not highly valued, and that is a message “that they're very appreciative of hearing in terrorist camps around the world.”

Budgets are commonly described as statements of priorities. That’s as true for a household budget as it is for a corporate one, and it’s certainly true for Obama’s proposal. Where we invest our money demonstrates the underlying needs and principles of those who crafted the budget, in line items large and small. The cuts to the D.C. Scholarship Opportunity Program and the Federal Flight Deck Officer Program demonstrate the priorities of an ideologue rather than a pragmatic leader who recognizes needs over political calculation, as does one program for which Obama wants to increase funding.

The cost savings from pushing poor kids out of the voucher program and making commercial flight less safe together add up to about $63 million. On the other side of the ledger: taxpayer subsidies for buying Chevy Volts.

The electric vehicle produced by GM has flopped, thanks to a high price tag for the subcompact model and the lack of resale value resulting from the expensive batteries that will have to be replaced in five to eight years at a cost of $8000 or more.  At the moment, GM has sold only about 7,700 Volts with a taxpayer subsidy of $7500 per car, for a cost of $57.8 million without including administrative costs.

Obama proposes to boost the subsidy to $10,000 per car and projects at least 10,000 units sold in FY2013, which would be a new cost of $100 million in that year alone just from the taxpayer-funded rebates at the point of sale, far outstripping what was saved by eliminating the DC voucher program and cutting effective airline security.
[Obama has shifted government resources to the wealthy in order to maintain his effort to kill the internal-combustion engine.]

Who gets these subsidies? According to GM’s CEO Dan Akerson, the average annual salary for a Volt buyer is $170,000 per year. That is about the average income for a BMW owner, about $40,000 a year higher than the average Cadillac buyer, and about $30,000 more than the average Lexus driver. Only a high-income earner could afford to take the financial risk of owning an electric vehicle that will have zero resale value when the batteries fail in five to eight years.

In essence, Obama has shifted government resources to the wealthy in order to maintain his effort to kill the internal-combustion engine. The wealthy will get those subsidies at least in part at the expense of the education of poor children and the safety of commercial airline passengers.
Obama’s budget spells out his priorities loudly and clearly when looking at the big picture, too. The budget proposal repudiates any notion of fiscal responsibility or balance. Last year at this time, President Obama announced on his Twitter feed that his new budget “meets that pledge, ”a pledge Obama made when he was sworn into office to cut the deficit in half by the end of his first term.

The budget in FY2009 – which Obama himself signed, thanks to a game of keep-away by the Democratic-controlled Congress to stall with continuing resolutions until George W. Bush left office – included a deficit of $1.55 trillion. (The last budget to be signed by someone other than Obama was FY2008, which had an actual on-budget deficit of $649 billion.) The FY2012 budget proposal referenced in that tweet had a deficit of $1.645 trillion, almost $100 billion higher than when Obama first took office, and it was pronounced dead on arrival by both Democrats and Republicans. Republicans in the Senate forced a vote on Obama’s budget proposal in May 2011, and it failed to get a single vote in a 0-97 rejection.
The new proposal sets the eventual FY2012 on-budget deficit at $1.39 trillion, higher than the FY2011 on-budget deficit of $1.367 trillion and FY2010’s $1.37 trillion, and projects the FY2013 on-budget deficit to $944 billion. That obviously is not half of $1.55 trillion, nor would it count as the end of his first term. Obama’s first term ends three months into FY2013, whose total deficit would be calculated to the end of September 2013.

However, it would be the first Obama budget below $1 trillion of the five he has signed in his presidency -- if it actually comes to pass.  How do we get below $1 trillion? Obama plans to hike spending by several hundred billion dollars in FY2013 alone while raising taxes high enough to gain $2 trillion more in revenues over the next ten years.  The Committee for a Responsible Federal Budget notes that Obama’s claims of cost savings mainly come from war spending that would not have occurred anyway, and which had been financed with borrowed dollars anyway.  And even then, the “savings” Obama’s budget proposal claims get spent elsewhere at the same time:

“The President employs a major budget gimmick by relying on the war drawdown for savings. This drawdown is already in effect and not the result of new deficit-reducing policies, and so it should not be counted as deficit reduction. Worse than simply counting it to inflate their numbers, though, the Administration uses some of the phantom savings to pay for existing unfunded transportation costs and to expand jobs and infrastructure initiatives. Paying for real costs with phony offsets is no way to budget or to control rising debt.”

The President’s priorities at the largest levels do not focus on spending reductions or honest accounting, but on increasing spending and taxes. If budgets are about priorities, this one makes Obama’s clear.