StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Can I Get An Amen? There Will Be No "Magic Asterisks" In The Obama Budget

23 Feb 2009
Posted by Stan Collender

Office of Management and Budget Director Peter Orzag has let it be known that some of the most egregious budget gimmicks of all time will NOT be included in the budget that President Obama will send to Congress this Thursday.

Hallelujah!

The gimmicks that apparently have been banished from the face of the federal budget include:

  • The Bush administration's refusal to include the costs of its requests for activities in Iraq and Afghanistan in the budget
  • Counting substantial additional revenues from the Alternative Minimum Tax even though there was virtually no chance it wouldn't be patched each year
  • Not assuming that any additional spending will be needed for natural disasters each year even though hurricanes, tornados, drought, forest fires, etc. were a virtual certainty
  • Assuming cuts in Medicare spending by refusing to admit that the law mandating reduced payments for doctors would be waived.
  • Not counting the additional interest payments from the increased government borrowing for all of the above.

Hallelujah!

There are two reasons why this probably wasn't that tough of a call for the White House.  First, the president has made transparency an issue in much of what he has been talking about since Inauguration Day.  Second, the best budget strategy for the administration is to get all of the bad news on the budget out as early as possible, especially when it can be blamed on the previous president.

And all of these items will add what will appear to be a great deal of bad news to the budget -- about $2.7 trillion in additional spending over the next 10 years.  That's spending that would have happened anyway; it just would have been hidden from public view because of these gimmicks.

Expect that the White House will play up its "honest budgeting" efforts this week as the administration conducts a steady series of budget-related activities starting with the summit today, the president's speech to Congress tomorrow, and the release of the budget on Thursday.  I suspect that the budget itself will include a major section on these changes and that every administration spokesperson will use them as a major talking point whenever the opportunity arises.

The one potential gimmick  we haven't heard about yet is the Obama economic forecast.  Given what OMB is doing on the standard gimmicks, my guess is that Rosy Scenario will also not appear this year and that the forecast will be decidedly less upbeat than most presidents have dared to include.  Again, the stratgey will likely be to take credit for getting the bad news out early.

Amen

Transparency is refreshing


Stimulus Package

I read in your yahoo interview that with the President's stimulus package, "You're adding $787 billion to the economy that wouldn't otherwise be there". If this is true, why stop at $800 billion? why not $1.5 trillion? how about $3.0 trillion? I'd feel good about adding $6.0 trillion to the economy that otherwise wouldn't be there. In fact, why should we ever stop?


Stimulus package

Because we are adding future money to this economy. We have to pay for it eventually.

I wish that Obama would follow through with his pledge to put bills on the web for 5 days before he signed them. We don't even know whats in these things before they become law.




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