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Jackie Gingrich Cushman
Jackie Gingrich Cushman
8 Oct 2015
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Reliability and Engineering

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Obama's Budget Increases 2012 Deficit by a Third


Obama's budget increases 2012 deficit by a third. Yes, that's correct. President Obama submitted his proposed 2012 budget this past Monday. This budget produces a $1.1 trillion deficit for 2012. This deficit is 33 percent higher than his 2011 budget projection, which targeted the 2012 deficit at $828 billion. This higher 2012 deficit is equivalent to $3,217 per person in the United States (based on the U.S. Census Bureau's population clock).

This year's forecast of the 2011 deficit is $1.6 trillion, 30 percent higher than Obama's 2011-budgeted deficit of $1.3 trillion.

Let's step back and take another look at what has happened: The government spent $265 billion less in 2010 than had been forecast for 2010 at the time of the 2011 budget.

The receipts (read, taxes on companies and individuals, i.e., their expenses) for 2010 were about on target, actual $2,163 billion versus a forecast of $2,165 billion. This change in spending produced a 2011 deficit $378 billion, or 30 percent higher than originally budgeted.

The one thing we can determine so far is that the administration does not have a stellar record for budgeting. Before beginning my writing career, I worked in corporate finance. In my last few years in corporate planning, I was in charge of budgeting and planning for companies worth $3 billion. My background includes an MBA in finance, and I am a holder of the Chartered Financial Analyst designation. This lets you know that I know how to scrutinize the details of budgets and sub schedules to see if the logic and the math hold up.

During the 2011 budget process, revenues (taxes on individuals and corporations) were originally forecast to rise $402 billion (19 percent) from 2010 to 2011, but are now forecast to rise by just $11 billion. Outlays (government expenses) were projected to rise by $113 billion, or 3 percent. In the 2012 budget submission, the 2011 outlays increased by $363 billion, or 11 percent.

So, while we spent less in 2010 than had been forecast in 2010, we are still planning on spending more in 2011.

Hmm. The first rule in budgeting is to make sure your year-end forecast reflects what is going to happen, because that is how the next year is compared.

Clearly, in the last year's round of forecasting year-end results, the outlays were overstated. Maybe there should be a bit of scrubbing on the 2011 year-end government-spending forecast. Outlays (government sending) decreased by $62 billion in 2010; the 2011 year-end forecast is for an increase of $363 billion.

This clever bit of forecasting allows the administration to claim a decrease in government spending in 2012 (granted that it's only $90 billion, or 2 percent, less than the 2011 forecast).

However, when you compare 2010 to 2012, there is a $273 billion increase in government spending. So, while Obama might talk about a decline in government spending in 2012, it's only because his 2011 forecast includes a government spending increase of $363 billion, or 11 percent.

In this year's budget submission, revenues are forecast to rise $453 billion, or 21 percent, in 2012. Much of the forecast is based on a 65 percent increase in corporate taxes. This is a substantial increase in taxes.

In selling his budget this week, Obama mentioned a letter he had recently received "from a woman named Brenda Breece. ... She's looking, as we speak, for a second job to help put Rachel (her daughter) through college and ensure, as she told me, that 'the money is there to help Rachel with her future.'"

Obama continued with, "What's true for Brenda's family is true for the larger American family. ... We're going to have to get serious about cutting back on those things that would be nice to have but we can do without."

The difference is that Brenda Breece is willing to take on a second job to secure her daughter's future, and Obama's budget never lives within our means. Every year in his budget there is a deficit, with the lowest deficit at $607 billion in 2015.

Obama's budget does not live up to his rhetoric — we never live within our means, and he only reaches his target of cutting the deficit in half by first increasing it by 27 percent. His pitch is for us to live with a high deficit in 2012 (he labels it an investment) so that the out-years (2013 — 2021) will get better.

We need to quit listening to the sales pitch and focus on this year and next because, in budgeting, the out-years never come.

To find out more about Jackie Gingrich Cushman, and read features by other Creators Syndicate writers and cartoonists, visit




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