Fabricated Savings

Despite claims of fiscal responsibility and honesty in budgeting, the President’s budget in fact uses various maneuvers to mask what it truly will produce: an explosion in spending, deficits, and debt. Many of the “savings” in the budget are illusory, reflecting only bookkeeping and accounting changes that make spending appear to be less than it is.

This paper analyzes one set of such ploys: the administration’s claim of outyear discretionary spending restraint. All of the data used in this analysis come from the President’s 2010 budget submission or from Office of Management and Budget [OMB] historical tables.

THE ADMINISTRATION’S CLAIM

Appearing before the House Budget Committee on 3 March 2009, OMB Director Orszag used nondefense discretionary spending in an attempt to highlight spending restraint in the President’s budget.

“The [2010] budget includes significant spending constraints and puts the Nation on a path to reducing nondefense discretionary spending as a share of GDP [gross domestic product],” Director Orszag said. “The average level of NDD [nondefense discretionary] spending between 1969 and 2008 was 3.8 percent of GDP. In contrast, the President’s budget proposes a gradual reduction in NDD spending as a share of the economy. Such spending averages 3.6 percent of GDP from 2010 to 2019 and declines to 3.1 percent by the end of the budget window – the lowest since the government began collecting the data in 1962.”

Read the full report here.