Defense "Savings" Mask $20.7 Billion in
New Domestic Spending, Analysis of President's Speech Shows
In yet another speech laden with "cost unknowns," President Obama
proposed $20.7 billion in new spending, a price tag that could only be offset
by substantial defense reductions and major tax hikes – that's the conclusion
from the National Taxpayers Union Foundation's (NTUF's) line-by-line analysis of the 2012 State of the Union Address. NTUF has been conducting these in-depth
studies since 1999.
"President Obama laid out an agenda that was
more about ‘soldiers to subsidies' than ‘swords to plowshares,'" said NTUF
Senior Policy Analyst Demian Brady. "Even as he reaps fiscal rewards from
completed military missions – such as fewer borrowing obligations going forward
– the President's domestic proposals continue to grow in their budgetary cost and
burden on everyday economic activity."
Although the NTUF project focuses on federal
spending in the President's speech, Americans will also be on the lookout for
new taxes, including a 30 percent "Buffett Rule" tax, a minimum tax on
multinational firms, and (yet again) repeal of commonly-used business tax
provisions for only certain oil and gas companies. All could have serious
consequences for the very same job creation, tax simplification, and
international competitiveness efforts the Administration is touting.
the findings of NTUF's study:
Obama proposed 18 items with a potential impact on federal expenditures: 3 that
would reduce the federal budget, 8 that would increase it, and 7 whose effect
was too vague to be estimated.
largest single cost was the President's infrastructure proposal. Based on his
plans outlined in the American Jobs Act, the projects contained in this initiative
would amount to over $11.07 billion annually.
- The President's defense
plans would save $48.7 billion per year, a result of both conscious policy
choices about the size of the military and windfalls from reduced involvement
in Iraq and Afghanistan. This dwarfs the $380 million per year he offered in non-military savings. In short,
for every dollar he hopes to save in domestic programs, Obama is counting
on saving 128 dollars in defense.
told, the items mentioned in the President's speech would, if enacted at once,
result in a net decrease of federal
outlays amounting to $27.99 billion per year (again, attributable mostly to
military program changes).
President continued his trend of offering many proposals whose cost impact
could not be sufficiently quantified. One example is his proposed "Financial
Crimes Unit," which could mean significant long-lasting (but currently unknown)
costs for taxpayers depending upon its structure.
request this year for "the authority to consolidate
the federal bureaucracy" sounds much like his call in last year's speech to
"merge, consolidate, and reorganize the federal government."
Prior to last night, the lowest total NTUF had recorded since it
began the analysis project was President George W. Bush's address in 2006,
coming in at under $1 billion in new spending. The highest was President
Clinton's 1999 speech, which proposed $327 billion in higher outlays. Last year
Obama's speech contained an annualized total of $21.35 billion in net new
Brady concluded: "The ramping down of overseas
military operations naturally leads to reduced expenditures, but the fact that
these actions were mostly financed through debt, combined with the President's
insistence on continuing to increase domestic spending, means taxpayers could
see less in the way of traditional ‘peace dividends.' To answer this question
more fully, taxpayers will have to see something else: whether the President's
delayed 2013 budget will attempt to contain spending growth beyond the
Since 1991, NTUF has tracked the fiscal impact
of proposed legislation through BillTally, an accounting database that reports
the "net annual agenda cost" for each Member of Congress based on sponsorships
and co-sponsorships of pending legislation. For this analysis, NTUF matched
Obama's proposals with those in the BillTally system and in White House
NTUF is the research affiliate of the
362,000-member National Taxpayers Union, a non-profit taxpayer advocacy group
founded in 1969. Note: The line-byline analysis of President Obama's
State of the Union proposal is available HERE.
"Price the Proposals"
Prior to the State of the Union, we asked you to submit your guess on what you thought the President's proposals would cost. You can see the range of estimates on our Facebook page.
Even though the President proposed a spending cut rather than a spending increase, the person with the lowest bid was Casey from Colorado who bid $1 million. So congrats, Casey! Casey wins a $25 iTunes gift card.
Thanks to everyone who played.
NTUF in the News
NTU's "Speaking of Taxpayers" Podcast
Investor's Business Daily: "Lawmakers Proposed $1 Tril In New Spending Last Year"
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