Wednesday, March 25, 2009

Budget Fact #10

Assumptions Prove Rosy

The Facts About The Democrats' Budget:

"Rosy" Economic Assumptions: While claiming to be "honest" and "transparent," the Democrats' budget relies on overly "rosy" economic assumptions. Indeed, the Democrats' budget projects much higher economic growth rates than the consensus among economists. The Democrats estimate that the economy will shrink by 1.2% this year and grow by 3.2% in 2010. The Blue Chip Economic projections forecast the economy will contract by 1.9% this year and grow by only 2.1% in 2010. By using unrealistic economic assumptions, Democrats are not being fully honest will the deficits that their budget will cause.

Budgets' Hidden Costs: The Democrats' budget contains at least two areas in which the costs of the Democrats' proposals are likely to be significantly underestimated. The Democrats' health care plan is said to be only a "down payment" at $643 billion over ten years, and their cap-and-tax proposal could be up to three times more expensive than the Administration first said.

Unrealistic Cost Of Dealing With The Financial Crisis: The Democrats' budget does not include the additional cost of their plans for dealing with the financial crisis, and according to the CBO, the rescue of Fannie Mae and Freddie Mac may prove to be much more costly than the Democrats' estimate.

Calling Gimmicks "Savings": The Democrats' budget relies on reducing operations in Iraq from unrealistically high forecasts to provide them with much of their supposed "savings." Also, as part of their original "savings" estimate, the Democrats counted tax increases. Most Americans would not consider tax increases to be budget savings.

Annual Budget Deficits Higher Than Any Year Before President Obama Took Office: Despite the Democrats' claims, their budget plans for deficits through 2019 that are actually higher than for any year before President Obama took office. This includes a deficit projected by CBO of $672 billion in 2013, the year the Democrats are claiming to halve the budget.

Unprecedented Borrowing: According to the CBO, the President's budget will add $9.3 trillion to the national debt. This would lead to unprecedented borrowing, with debt held by the public increasing from 41% of GDP in 2008 to 82% of GDP in 2019.

Posted by: Press Secretary

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