Monday, February 1, 2010

OMB Budget 2011: Or A Slight of Hand!

We have done a top level analysis of the OMB Budget for 2011 and thereafter and the following comments raise some concerns. We also have looked at other sources such as the Wall Street Journal and some of the numbers do not comply.

For example the WSJ states $935 B in receipts for Medicare and SSI, $1435 B for Medicare and Medicaid outlays plus $730 B SSI. These just do not comply with the facts and in fact they make no sense. We know Medicare is still just under $500 B by itself and Medicaid is nowhere near a trillion.

Now to MB:

1. Receipts: The receipts for the period are shown below. Note the Health Care receipts showing up over the 2013 till end of period. There is NO BASIS for this number and it will become a focus on the analysis.

2. Outlays: The outlays are shown below. Two things to observe. There is some assumption of lowered rates of increase for health care and the explosion of interest and debt payments are there but still small. If we assume an aggressive growth in inflation than this is all out the window.

3. 2012 Receipts: The tax rates are increasing but they are still only slightly shown even here in the 2012 budget. This will be the budget that the current Administration runs on again. The question will be "are you better off now than four years ago?". Good question.

4. 2012 Outlays: There are no dramatic increases other than what the current Administration has been projecting. 2012 is set up to be a good election year.

5. The Deficit, With and Without the Health Care Fudge: The following three charts depict the deficit. First with the Health Care numbers in, second with them out and third with them compared.

First below is with the HC numbers included. Note that they are included only AFTER the next election!

Second we take them out and this is the deficit:

Note the increases in the deficit. Now we combine these together. This is the telling slide.

Thus we have no real deficit reduction only a slight of hand to attain a good position for the next election. Pity!