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The Back to Pelosi Budget Soaring tax revenues will hit 18.3% of GDP in fiscal 2015.
March 4, 2014 7:27 p.m. ET

President Obama released his 2015 budget proposal on Tuesday, and the best way to understand it is as a campaign-strategy memo to return Nancy Pelosi as Speaker of the House. After the rude four-year interruption of a GOP House, Mr. Obama is revving up the tax and spend engines to turn out Democrats this fall and change the debate away from ObamaCare.

One of the President's more amusing fiscal sleights-of-hand is his claim that the federal government has been enduring "austerity." Taxpayers should be so lucky. The nearby table shows the arc of tax revenues and spending during the Obama Presidency, and you can see they are both up. Washington has rarely had it so good.

The feds spent $2.98 trillion in 2008 and Mr. Obama is proposing to spend $1 trillion more than that in fiscal 2015. The Pelosi-Obama stimulus blew out the bank in 2009-2011, the GOP House imposed a modicum of restraint in the next two years, but Mr. Obama is going back to the Pelosi future from here on out.

His budget would increase outlays by nearly $450 billion from fiscal 2013, and almost none of it for defense. Spending in 2015 would hit 21.4% of GDP, up from 20.8% in 2013. Outlays would rise by another $1 trillion by 2020, much of it fueled by the exploding costs of ObamaCare, and would reach an astonishing $6 trillion by 2024. If Democrats do take the House and Senate, you can bet spending will rise even faster.

Mr. Obama's budget nonetheless says that the deficit will fall to $564 billion in 2015, or 3.1% of GDP. How would that happen? Well, because tax revenues are booming. Revenues hit $2.77 trillion in 2013—a new federal record—and the Obama budget foresees them growing another 20%, to $3.33 trillion in fiscal 2015. Receipts will hit 18.3% of GDP in 2015, well above the 40-year average of 17.4%, and they'll keep rising to 19.9% a decade from now. But Mr. Obama says the government is starved for revenue and thus any tax reform must raise another $1 trillion on top of all this.

The President's budget proposes to spread all this cash around to various voter groups and Democratic constituencies. Mr. Obama would fund public preschool for every four year old and create a new fund to underwrite paid family leave in the states. There's more for job training programs that haven't shown they can train workers for jobs, and more for shovel-ready road projects that may or may not be shovel-ready. And don't forget a new $1 billion fund for efforts to combat climate change, which means more payola for green crony capitalists.

The big spending loser is the military, which will impress Vladimir Putin, though not in a good way. The proposed 2015 $623 billion defense budget is 3.4% of GDP and would be cut by nearly $39 billion more in 2016 to 3% and 2.3% by 2023. The last time the U.S. spent that small a share of the economy on defense was 1.7% in 1940. Readers who attended schools that still taught American history may recall that was not a good year for global stability.

Bloomberg

By contrast, Mr. Obama's budget leaves entitlement program spending on cruise control. He has dropped from the budget last year's modest proposal to make the calculation for cost-of-living increases in Social Security more accurate—a bow to the protests by liberal Democrats.

Inequality and class warfare will be big Democratic themes this election year, so Mr. Obama has obliged with more tax increases on business to finance more tax credits for workers. Millions of Americans already pay no income taxes, and Mr. Obama would take more of them off the rolls by expanding the Earned Income Tax Credit (EITC) to 13.5 million childless Americans—at a cost of $60 billion over 10 years. These credits are "refundable," which means you get a check even if you have no net tax liability.

This EITC expansion deserves longer treatment, not least because the Treasury Inspector General reports that the current program loses at least $11 billion a year to improper payments. But as a policy matter the earned credit was designed to be a substitute for the minimum wage that wouldn't price workers out of the job market. Instead, Mr. Obama wants to expand the EITC and raise the minimum wage.

Mr. Obama's budget doesn't make even a token outreach to the GOP, and in that regard it is at least honest. With Democrats at risk of losing the Senate, Mr. Obama views a revival of tax and spend as his party's best 2014 campaign pitch. Americans will have to decide if they like what about half of them will be paying for.

 

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Over a trillion dollar increase in spending on welfare, foodstamps and other social programs while almost a trillion more will be stolen from Medicare and Medicaid. It all boils down to the typical dimocrat President guidline; Increase government size, Increase government dependence, Increase taxes, decrease personal responsibility, decrease freedom, decrease quality of life.

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