Barack Obama - Debt, Deficit, Spending, and the Size of Government
Last Updated: Mar 07, 2011
Summary
Barack Obama was in the US Senate for two votes to increase the limit of the national debt. He missed one of those votes and voted against raising the national debt limit on the other vote. Prior to that vote, Senator Obama spoke on the Senate floor and stated that the need to raise the debt ceiling represented a failure of leadership and weakened the US. Senator Obama touted this vote in his campaign literature - Blueprint for Change and admonished President Bush for increasing the debt. In 2011, the national debt limit had to be raised to compensate for President Obama's budget.
Throughout the 2008 Presidential campaign, Senator Obama mocked Senator McCain for his proposed spending freezes. He repeatedly asserted that such a measure was akin to using a hatchet where a scalpel was needed. He also stated that such a measure prevented needed programs from being funded and did not take merit of those already being funded into account. In January of 2010, President Obama announced that he would be calling for a spending freeze for three years on all discretionary spending, and in January of 2011 President Obama called for a 5 year freeze on domestic spending during the State of the Union Speech.
As late as March of 2011, WhiteHouse.gov contained a fiscal discipline section that noted President Obama's intention to cut the deficit by the end of his first term.
Objection to Raising the Debt Ceiling in 2006
In September of 2006, Senator Obama spoke on the Senate floor about his objections to raising the debt ceiling. He stated that the need to raise the limit represented a failure of leadership.
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
Opposition to Spending Freezes
During the 2008 Campaign cycle, Senator Obama opposed an across the board spending freeze and stated that it was using a hatchet where a scalpel was needed.
Debate 1
Senator McCain: How about a spending freeze on everything by defense, veteran's affairs, and entitlements?
Moderator: A spending freeze?
Senator McCain: I think that we ought to seriously consider it. With the exception of caring for out veterans, national defense and several other vital issues
Moderator: Would you go along with that?
Senator Obama: The problem with a spending freeze is that you are using a hatchet where you are using a scalpel. There are some programs that are very important that are currently underfunded.
Debate 2
Senator Obama: It's important for the President to set a tone that says "All of us are going to contribute, all of us are gonna make sacrifices." And it means that yes we may have to think about cutting spending, although I disagree with Senator McCain about a spending freeze. I think that an across the board freeze, that's an example of an unfair burden sharing. That's using a hatchet to cut the federal budget, I wanna use a scalpel to make sure that people who need help are getting help and those of us like myself and Senator McCain who don't need help aren't getting it.
Blueprint for Change
As part of the 2008 elections, Senator Obama and Senator Biden released a blueprint for change. The fiscal discipline of this blueprint is shown below.
AT A GLANCE
Restore Fiscal Discipline in Congress Obama and Biden will reinstate pay-as-you-go (PAYGO) budget rules, so that new spending or tax cuts are paid for by spending cuts or new revenue elsewhere.
Cut Pork Barrel Spending Obama and Biden will cut skyrocketing pork barrel spending projects by forcing more transparency about who is requesting projects and what the projects would accomplish before Congress votes to approve them.
Cut Down on Tax Haven and Tax Shelter Abuse Obama and Biden will build on his bipartisan work to penalize companies that abuse the tax code and stop the use of tax havens.
Repeal Bush Tax Cuts for the Wealthy Obama and Biden committed to repealing the Bush tax cuts for the wealthiest Americans.
THE PROBLEM
Increasing Debt Under President Bush, the federal debt has increased from $5.7 trillion to $8.8 trillion, an increase of more than 50 percent.
Irresponsible Tax Cuts rnPresident Bush’s policies of giving tax breaks for the wealthy will cost the nation over $2.3 trillion by the time they expire in 2009.
BARACK OBAMA and Joe Biden’s Plan
Restore Fiscal Discipline to Washington
Reinstate PAYGO Rules: Obama believes that a critical step in restoring fiscal discipline is enforcing pay-as-you-go (PAYGO) budgeting rules which require new spending commitments or tax changes to be paid for by cuts to other programs or new revenue.
Reverse Bush Tax Cuts for the Wealthy: Obama and Biden will protect tax cuts for poor and middle class families, but he will reverse most of the Bush tax cuts for the wealthiest taxpayers.
Cut Pork Barrel Spending: Obama introduced and passed bipartisan legislation that would require more disclosure and transparency for special-interest earmarks. Obama believes that spending that cannot withstand public scrutiny cannot be justified. Obama and Biden will slash earmarks to no greater than what they were before the Bush Administration and ensure all spending decisions are open to the public.
Make Government Spending More Accountable and Efficient: Obama and Biden will ensure that federal contracts over $25,000 are competitively bid. Obama and Biden will also increase the efficiency of government programs through better use of technology, stronger management that demands accountability and by leveraging the government’s high-volume purchasing power to get lower prices.
End Wasteful Government Spending: Obama and Biden will stop funding wasteful, obsolete federal government programs that make no financial sense. Obama has called for an end to subsidies for oil and gas companies that are enjoying record profits, as well as the elimination of subsidies to the private student loan industry which has repeatedly used unethical business practices. Obama and Biden will also tackle wasteful spending in the Medicare program.
Make the Tax System More Fair and Efficient
End Tax Haven Abuse: Building on his bipartisan work in the Senate, Obama will give the Treasury Department the tools it needs to stop the abuse of tax shelters and offshore tax havens and help close the $350 billion tax gap between taxes owed and taxes paid.
Close Special Interest Corporate Loopholes: Obama will level the playing field for all businesses by eliminating special-interest loopholes and deductions, such as those for the oil and gas industry.
OBAMA’S RECORD
PAYGO
Obama voted in 2005, 2006, and 2007 to reinstate PAYGO federal budget rules.
No-Bid Contracts rnObama has introduced and helped pass bipartisan legislation to limit the abuse of no-bid federal contracts.
Against Raising the Federal Debt Limit
In 2006, Obama voted against misguided Republican efforts to raise the statutory debt limit at the same time the Republicans were pushing through massive debt-financed tax cuts for the wealthy.
Blueprint for Fiscal Discipline
In his blueprint for fiscal discipline, Senator Obama outline his plans for balancing the budget and eliminating waste.
Cut down on tax haven and tax shelter abuse
Go after $100 Billion in lost tax revenue
Shut down offshore tax havens and corporate loop holes
Tax reform that works for American families
Middle class tax cut
$1,000 of relief to 95% of workers and their families
Eliminate income taxes for retirees making less than $50,000
Never privatize social security
We lose $100 Billion dollars a year because corporations get to set up mailboxes offshore so that they can avoid paying a dime in taxes in America. Imagine if you got to do that. You could just open up a mailbox in the Cayman Islands somewhere. There's a building right now in the Cayman islands that is the address for 18,000 corporations. Now that's either the biggest building in the world, or it's the biggest scam in the world and I think we know which one it is. So we're gonna shut down those offshore tax havens and all those corporate loopholes. You shouldn't have to pay higher taxes because some corporation cut corners to avoid paying theirs.
I will reform our tax code so that it is simple, fair, and advances opportunity instead of distorting the market by advancing the agenda of some lobbyist or oil company. And i'll use the money to help pay for a middle class tax cut that will provide $1000 dollars of relief. $1000 of relief to 95% of workers and their families. I'll make oil companies like Exxon pay a tax on their windfall profits and we'll use the money to help families pay for their skyrocketing energy costs and other bills.
We'll also eliminate income taxes for any retiree making less than $50,000 per year. Because every senior deserves to live out their life in dignity and respect. And while John McCain wants to pick up where George Bush left off by trying again to privatize social security, I will never waiver in my commitment to protect that basic promise as President. We will not privatize social security and we will not raise the retirement age. We will protect social security for future generations by asking the wealthiest Americans to pay their share.
Spending Freeze
In January of 2010, President Obama announced that he would be calling for a spending freeze for three years on all discretionary spending. Discretionary spending makes up roughly 1/8 of the budget with much of that going to entitlement programs such as social security and medicare.
Support for PAYGO Rules
In February of 2010, President Obama used his weekly address to state his support for PAYGO rules that were recently signed into affect.
Proposed Annual Domestic Spending Freeze
In January of 2011, President Obama used a portion of the State of the Union address to call for a spending freeze to annual domestic spending for 5 years.
Now the final critical step in winning the future is to make sure that we aren't buried in a mountain of debt. We are living with a legacy of deficit spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people's pockets. But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day families sacrifice to live within our means. They deserve a government that does the same.
So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years. Now this would reduce the deficit by more than four hundred billion dollars over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was President. This freeze will require painful cuts. Already, we've frozen the salaries of hard working federal employees for the next two years. I've proposed cuts to things I care deeply about, like community action programs.
Budgets and Deficits
The Congressional Budget Office (CBO) releases data yearly for the amount of money taken in by the government, the amount spent, the resulting deficit for that year, and the total amount of debt. The graph and table below shows that data.
White House.gov Statements
On WhiteHouse.gov, policies on fiscal discipline are outlined which involve reducing the deficit by 1/2 in the first 4 years and bringing more transparency to government spending.
Fiscal Responsibility
Progress
The President signed an Executive Order on government contracting to fight waste and abuse.
The President launched Recovery.gov to track spending from the Recovery Act, an unprecedented step to provide transparency and accountability through technology.
The President wrote to the congressional leadership calling on them to pass statutory Pay-As-You-Go rules so that any new non-emergency tax cut or entitlement expansion offset in the budget.
The President signed the Weapons Systems Acquisition Reform Act to stop fraud and wasteful spending in the defense procurement and contracting system.
Guiding Principles
Changing the way Washington does business
Just as important as changing what Washington does is to change how it does it. We cannot begin to tackle the challenges we face in the short term to revive our economy and in the long term to put us on the path to growth without restoring fiscal responsibility and accountability to Government.
Restoring Fiscal Discipline
The Administration in its first weeks has taken the initial steps to restore fiscal discipline by requesting and signing into law an economic recovery bill that is free of all earmarks and by launching Recovery.gov – an unprecedented effort to allow the public to track how and where recovery funds are actually used. To continue this progress, the Administration will:
Cut the deficit in half by the end of the President’s first term. On January 20, 2009, the President inherited a $1.3 trillion budget deficit. The President has put forth a budget that will halve this deficit by the end of his first term, bring non-defense discretionary spending to its lowest level as a share of GDP since 1962.
Review the budget line-by-line for waste. We should be investing taxpayer dollars in efforts and programs with proven records of success and reallocating or cutting programs that do not work or whose benefits are not worth their cost. Secretary of Defense Gates has unveiled an unprecedented effort to reform defense contracting, and the President has launched a line-by-line review of the federal budget to pinpoint what programs works and what needs to be terminated or reduced in scope..
Return to honest budgeting. Too often in the past several years, budget tricks were used to make the government’s books seem stronger than they actually were. The President put forward a budget that rejects many of these gimmicks, most notably, the exclusion of war costs.
Return to Pay-As-You-Go budgeting. The President and his team are working with Congress to develop a set of budget enforcement rules that are based on the tools that helped create the surpluses of a decade ago, including statutory PAYGO.
Making Government More Effective
For decades, the argument in Washington has been between those who say that government is the cause of every problem and those who say that it’s the answer. What has become clear over the past eight years, especially in light of the Federal Government’s response to Hurricane Katrina, is that what bothers Americans is bad government—government that does not to do its job effectively and efficiently. To make Government more effective, the Administration will:
Eliminate wasteful redundancy. The Administration will conduct an immediate and periodic public inventory of administrative offices and functions and require agency leaders to work together to root out redundancy.
Streamline government procurement. The President will implement the GAO’s recommendations to reduce erroneous Federal payments, reduce procurement costs with purchase cards, and implement better management of surplus Federal property.
Reform federal contracting and acquisition. The Administration will take several steps to make sure that taxpayers get the best deal possible for Government expenditures. We will review the use of sole source, cost-type contracts; improve the quality of the acquisition workforce; and use technology to create transparency around contracting. In the Defense Department, Secretary Gates has identified major weapons programs for cut or reduction in order to get the most our of our defense dollars.
Put performance first. The President is creating a focused team composed of top-performing and highly-trained Government professionals and headed by a new Chief Performance Officer (CPO). The CPO will work with Federal agencies to set tough performance targets and hold managers responsible for progress.
Spend taxpayer dollars wisely on our large entitlement programs. With billions of dollars being spent in programs such as Social Security, Medicare, and Medicaid upon which so many Americans rely, it is important that they are run efficiently and effectively. To that end, the Administration will make significant investments in expanding oversight activities in the largest benefit programs and increasing investments in tax compliance and enforcement activities.
Voting Record
Housing and Economic Recovery Act of 2008 - Debt Ceiling Increase to $10.615 trillion
In April of 2008, the Senate passed the Housing and Economic Recovery Act of 2008. Included in that legislation was an increase to the debt ceiling to $10.615 trillion. The legislation passed the Senate 84-12. Barack Obama cast a "No Vote"
TARP - Debt Ceiling Increase to $11.315 trillion
In October of 2008, the Senate passed the Emergency Economic Stabilization Act - the TARP. The legislation included an increase in the debt ceiling to $11.3115 trillion. The legislation passed 74-25. Barack Obama voted in favor of the legislation to increase the debt ceiling to $11.315 trillion.
Barack Obama voted in favor of the legislation to increase the debt ceiling to $11.315 trillion.
Increasing the debt ceiling to $9.815 trillion
In September of 2007, the Senate voted to pass a measure that increased the debt ceiling to $9.815 trillion. The measure passed 53-42. Barack Obama cast a "No Vote"
Debt Ceiling Increase to $8.965 trillion
In March of 2006, the Senate passed H J Res 47 to increase the debt ceiling to $8.965 trillion. The measure passed 52-48. Barack Obama voted against increasing the debt ceiling to $8.965 trillion.
Barack Obama voted against increasing the debt ceiling to $8.965 trillion.
A bill to provide for greater responsibility in lending and expanded cancellation of debts owed to the United States and the international financial institutions by low-income countries, and for other purposes.
