Rising tide of red ink

The Congressional Budget Office has come out with ten-year cost estimate of President Obama's budget proposals -- a welcome service Congress provides taxpayers every year. Too bad Congress doesn't pay attention to its messages.

One message is that Mr. Obama seeks a permanent shift of resources from the private sector to the public sector. It is one thing for the government to borrow and spend heavily during a recession to offset a decline in private-sector payrolls. But Mr. Obama apparently plans to make the recent growth of government permanent.

The CBO finds that federal spending will average 24.1 percent of the gross domestic product over the next decade, compared to about 21 percent for the previous decade. That means a smaller share for the private sector.

But it is the private sector that is responsible for the strength of the economy and the rate of economic growth.

Mr. Obama proposes big increases in so-called "mandatory" spending. Mandatory spending, mainly for personal entitlements, is spending Congress cannot control on an annual basis through appropriations. Once enacted, it is very hard to cut.

In detail, the CBO finds that the president seeks $1.9 trillion more mandatory spending for a variety of programs -- health care, refundable tax credits, Pell education grants and others.

The second message from the CBO is that the president does not plan to pay for these increases, contrary to his claims. The president's plan would increase borrowing by $3.8 trillion over 10 years, compared to the CBO's estimate of the deficit under current law. And that's with the president's rosy assumption that Congress will indeed, against experience, cut Medicare spending by about $500 billion over the next decade. Otherwise the red ink would rise even higher.

The only other visible area of spending restraint is a plan to cut defense spending by $339 billion.

Fiscal experts ranging from former Comptroller General David Walker to Douglas Elmendorf, the current director of the Congressional Budget Office (and a Democratic appointee), to Ben Bernanke, chairman of the Federal Reserve Board, have warned that deficits of this magnitude will sap the energy of the American economy. It is time Congress heeded the warnings.