More on the Deficit
December 18, 2009
I’ve talked about this before, but this nice chart really puts the whole thing in perspective:
What this shows of course, is that the large deficit mainly reflects the unpaid-for policies of the Bush years – war and tax cuts. If we had entered this recession close to balance, we could have fought the recession more effectively by accommodating the increase in the deficit due to the downturn and complementing it with a bigger stimulus. As it was, we were burdened by the heavy yoke of the Bush years. Remember that next time some Republican or ill-informed fellow-traveler complains about “Obama’s deficit”.
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26 Comments
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You and your charts!
I thought this was pretty convincing until I looked at the bottom of the graph and realized that these were projections for the next decade. The closer you get to the present, the more President Obama’s financial policies come to represent the same amount that Bush spent.
How reliable would you say these projections are? Have the CBPP any old projections from a decade ago that have been proven correct today?
I should correct myself – this graph is based on the CBO estimates, which if I remember correctly, are almost always wrong.
I’m of the opinion that the fiscal situation you describe was deliberately created by the Republicans, MM.
In 2000, the situation was that not only yearly deficits, but the entire national debt (and the hundreds of billions in yearly interest costs) would have vanished entirely by roughly the present time, leaving a large amount of money available to do things like initiate sweeping programs to help lift millions out of poverty and stagnation, provide healthcare for everyone who needs it, upgrade our national transportation infrastructure so that it’s the best in the world, and so on.
Many of the things Democrats would want to do with the money would have the effect of increasing the power of workers relative to management.
I believe that is a lot of the reason that the right is opposing healthcare – if you’re not tied to your job by the fear of losing your health care, why then you might get silly ideas in your head about asking for a raise or better working conditions, and lord, we can’t have that.
The deficits were a strategic move by Republicans to hamstring the next Democratic president, so that if he wants to use the government’s resources to help ordinary Joes out, the Republicans can wring their greedy hands in little mimes of concern and explain through their crocodile tears that gee, due the deficits we really can’t afford it. Which, of course, is exactly what they’re doing now.
Or, as Michael Moore said at the end of Sicko:
Yep. That pretty much nails it.
That has been the Republican plan since Reagan – run up as much debt as possible to make sure that Democrats can never implement social policies. Note that under Bush, his gigantic tax cuts and his gigantic war spending (both bigger than proposed healthcare spending) were not paid for. They were never meant to be paid for. That was the point. In contrast, Obama’s policies are paid for.
How can the Bush tax cuts be part of the graph when they expire in 2010?
Removing that and the main factor is the downturn. Also prolematic is the view that “tax cuts” are a “government program that is funded.” Big philosophy difference there.
Jacob Weisberg points out in Newsweek that the overwhelming majority of Republicans who were in the House and Senate at the time supported Bush’s Medicare prescription drug plan, even though all the criticisms they are aiming at the current health care reform bills could easily have been made of the prescription drug plan: “Simply stated, the law is complicated as hell, costs a fortune, still isn’t paid for, and doesn’t do all that much—though it does include coverage for end-of-life counseling, or what Grassley now calls ‘pulling the plug on Grandma.’” He says:
CBPP is using estimates from the Congressional Budget Office. While CBO does not have the Holy Spirit whispering in their ear, I think all viewpoints acknowledge they are as good and neutral as anyone is going to get.
I’m glad VN is turning its attention to important moral questions like which political party is responsible for the federal budget deficit.
MM–
Are you really suggesting that Republicans don’t have a good faith belief in the value of their policies but instead only use them as a vehicle to prevent the democrats from implementing their own spending policies?
I think that you should give the republicans the benefit of the doubt that they actually believe in the rightness of their war (no matter how wrong it was). The suggestion that they went to war not because they thought the war was good in itself, but as a method of bankrupting the budget and slowing down the welfare state is actually quite bizarre. Similarly, I think Republicans genuinely believe that tax cuts stimulate the economy, and really are not in it principally to run up a huge debt.
That was mostly me, not MM, Michael, and yes, I absolutely believe that the Republicans made it a priority to hamstring the Democrats. The Republicans, among their many other crimes the last 8 years, committed deliberate fiscal vandalism. There was never a peep, from any of the leadership of the Republicans in Congress, and certainly not from the Bush White House, of “gee, looks like we’re running up a huge debt; let’s do the fiscally responsible thing and revoke the tax cuts and raise taxes to pay for our wars and other spending.”
Matt–
There is a difference between not caring about the debt and purposely running it up for partisan games. I also think you should at least assume they believe that tax cuts will stimulate the economy and in the long run increase tax revenue.
So SO dishonest.
I actually take a partisan view of the Deficit.
We are paying now more for LBJ’s programs than Bush. At least Bush wanted to deal with the Social Security problem. We keep robbing the trust fund and we all ignore it.
The fact is we really can’t blame the future short falls on Bush II, Clinton, Bush I , Reagan, Ford Nixon etc. Heck Bush ran a pretty small structural Deficit. The problem we have is what HAVE HAPPEN generations before
Which is one reason I am wary of Health Care reform,= . What happens when we can’t rob fron the trust fund!!! Before we spend money on another entitlement should we not make sure first shore up a prevous obligation
I really don’t get this line of argument. Deficits are incredibly high due to Bush era policies, therefore it’s okay for Obama to make them even higher?
I really don’t get this line of argument. Deficits are incredibly high due to Bush era policies, therefore it’s okay for Obama to make them even higher?
Eh….yes. Fiscal policy is supposed to be countercyclical. Let me break that down – in good times, you run a prudent policy. In bad times, you run a looser policy. But to do this effectively, you need a favorable starting point, which we did not have. Are you seriously making a neo-Hooverite that Obama should have tried to cut the deficit in 2009?
JH: social security is not the problem, medicare is the problem. Tell that to your Repubilcan friends who have suddenly and inexplicably – after years of trying to gut the program – that any attempt to contain its rate of cost increase is akin to killing old people.
And you are ignoring the biggest government program of all – military spending. Cut, cut, cut.
At least Bush wanted to deal with the Social Security problem.
jh,
Bush wanted to “deal with” Social Security by creating private accounts, which, according to BusinessWeek (and every other serious analysis I remember), would not have solved the problem.
And does it look like the stock market is going to match its historical average? It’s hard to know about the next 100 years, but right now things don’t looks so good.
Fiscal policy is supposed to be countercyclical. Let me break that down – in good times, you run a prudent policy. In bad times, you run a looser policy.
MM your chart shows an annual deficit of nearly a trillion dollars or more every year for the next ten years. The deficit for 2019 is almost the same as for 2009. And you want to defend that as countercycical?
We are paying now more for LBJ’s programs than Bush. At least Bush wanted to deal with the Social Security problem. We keep robbing the trust fund and we all ignore it.
The fact is we really can’t blame the future short falls on Bush II, Clinton, Bush I , Reagan, Ford Nixon etc. Heck Bush ran a pretty small structural Deficit. The problem we have is what HAVE HAPPEN generations before
Which is one reason I am wary of Health Care reform. What happens when we can’t rob from the trust fund!!! Before we spend money on another entitlement should we not make sure first shore up a previous obligation.
jh – That’s not supported by history. At the end of the Clinton administration, the country was in the strongest fiscal position it had ever been in – there was serious discussion (from Alan Greenspan and others) of the problems that might occur when the United States retired all of its debt. Absent Bush tax cuts and the unnecessary war in Iraq, there would be no national debt right now: there would be $400 billion plus NOT being spent on interest on a national debt that wouldn’t exist. This whole discussion would not be about raising the national debt; it would be more like: “Ok, let’s once again run deficits for a couple years. Good thing we paid off our previous obligations so that, when times get better we’ll pay it off again within a couple years.”
The fact that that is NOT the situation we face can be placed squarely in the lap of the Bush Administration and the Republicans in Congress.
Blackadder,
You do understand that we must measure the deficit in percent of GDP terms, right? What do you think happens to a constanmt nominal deficit over 10 years in percent of GDP terms?
You do understand that we must measure the deficit in percent of GDP terms, right? What do you think happens to a constanmt nominal deficit over 10 years in percent of GDP terms?
If there’s economic growth, then the deficit gets smaller as a percentage of GDP. Which doesn’t prevent this.
At the end of the Clinton administration, the country was in the strongest fiscal position it had ever been in – there was serious discussion (from Alan Greenspan and others) of the problems that might occur when the United States retired all of its debt. Absent Bush tax cuts and the unnecessary war in Iraq, there would be no national debt right now
The good old days. Republicans and the Chamber of Commerce were actually worried that without a national debt, businesses and investors would not have the rock-solid option of parking their money in secure T-bills. One of Bush’s early actions was closing down the Savings Bonds Marketing program. After all, we all know who comes first to the Republicans between Grannies buying 1st Communion gifts and corporations looking for a sound place to put their money.
One other thought: it seems to me that the point about countercyclical policy is at odds with blaming Bush for the bulk of the deficit. Suppose Bush hadn’t invaded Iraq or Afghanistan and hadn’t passed the tax cuts. In that case the deficit would be a lot smaller than it currently is. Which would be horrible, right? I mean, if having a $1.5 trillion deficit is all that’s keeping us from reliving the Great Depression, then shouldn’t you be giving Bush props for getting the deficit so high?
At this point, deficits are a problem but the real problem is the debt. Further it’s silly to try to exonerate or one guy’s debt piling by pointing to another guy’s debt piling. Yes, the deficits in the Bush years were not good. The deficits in the Obama administration is also not good. In fact, given the debt load, we cannot afford to pile on the catastrophic deficits that are being projected here, regardless of who is at the helm.
Further, this: “Absent Bush tax cuts and the unnecessary war in Iraq, there would be no national debt right now” is entirely false. Perhaps this person is conflating deficit with debt. There would definitely be a debt (and a large one) with out the tax cuts, wars, or even either of the recessions of this decade.
Rocco – no, I mean the national debt would not exist: the projections were that the entire national debt would have been paid off some time late in this decade. Remember surpluses that extended “as far as the eye could see” back in ’99 and 2000?