WaPo repeats “inherited” deficit fallacy

posted at 2:00 pm on December 8, 2009 by Ed Morrissey

Is it too much to ask that political reporters and their editors pass a basic civics test?  Joel Achenbach isn’t the first reporter to refer to the ballooning federal deficits as something Barack Obama “inherited,” but one might have thought that the editors of the Washington Post might have finally flipped through a basic primer on legislation and spending, as well as recall when the FY2009 budget actually got passed:

But it may not be boring forever. The United States owes investors nearly $8 trillion. That number could more than double in a decade. The projected growth of the federal debt is widely viewed as unsustainable. It’s unlikely that the nation will ever default, but neither is that any longer unthinkable.

President Obama is expected to address the burgeoning debt in a major economic speech Tuesday in Washington. He inherited a huge deficit, and there’s nothing but red ink as far as the eye can see. The administration has estimated that there will be $1 trillion-plus shortfalls through 2011, followed by $700-billion-plus shortfalls through 2019.

Whopper budget deficits for so many years will mean that the cumulative debt will creep up as a percentage of the nation’s gross domestic product. How much debt the country can handle is debatable. The problem is that, if investors think the United States isn’t fiscally responsible, they could start demanding much higher interest rates when they bid on Treasury securities. The feedback loop could get ugly. The nation could have to borrow hundreds of billions just to pay interest on what it owes. This has been touted as a classic path to irreversible national decline.

“Right now, this year, we have 1.6 trillion in debt coming due. That’s roughly twice individual income tax revenue. Our only plausible strategy for paying that back is to borrow more money,” says Leonard Burman, an economist at Syracuse University.

Well, that’s not exactly true, Dr. Burman.  We could start cutting the size and cost of the federal government instead of expanding it.  We could then use the money we save to start paying off some of our debt, as well as use the increased revenues from better economic performance that would result.

But back to the civics lesson.  Budgets do not come from the White House.  They come from Congress, and the party that controlled Congress since January 2007 is the Democratic Party.  They controlled the budget process for FY2008 and FY2009, as well as FY2010 and FY2011.  In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.  For FY2009, though, Nancy Pelosi and Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office.  At that time, they passed a massive omnibus spending bill to complete the FY2009 budgets.

And where was Barack Obama during this time?  He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete FY2009.

Let’s remind people of what the deficits looked like during that period:

If the Democrats inherited any deficit, it was the FY2007 deficit, the last of the Republican budgets.  That deficit was the lowest in five years, and the fourth straight decline in deficit spending.  After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets.  If Obama “inherited” anything, he inherited it from himself.


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Comment pages: 1 2

Come on Ed, you know better. You’re not showing fully accurate stats as your realize that the deficit grew drastically under Bush. Stimulating artificial economic growth with deficit-based tax cuts is an old parlor trick that never ends well. And it should be more than obvious by now that the economy of 2005 thru 2008 was running on the vapors of a housing bubble- which wasn’t Bush’ fault by the way- but an unfortunate fact. Those lower deficit numbers in 2005-07 were never sustainable and most economists said so at the time (the major reason why Greenspan opposed Bush’s second round of huge tax cuts in 2004 was the effect on the deficit).

Bush inherited a budget surplus from Clinton, and by combining tax cuts with massive spending increases, created a massive, structural budget deficit. Under Bush, conservatives lost their way. When Treasury Secretary Paul O’neill, a former Fortune 500 CEO, objected to additional tax cuts for the wealthy that inflated an already large deficit, the entire Republican Party turned on him. At that time, “deficits don’t matter” was the official policy.

Now you’re trying to revise history. Instead of pointing to the Bush “economic miracle” as an excuse for Bush’s irresponsible spending and reckless tax cuts, you’re trying to say that Bush didn’t really increase federal spending or pass deficit-funded tax cuts. It’s amazing the difference a couple years can make.

Let’s consider the past record. Between 2001 and 2007, Bush and his allies in Congress increased the US annual budget from $2 trillion to $2.7 trillion, an increase of about 35% over a period of 6 years. At the same time, Bush passed a number of tax cuts that were never offset by spending cuts, effectively pumping cash into the economy to generate artificial growth. With the tax base lowered, the country was guaranteed a crash landing when the economy and stock markets collapsed. To make his legacy more complete, Bush nearly doubled the federal debt, adding a whopping $4 trillion to the China tab.

You can blame Obama for spending increases, that’s certainly true. But the fact remains that Obama inherited the results of 8 years of defective fiscal policy, unbalanced books, and slick accounting tricks that excluded the costs of war from annual budget outlays.

A report commissioned in 2002 by O’Neill, while he was Treasury Secretary, suggested the United States faced future federal budget deficits of more than US$ 500 billion. The report also suggested that sharp tax increases, massive spending cuts, or both would be unavoidable if the United States were to meet benefit promises to its future generations. The study estimated that closing the budget gap would require the equivalent of an immediate and permanent 66 percent across-the-board income tax increase.
http://en.wikipedia.org/wiki/Paul_O'Neill_(businessman)

bayam on December 8, 2009 at 5:57 PM

Its about time bush steps up to defend himself and put this lying joker in his right place.

bluegrass on December 8, 2009 at 6:35 PM

Reid; “I inherited a deficit that I voted for and then I voted to expand that deficit four-fold since January 20th.”
OOPS, sorry Dingy Harry, your B.S. doesn’t wash.

nelsonknows on December 8, 2009 at 7:01 PM

The Congressional Budget Office estimated Friday that the U.S. federal budget deficit for fiscal year 2007, which ended Sunday, was about $161 billion, or 1.2% of gross domestic product.
“While somewhat lower than estimates issued at the beginning of the year, the 2007 deficit announced today by the Congressional Budget Office is no cause for celebration,” said House Budget Committee Chairman John Spratt (D., S.C.)

FY-2009 Deficit – $1.85 Trillion.

When will the corrupt-ocrats and their minions take responsibility? After they print another $150 billion for porkulus II?

The honorable thing would be to fall on their swords.

jdkchem on December 8, 2009 at 9:46 PM

Comment pages: 1 2