Tuesday, May 15, 2012

Obama's Deficit

This chart, variations of which have been floating around for awhile (this one is from TPM),  is well worth studying. Not because it settles the argument over whose fault it was that the federal deficit expanded so dramatically since 2008 (people will never stop arguing about that), but because it proves that the deficit was going to explode regardless of who had become president that year. The recession itself caused a massive shortfall in revenues, as well as triggering automatic spending increases such as unemployment insurance and food stamps. The tax structure put in place during the Bush administration added to the shortfall. And measures taken to deal with the financial crisis, many of which were supported by both parties, including TARP, as well as additional tax cuts, also added substantially to the deficit.

The idea that President Obama and the Democratic Congress went on some kind of spending spree in 2009 and 2010 is just plain false. In fact, federal spending has grown at a lower rate during the Obama administration than during the Bush and Reagan administrations. So the only claim the Republicans can make is that had they been in control, they would have responded to the recession by cutting spending dramatically. This claim does not stand up either, since even under the Ryan budget, spending levels for the last several and next several years would not have been reduced substantially, and revenues would actually decrease further. Moreover, additional spending cuts would likely have prolonged the recession, and increased unemployment, which is proven by the impact of spending cuts at the state level.

Whenever you hear about how much Obama has added to the federal deficit during his term, remember that only means the deficit increased by that amount during Obama's term. You can't attribute all of that increase to Obama's policies until you analyze the factors that have caused that deficit increase. Then you can figure out which of those components are due to Obama's policies, which are due to policies the Republicans supported, and which are due to factors beyond either party's control. Somehow, that part of the analysis is always missing from the opposition's critiques. It's a lot simpler to just keep laying all the trillions of additional debt at Obama's doorstep, than to admit that the alternative policies proposed by the opposition would have created about the same amount of debt.

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