Call me crazy, but I chose to be a budget reporter, and did it for more than 10 years. I could say it was because budget politics are fascinating or because it’s satisfying to try to master an important subject few people really understand.
True, but the real reason is more mundane. When I first came to Washington, one of the subjects I covered was the (then) fairly regular vote on raising the national debt limit. Utterly naïve about the ways of Congress, I was amazed at the operatic hypocrisy that always accompanied these votes. I mean, wasn’t this just fiscal housekeeping?
By the time debt limit votes rolled around, all the real decisions about spending and taxing had already been made. This was just paying the tab. Voting no seemed wildly irresponsible – would anyone really want the U.S. to default on its debt and risk downgrading one of the safest investments on the planet? Wouldn’t that cause interest rates on Treasury borrowing to go to the moon? Wouldn't that be fiscal suicide?
Well, yeah, of course. But the suicide bombers knew that on this and any number of other difficult budget issues, someone else would usually take the tough vote, so there was no real cost to them for preaching all manner of destructive claptrap. Which helps explain, for example, why many Americans (and members of Congress, apparently) still believe that tax cuts pay for themselves or that cutting foreign aid will balance the budget. Delusions like these make it much harder to do the real work of deficit reduction, which makes it important to try to stamp out dumb budget ideas wherever they arise.
The latest – now a staple of GOP campaign rhetoric -- is that reckless spending by President Obama and the Democrats is why deficits are so huge and the national debt is threatening to grow out of control. Not only is this a galling example of chutzpah – the same people who are making this case are actually among the guiltiest parties – but it once again gets in the way of clear thinking about what made deficits so big and how to fix them.
On cursory inspection this criticism of Obama and the Democrats seems to have a germ of truth to it. Democrats have been pushing mega-spending as an antidote to the recession, and a legitimate debate has sprung up over whether it’s time to begin trimming that spending back or perhaps cutting something else – how about farm subsidies? – to offset items such as additional unemployment benefits.
But that’s a distraction. The current argument over more stimulus spending is an asterisk to the larger story, which is that big deficits and rising debt were baked in the cake before Obama ever took office.
On Jan. 7, 2009, two weeks before Obama was inaugurated, the Congressional Budget Office released a routine forecast for fiscal 2009. The projected deficit: a staggering $1.2 trillion. Remember – Obama hadn’t even been sworn in yet. The eventual $1.4 trillion 2009 deficit that critics now blame entirely on the president and his Democratic co-conspirators was almost entirely foreordained before Obama took office. (Kathy Ruffing at the Center on Budget and Policy Priorities dug up the CBO forecast and wrote about it here.)
The key driver of the huge deficit, which critics of big deficits conveniently ignore, was the recession, which wreaks havoc on federal spending, even if the government doesn't produce a special fiscal stimulus bill. Recessions kill tax revenues and send automatic safety net spending for unemployment benefits, food stamps and so on shooting up. That's what made the first President Bush's substantial deficit-reduction deal in 1990 look so ineffective -- it was passed in the teeth of a recession, which consumed all its savings and more.
The recession wasn't the only factor driving up Obama's first deficit. One year ago, when the Obama administration was just barely under way, David Leonhardt of The New York Times made an interesting analysis of what drove deficits by going back to CBO projections in 2001 -- when Clinton left office amid forecasts of $800 billion surpluses from 2009 to 2012 -- to 2009, when those surplus forecasts had morphed into projections of $1.2 trillion deficits. Looking at CBO reports for the intervening decade, Leonhardt came up with the following list of reasons for the change from black ink to red:
- Recessions (2001 and 2008) 37%
- Bush policies 33% (tax cuts, wars, Medicare drug benefit)
- Obama/Bush policies 20% (bailouts, continuing the wars and tax cuts)
- Obama stimulus bill 7%
- Obama policies 3%
A year later, fairly or not, Obama owns the wars, the recession and the deficit, which CBO forecasts will be about $1.4 trillion this year. Any fair-minded analysis shows he didn't dig the hole, but after this year that won't matter. Like everything else, he owns the job of digging out.
George Hager is a member of the USA Today editorial board.
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