Political narratives are precious things these days. They give people a story line, an explanation for why the world is as it is and why their side isn’t to blame. And at the moment, the right’s most important narrative is that the nation’s dangerous and unsustainable budget deficit is the fault of Barack Obama.
Well, it isn’t, as the chart on the right demonstrates. “Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years,” Kathy Ruffing and James R. Horney conclude in a study published by the Center for Budget and Policy Priorities.
The CBPI is a liberal policy-analysis group, and those who are more interested in preserving their faith in conservative narrative than in discovering the truth can and will dismiss its findings on those grounds alone.
But numbers are numbers. If the numbers driving this chart are “liberal,” if the assumptions behind those numbers are “liberal,” then it should be possible for conservatives to explain how and where they’re wrong. The center “shows its work,” as our math teachers used to say, which should make it possible for others to come along and rebut it.
Take, for example, the impact of the economic downturn on the deficit. As the CBPI report notes, the Congressional Budget Office issued projections on Jan. 7, 2009 — two weeks before President Obama even took office — putting the 2009 deficit at well over $1 trillion.
“The recession battered the budget, driving down tax revenues and swelling outlays for unemployment insurance, food stamps, and other safety-net programs,” the CBPI reports. “Using CBO’s August 2008 projections as a benchmark, we calculate that the changed economic outlook accounts for over $400 billion of the deficit each year in 2009 through 2011 and slightly smaller amounts in subsequent years. Those effects persist; even in 2018, the deterioration in the economy since the summer of 2008 will account for over $250 billion in added deficits, much of it in the form of additional debt-service costs.”
Significant tax cuts enacted in a time of war — the first time in U.S. history that such cuts have been enacted — also had a predictable effect:
“Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits in 2009 through 2019, including the associated debt-service costs. (The prescription drug benefit enacted in 2003 accounts for further substantial increases in deficits and debt, which we are unable to quantify due to data limitations.) These impacts easily dwarf the stimulus and financial rescues. Furthermore, unlike those temporary costs, these inherited policies (especially the tax cuts and the drug benefit) do not fade away as the economy recovers.
Without the economic downturn and the fiscal policies of the previous administration, the budget would be roughly in balance over the next decade. That would have put the nation on a much sounder footing to address the demographic challenges and the cost pressures in health care that darken the long-run fiscal outlook.
Of course, what happened in the past doesn’t get President Obama off the hook for what happens next. If Obama did not create this problem, he will certainly be judged on whether and how he gets us out of it. Ruffing and Horney also acknowledge that fact.
“While President Obama inherited a dismal fiscal legacy, that does not diminish his responsibility to propose policies to address our fiscal imbalance and put the weight of his office behind them,” they write. “Although policymakers should not tighten fiscal policy in the near term while the economy remains fragile, they and the nation at large must come to grips with the nation’s long-term deficit problem.”
That’s going to require both serious budget cuts and significant tax increases, neither of which will be politically popular. But after the G-20 summit in Toronto, Obama noted that a bipartisan deficit-reduction commission that he appointed is expected to produce its report this December, setting the stage for real debate.
“I’m doing it because I said I was going to do it,” Obama said. “And I think it’s the right thing to do. And people should learn that lesson about me, because next year when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, because I’m calling their bluff. And we’ll see how much of that — how much of the political arguments they’re making right now are real, and how much of it was just politics.”