Obama’s $8.6 trillion in deficits: Only a low-ball estimate

Anyone trying to claim a fiscal equivalence between the Bush era and the Obama era needs to review the latest report from the Congressional Budget Office.

In its recent budget report, the White House forecast budget deficits totaling $8.6 trillion over the next decade. To keep that in perspective, the total public debt held by the end of 2009 — that is, by the end of George W. Bush’s last budget — was $7.5 trillion.

projected_deficit

Graph originally posted at gregmankiw.blogspot.com

CBO, however, says even that mind-boggling projection is too low. In fact, the nonpartisan budget crunchers estimate, the cumulative deficit from 2010-2020 will be $9.8 trillion. That’s a difference of $1.2 trillion, as illustrated to the left (the graph comes from Greg Mankiw).

How much is $1.2 trillion? It’s roughly the same as the combined deficits of Bush’s first four years in office. And remember, we’re only talking about the “extra” amount of total deficits in the decade to come.

But as bad as a $1.2 trillion underestimate is, here are the numbers to really worry about:

  • $9.8 trillion: The cumulative budget deficits from 2010-2020 given Obama’s plans, according to CBO. In other words, we will average a $1 trillion deficit over the next 10 years, after never breaching $1 trillion a single time before Bush’s final budget.
  • $3.8 trillion: The additional budget deficits from 2010-2020 given Obama’s plans, compared to just leaving the budget on auto-pilot, according to CBO.
  • 90 percent: The public debt as a share of the total economy by 2020 given Obama’s plans, according to CBO. The current figure is 53 percent.
  • 80 percent: The amount by which the White House has overestimated next year’s economic growth, according to CBO (4.3 percent GDP growth in 2011 forecast by White House, versus 2.4 percent per CBO). Even if the White House is correct and the economy is about to come roaring back, it is foolish to count on such spectacular growth. (Recall what I’ve said before about rosy scenarios.)
  • 24.1 percent: The average proportion of GDP that the federal government will spend from 2010-2020 given Obama’s plans, according to CBO. The 40-year historical average is 20.7 percent. So, we are talking about a federal government in 2020 that is one-sixth larger than it historically has been.

And all of this assumes that there will be no national emergencies over the next 10 years: No terrorist attacks or natural disasters that require extra spending. And it assumes that we will have a decade of uninterrupted economic growth; history suggests that’s unlikely.

We are talking about an expansion of government, the deficit and debt that is an order of magnitude greater than anything we’ve seen before. If you’re one of those people asking why fiscal conservatives are suddenly concerned about the deficit now, and weren’t holding tea parties back when Bush was still in office, this is why.

248 comments Add your comment

dewstarpath

March 8th, 2010
11:04 am

- The massive deficit was the result of an unnecessary
invasion of Iraq, the obvious goal being the capture of
Saddam Hussein.

Afghanistan was (and should have been) the primary
focus of any power projection by the US to capture or
kill Osama bin Laden. It was a grievous error on the
part of the Bush administration to split military forces
between a clear and present threat and non-threat.

The operation (and execution) of Saddam was, of course,
successful, but IMO it left an economic hole that we
won’t be able to recover from in our lifetime.

Kyle Wingfield

March 8th, 2010
11:13 am

And in spite of all that, dewstar, Obama’s plans would take deficits to a whole new level.

Jess

March 8th, 2010
11:39 am

Once again. Iraq has cost $687 billion since it’s inception. Now look at the numbers above again. And Iraq caused this?

dewstarpath

March 8th, 2010
11:42 am

True, there are no easy answers. I think that recovery
depends primarily on how we cooperate to improve the
economy without being split along political lines –
specifically when it comes to the role of protecting
middle-class economic gains as opposed to corporate
uber-compensation at the “board of directors” level.

dewstarpath

March 8th, 2010
11:46 am

Jess – It wasn’t just Iraq – it was also the political isolation of trying
to “go it alone”, as well as the massive nation-building efforts after
the fall of Saddam.

David

March 8th, 2010
11:48 am

Unfortunately, deficits and the raising debt level are not just a republican or democratic problem. Both parties don’t know how to curb spending because they ahve to be seen as bringing “their fair share” back to their home district or state. Add that to the money that the elected officials love to hand out to special interest groups that fund the campaign, there is almost no hope to curbing spending until the government goes broke. Need to change the system of elections and terms of service if we ever hope to have a solvent country left for our children.

RJ

March 8th, 2010
11:49 am

Kyle, with all the “stimulus” money, how are states needing to cut education funding? You’d think the money would be available.

Kyle Wingfield

March 8th, 2010
11:57 am

dewstar, how does that (”go it alone,” which isn’t true, but anyway…and “massive nation-building efforts after the fall of Saddam”) count as “not Iraq”? What else would you consider those things to be?

Kyle Wingfield

March 8th, 2010
11:58 am

RJ, they’re cutting in spite of stimulus money. Which is why next year’s budget will probably be even worse than this year’s.

Johnny Dodds

March 8th, 2010
11:59 am

There really is not much of a difference between modern day Bush Republicans and Obama Democrats. They should just combine the two parties and call them “Republocrats.” That’s what they really are, And all both groups do are serve the interests of corporations, just different ones. But they BOTH spend obsene amounts of money we don’t have, never see the problems until they’re merely reacting to them and constantly just fight like kids against one another. Sadly, there is no legitimate (i.e. one that can win a handful of elections) third option in America, and that’s very very sad and unfortunate for us all. America is simply not as black and white as Republicans and Democrats make it out to be.

Kyle Wingfield

March 8th, 2010
12:00 pm

You’re right, David, that neither party has been particularly good at deficits and debt, especially when it controls both the White House and Congress. But this administration and this Congress are particularly — even historically — *bad* at deficits and debt.

Jefferson

March 8th, 2010
12:03 pm

50% over 500k. 40% 251-500K. The problem goes away. Fish where the fish are.

dewstarpath

March 8th, 2010
12:27 pm

Kyle – by “Iraq” I meant Operation Iraqi Freedom. By “going it alone”
I meant the US bearing far more of a share than the other countries
that made up the allied effort – especially since we were part of
another allied front in Afghanistan. Sorry if there was any confusion
about my post.

retiredds

March 8th, 2010
12:35 pm

Kyle, when George Bush (under a Clinton budget, since the government’s budget runs from 10/01-09/30 of the following year) took office the national debt stood at approximately $5.7 trillion. When Barak Obama took office (under George Bush’s budget) the national debt was $10.6 trillion. I would like to know where you got the $8.6 trillion number from, sounds a little low to me. Also the budgets are complicated estimates. When the economy (notice I did not say “if”) gets moving those deficit number could just as easily go down as up. I hope they go down. Also from an economist’s point of view you do not cure the worst economic recession by not running deficits, even high ones. Some respected economists say the stimulus was not enough and we need another one. If you follow the Republican panacea you have what’s going on in GA right now, cuts to all sorts of programs even if they are good ones because there is not enough revenue to support them. You see when you lay off a person who is paying taxes and they go on unemployment they now cost the state $$$$. If you cut a business’ taxes that does not necessarily bring someone into the store to buy product, especially if that person has just been laid off. In other words if someone fears the possibility of losing their job do you think they are going out and buy a house even if it’s discounted 60%-80%? Are they going to borrow lots of money for big ticket items even if interest rates are at their lowest levels in decades? Catch-22, isn’t it. But one thing I am sure of, borrow and spend can lead to disaster and that is not just an Obama problem, it is anyone who has been in office for more than 10 years, Republican or Democrat. The great myth of Reagan and Bush was they would talk a great game but would deliver a much different product. One that you, me, and everyone else, including the next several generations, will be paying for (i.e. interest on the debt, being held hostage to petro-dictators, politicians who say they are “family value guys” while they are being bought and paid for by special interests or running around with women other than their wives). So, Kyle, I have said before, the Republicans, Reagan, Bush, et. al. are not innocent bystanders to all this deficit stuff. When you pile debt on debt (it’s call accumulated debt) all have been at the $$$ trough. And, quite frankly, there is no one currently in either party who will change that.

Jefferson

March 8th, 2010
12:39 pm

Nobody wants to face the facts.

Kyle Wingfield

March 8th, 2010
12:45 pm

retiredds: My figures come from the CBO report (see the first link in the post; the total public debt figure ($7.5 trillion) comes on page 2).

As for economic growth, the CBO report takes that into account; it’s just that CBO doesn’t share the White House’s optimism that the economy is about to hit overdrive (anything above 4% economic growth is pretty torrid in the U.S. economy). It’s not a matter of hoping for one outcome versus the other — I’d love to see 4.3% growth in 2011. But if it happens, it will come as a very pleasant surprise to me, and I don’t think governments should base budget plans on what they hope will happen. (I have also criticized Gov. Perdue for doing the same thing in Georgia this year.)

JF McNamara

March 8th, 2010
12:50 pm

We need tax cuts. That’ll fix everything.

MrLiberty

March 8th, 2010
12:54 pm

Is there ever going to be a time when a conservative will stop defending the profligate spending under Bush as “not as bad as we have under Obama?” Do only libertarians understand and stick to principles?

Under Bush, spending increased more than any president before him. Yes, congress approved the budget just like they bent over and approved every other proposal he stuck in front of them, constitutional or not.

We are never going to get out of this mess until everyone who supported Bush and everyone who supported Obama, and everyone who supported Clinton, Bush I, and every president before them owns up to their own complicity in the destruction of this country, its economy, the dollar, the constitution, and every other foundation that this country was built upon. Pointing fingers at “them” is not going to get us anywhere. That divisiveness is at the heart of the success of the 2 party (really just 1 party) system that we suffer from. I figured out long ago that both major parties are the problem, and any objective analysis will prove this to be true.

So stop rationalizing the failures of Bush (and yourselves) and adopt some sound principles of constitutionally-limited government, a common sense foreign policy, sound money (a gold or silver standard), an austrian approach to economics, and the other important priniciples that will make america great again.

It is this implicit support for Bush and his policies that undermines every criticism of Obama and makes the comments just a bunch of hipocracy.

LA

March 8th, 2010
12:55 pm

“The operation (and execution) of Saddam was, of course,
successful, but IMO it left an economic hole that we
won’t be able to recover from in our lifetime.”

Sure we can. It’s called cutting spending.

retiredds

March 8th, 2010
12:56 pm

Looks like we are using two different reports. The following link is from Treasury Direct and lists the debt held by the public and intragovernmental holdings the total of which is the total debt outstanding. It is by date so I used the date GWB took office and the date BO took office. Here’s the link: http://www.treasurydirect.gov/NP/NPGateway

I agree with you about growth rates, they are critical to the supposed outcome (or any assumptions for that matter). Unfortunately most, if not all, politicians tend to err on the “long/high” side. It makes their numbers look better.

LA

March 8th, 2010
12:57 pm

dewstarpath , that is a good point about going it alone. Sad to say but Europe needs a wake up call and they are getting quite a dose right now. Greece is going bankrupt and the Euro will soon tank. The ONLY reason Europe exists as it is right now is because the US protects them from Russia.

LA

March 8th, 2010
12:57 pm

“We need tax cuts. That’ll fix everything.”

As opposed to Obama raising taxes during a recession? Yep, that’ll fix everything.

LA

March 8th, 2010
12:58 pm

“The massive deficit was the result of an unnecessary
invasion of Iraq”

Yet…….we’re still there…….

Andy

March 8th, 2010
1:00 pm

How much of that deficit is tied to social security and medicare and the retiring boomers? Isn’t that what so called entitlement reform is all about? And how can the boomers reaching retirement age be blamed on Obama?

When unemployment is high, workers aren’t paying as much into social security as they normally would. Is the unemployment rate the fault of Obama or the collective fault of the last 30 years of mostly republican policy and all of these asset bubbles that the country has been experiencing the last 20 years?

LA

March 8th, 2010
1:02 pm

“And how can the boomers reaching retirement age be blamed on Obama?”

It’s not being blamed on him. What IS being blamed on him is massive spending.

LA

March 8th, 2010
1:05 pm

Massa: Rahm Emanuel “Would Sell His Own Mother” For Votes

“Rahm Emanuel is son of the devil’s spawn, Rep. Eric Massa (D-NY) said. “He is an individual who would sell his mother to get a vote. He would strap his children to the front end of a steam locomotive.”

Rep. Massa describes a confrontation with Emanuel in a shower: “I am showering, naked as a jaybird, and here comes Rahm Emanuel, not even with a towel wrapped around his tush, poking his finger in my chest, yelling at me.”

http://www.realclearpolitics.com/video/2010/03/08/massa_rahm_emanuel_would_sell_his_own_mother_for_votes.html

Kyle Wingfield

March 8th, 2010
1:08 pm

Andy: CBO says the deficits from 2010-2020 would total $6 trillion under current law and $9.8 trillion given Obama’s plans. So, CBO is saying that things would be bad with business as usual but will get far worse with Obama’s plans.

Jefferson

March 8th, 2010
1:08 pm

To think spending will ever stop is a simple minded, weak and WRONG path of thinking, it never has and never will. Sounds good, don’t work — the GOP in a nutshell.

LA

March 8th, 2010
1:11 pm

The end of the road for Barack Obama?

Barack Obama seems unable to face up to America’s problems, writes Simon Heffer in New York.

http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/7396358/The-end-of-the-road-for-Barack-Obama.html

Kyle Wingfield

March 8th, 2010
1:12 pm

Mr. Liberty, and anyone else who didn’t get the gist of my post: The point is not that everything was fine under Bush. The point is that too many Obama supporters trot out the Bush era as a kind of justification for what’s happening now. Or, even more laughably, as a time when deficit spending was even worse than it is now.

There is no equivalence between the two. Increasing the debt from $3.3 trillion to $7.5 trillion over eight years is plenty bad; taking it from $7.5 trillion to $16.4 trillion is unquestionably worse.

LA

March 8th, 2010
1:12 pm

“To think spending will ever stop is a simple minded, weak and WRONG path of thinking, it never has and never will.’

Well Jefferson, I guess I’ll see you in the sweat shops when China calls in our debt!

The American People

March 8th, 2010
1:28 pm

$7.2 Billion dollars of stimulus money working hard as we speak to get the 4% of Americans who don’t have access to High Speed Internet because of where they live the access to it. Dial up isn’t good enough for these folk according to our government so give them the money. A seperate program of $9 billion dollars of regular tax money will also soon be in the works to fight the same injustice.

emo

March 8th, 2010
1:35 pm

Anyone who’s worried about the deficit needs to call his or her Representative and Senators and demand they sponsor legislation ending the wars and repealing the two tax cuts from the previous administration IMMEDIATELY. And cancel Medicare part D.

emo

March 8th, 2010
1:54 pm

And maybe downsize the military, which is more expensive than ALL the rest of the world combined.
So, let’s see just how serious you are about the deficit.

LA

March 8th, 2010
1:55 pm

“And maybe downsize the military”

Obama already did that.

MiltonMan

March 8th, 2010
1:56 pm

Obama said hewould have the troops out within 16 months of him taking office.

Obama is more occupied with Socializing healthcare than jobs.

Obama…
Obama…
Obama…

Tyler Durden

March 8th, 2010
1:57 pm

As usual from the Reicht (I mean ‘Right’) cherry picking their info to support the argument. Invading Iraq was a solution (support Halliburton, big oil, neocons) in search of a problem (insert ever-shifting rationale here). Kyle cannot remember anything before January 2009, so he has no recollection of the trainwreck of policy blunders, deficit spending and wartime tax cuts that preceded his ‘awakening’. Of course, he’ll cite a lot of isolated components that support his ideology, but ask him to answer what happened before Obama and prepare to be underwhelmed… And the very folks who carried Bush’s water, chided anyone who questioned the legitimacy of going into Iraq, and generally ran the country into a ditch are now the same folks afraid of fixing those problems and, GASP, making actual progress.

The mantra of the Right: Never let the facts get in the way of your ideology :-)

LA

March 8th, 2010
2:03 pm

“As usual from the Reicht”

Even though it’s the democrats who liked Hitler ie: Chamberlain.

“cherry picking their info to support the argument.”

Like Obama does on an hourly basis.

“Invading Iraq was a solution”

And we’re still there…

“Never let the facts get in the way of your ideology”

And the democrats continue to jump ship and lose elections….

Next

Robert

March 8th, 2010
2:03 pm

Some people just don’t understand republican economics.

When bush squandered a trillion-plus surplus inherited from Bill Clinton – NO PROBLEM.

When the trillion-plus bush tax cuts gave millions more to the idle rich and created the deficits we are stuck with – NO PROBLEM.

When bush wasted trillions on phony wars he started – NO PROBLEM.

When bush gave a trillion to the his bankster and Wall Street friends – NO PROBLEM.

But spending money IN America, to help working people – BIG PROBLEM!

LA

March 8th, 2010
2:06 pm

“But spending money IN America, to help working people – BIG PROBLEM!”

Unemployment is 10%. Yep, Obama sure be helpin them Americans!

emo

March 8th, 2010
2:16 pm

Actually, if your corporate cronies would hire some people, instead of making workers like me work unpaid overtime, the job situation would improve. You would be the first to say that no President creates jobs, if it were a Rethug in office.
And Obama never promised to pull all troops out at once, but maybe you should start demanding that.

emo

March 8th, 2010
2:23 pm

“And maybe downsize the military”
‘Obama already did that.’
Typical Repug lie. Only to a chickenhawk would decreasing the rate of increase be considered downsizing.

retiredds

March 8th, 2010
2:28 pm

LA, it seems your understanding of basic economics is a little soft. Unemployment at 10% did not happen just because Obama was elected president. Unemployment would be 10% no matter who was president and whatever policies were instituted. Historically the unemployment numbers follow the bottom of a recession by about eight months to a year and one half. According to most economists the recession ended sometime last summer. The unemployment numbers should begin declining over the next several months and years, but because of the depth of this recession/depression it will be gradual. Question for you, had no stimulus money from either TARP or the stimulus bill been enacted, what do you think the unemployment rate would be today? And, what would you be suggesting as a solution?

Life is a high stakes test

March 8th, 2010
2:32 pm

The simple truth is that Obama inherited a difficult sitation and has worked hard to make it permanent.
Post partisan was a joke when he picked Rham.
Spending is not the solution to all our problems.
Obama is a one trick pony who can only see a new government program, as the solution.
He is trying to govern from the left and the people are rejecting his policies.
It’s time for a change.

emo

March 8th, 2010
2:36 pm

He was elected to govern from the left by about 8 million votes and the Congress, in both ‘06 and ‘08. In the words of one of your elder statesmen,
“Elections have consequences. Until you can win one, sit down and shut up”.
Rush Limbaugh

retiredds

March 8th, 2010
2:37 pm

So, Life is a high stakes test, if you could make that change right now, who would you put in the President’s chair?

Giant Generation

March 8th, 2010
2:51 pm

All this is a prelude to the Repukes and Kyle demanding we, the giant generation, give up the Social Security benefits we have paid into for all our working lives. We are 70 million strong, and we will make war on anyone or anything that tries to cheat us out of the retirement money we have already paid for, in full. BOYCOTT THE AJC, BOYCOTT THE AJC, THEY WANT TO STEAL OUR SOCIAL SECURITY….BOYCOTT, BOYCOTT, BOYCOTT….TAKE THAT TO YOUR NEXT PERFORMANCE APPRAISAL KYLE.

LA

March 8th, 2010
2:54 pm

“it seems your understanding of basic economics is a little soft.”

Yeah, and Obama is an economic genius. LOL

“Unemployment at 10% did not happen just because Obama was elected president.”

Never said it was. Your words not mine.

“Unemployment would be 10% no matter who was president and whatever policies were instituted.”

No it wouldn’t. Are you psychic?

“According to most economists the recession ended sometime last summer.”

Would those same “economist” happen to work for Obama?

“Question for you, had no stimulus money from either TARP or the stimulus bill been enacted, what do you think the unemployment rate would be today?”

Less than 10%. The “stimulus” didn’t do anything. Most of the stimulus was never spent. Most of that money that was spent went to unions, GM and banks. And guess what? GM is still crappy and a lot of banks still went under.

“And, what would you be suggesting as a solution?’

The same thing that has worked for 200 years. The free market always corrects itself. Government makes things worse. IE: prolonging the Great Depression.

Tall

March 8th, 2010
2:54 pm

Tyler Durden:

Can’t you come up with anything better than the stale allegory you’ve just posted? Offer a scenario if we didn’t invade Iraq. As the situation in Iraq improves, you can bet the Obama administration will take credit for everything. As for the Halliburton conspiracy, the stock should have done alot better than tread water in the $18 – 22 range. I’m not saying the political connections didn’t help, but if there was so much money to be made, why did HAL sell Kellog, Root and Brown?

What choice did W have? He was left with the “no flyover zone.” Remember that one? That wasn’t an inexpensive exercise. Former President Clinton did nothing about it. If you think a tyrant like Saddam wasn’t talking to Al Qaida, guess again.

LA

March 8th, 2010
2:55 pm

“Typical Repug lie. Only to a chickenhawk would decreasing the rate of increase be considered downsizing.”

Is that like a Democrap Lie? How about a Libtard? Maybe an Obamabot?