A fiscal black hole grows deeper

Add another half-trillion dollars to America’s debt.

No, Congress hasn’t been on another spending spree. (Yet.)

I’m talking about another $600 billion in debt — almost $2,000 for every man, woman and child — that state and local governments have racked up but don’t recognize.

I’m talking about money that we owe to just one category of retirees: Teachers. Money that we already would have known about if government followed the same accounting rules as private companies.

Add that money to the teacher-retirement debt we already knew about, and we’re talking about almost $1 trillion.

Whoever said “trillion” is the new “billion” wasn’t kidding.

These figures come from a new report, “Underfunded Teacher Pension Plans: It’s Worse Than You Think.” The authors argue the funds underestimate funding gaps by overestimating the rate of return on their investments. They say the funds could avoid this problem by following private-sector accounting rules, which require adjustments to account for pension investments’ risk.

That’s right: The unfunded liabilities of teacher pensions across the country have been understated by an amount — $600 billion — roughly equivalent to the 2008 bailout of Wall Street. And it’s because the plans, like the banks, weren’t accounting prudently enough for risk.

As a result, the plans nationwide are not close to the benchmark of 80 percent funded, as previously thought, but just more than half-funded.

“The Dow Jones Industrial Average would have to nearly double overnight to make up for the present underfunding of these plans,” write co-authors Josh Barro of the Manhattan Institute for Policy Research and Stuart Buck, a doctoral fellow at the University of Arkansas.

Georgia is better off than most states, which isn’t to say we’re in great shape.

Our Teachers Retirement System is still two-thirds funded after Barro and Buck’s adjustments. But they peg the plan’s unfunded liabilities at $23.6 billion, compared to the officially reported $4.8 billion. The difference in those figures, $18.8 billion, is greater than the entire 2011 state budget will be.

Yep, the hole just got deeper.

Actually, it got deeper a long time ago. For decades, governments have hired workers on the premise that they would earn lower wages but make up for the shortfall with better benefits and job security.

That premise is no longer true. USA Today reported last month that government workers earn 13 percent more than their private-sector counterparts in the same occupations. With benefits, public-sector compensation is an astounding 55 percent higher.

It’s a model that was bound to fail, because it allows elected officials to make promises their successors will have to keep.

“I think there is a real institutional problem with these systems where you get to make the promise now” about pay and benefits, Barro told me in a telephone interview Tuesday, “and you don’t have to pay for it for decades.”

Barro’s comment is a perfect description of the government model used in this country since the New Deal. The most crushing components of our growing federal debt are two programs that likewise promise today’s workers a share of their children’s future wages: Social Security and Medicare.

It is a failed model.

And we can’t afford to keep funding this failure much longer. Barro notes that our $1 trillion nationwide in unfunded liabilities for teacher pensions equals two years of our entire spending on K-12 education.

Federal debt of $12.8 trillion. Cumulative state and local debt of $2.4 trillion. State and local pension debts of $2 trillion (the estimated total including retirees besides teachers).

Happy Tax Day. It won’t get any easier from here.

118 comments Add your comment


April 14th, 2010
7:51 pm

USA Today reported last month that government workers earn 13 percent more than their private-sector counterparts in the same occupations. With benefits, public-sector compensation is an astounding 55 percent higher.

Restating this figures, private-sector workers earn 12 percent less than their public-sector counterparts in the same occupations. With benefits, private-sector compensation is an astonishing 35 percent lower.

Beginning with Reagan, in the early 80’s, the private-sector has slashed both compensation and benefits — adjusted for inflation — with the end result being that a tiny percentage at the top hold more wealth than 95 percent of the households.

The USA Today figures are not reflection of public-sector inefficiencies. Rather, they’re a reflection of private-sector greed.


April 14th, 2010
8:37 pm

CJ, don’t you think the reason for the pay difference is the fact that government can run at a deficit while the private-sector has to at least break to be sustainable? Using the libtard mantra of greed totally discounts your argument.

Mr T

April 14th, 2010
8:48 pm

I guess starting a bogus war that is and will cost trillions (and not including it or Afghanastan in the deficits), and taking a surplus and spending money like a drunken sailor on shore for 8 years makes you an expert on “fiscal responsibility”? It’s always the social spending,you know the helping your fellow man which your bible talks about when you are born again for the hour and a half of the week on Sunday morning, that bugs you elephants the most. Except when you or family members need it! Like unemployment, grandpa’s SSI, mom’s medicare. Anybody else should be able to take care of themselves. Need I say most elephants aren’t that bright and are tools???

Paulo 977

April 14th, 2010
8:49 pm

CJ…you are right on target . Private- sector ‘cheerleaders’ have just not figured it out!!


April 14th, 2010
8:55 pm

Well, we could always trim back on that 1+ trillion dollar annual military budget and put that money to better use. Of course, we could have also quit taking all the money paid into social security over the years and diverting it to pay for tax cuts. There are just so many things that could be done better. Keeping fiscally irresponsible Republicans out of office helps a lot.


April 14th, 2010
9:04 pm


“Keeping fiscally irresponsible Republicans out of office helps a lot.”



April 14th, 2010
9:05 pm

“Need I say most elephants aren’t that bright and are tools???”

I have yet to see a single conservative suggest that a bill should be passed and then “we’ll see what’s in it”. For that matter, I’ve not seen any conservatives that think an island will tip over if too many people get on it at the same time.

Back on topic…Not only do government employees make more than private sector employees, they are nowhere near as efficient…further deepening the money pit.


April 14th, 2010
9:37 pm

According to the St. Petersburg Times (a conservative paper) that pay disparity study is flawed and the GOP Senators that keep quoting it don’t score too well on the ‘Truth-o-Meter’:


I’ve worked private sector and public jobs. Both have lazy people and great people. Its easy to generalize. If I had to choose between US military personnel and Blackwater, I’d take the GI’s over an outfit like that or most of the contractors (Halliburton?) who are only in business to bilk the govt.

How’s that for a generalization?

Michael H. Smith

April 14th, 2010
9:43 pm

I’m always ready to cut BIG GUB’MENT anytime. Let’s see: Get rid of the Postal Service, Fannie and Freddie, HUD, DHS, Department of Education, about half of the IRS, about 32 czars, end all GUB’MENT pension plans, get rid of all Democrats in now in Congress and ObumerCare…

In the public sector social security is called an entitlement. In the private sector it is called a ponzi scheme. No matter what they’re called they always fail. Only difference is the thieves in the public sector get re-elected, while those in the private sector go to jail.


April 14th, 2010
9:46 pm

Don’t worry, you won’t have to pay teachers Social Security, we fall under the windfall provision act. Even if we work second jobs and pay into Social Security, we aren’t allowed to get benefits. Every year when I get my Social Security statement and see my estimated benefits and start calculating the amount I would receive that I will never see. Many other jobs allow retirees to receive retirement benefits AND Social Security. This is common in many states around the country.


April 14th, 2010
9:52 pm

I know the value of a trillion dollars. It’s what GWB’s false war in Iraq has cost us to date. 3 billion a week for 8 years. Funny, I don’t remember the Kyle Wingfield’s of the world doing too much griping about this over the past 8 years or so.

Michael H. Smith

April 14th, 2010
9:53 pm

Social Security is broke. Don’t bet on what anyone will receive.

Jason T

April 14th, 2010
10:16 pm

Always amazing how the Dems and libtards defend The Imperial Federal Government, with all their wealth distribution schemes and money lost in black holes, waste and fraud. Yet, they have so much problem with individuals keeping their own money! War on Poverty? over 4 Trillion spent, and what happened? The Post Office? AMTRAK? Social Security? Medicare? Medicaid? The wonderful world of Government. If Corporations ran themselves like The Imperial Federal Government, they would be in jail, not the Government. You wanna talk about “tools”???? None bigger than believers in Government being the answer!

Kyle Wingfield

April 14th, 2010
10:31 pm

Unfortunately for Daedalus, we’re talking about different studies. And the criticisms leveled in the article he links aren’t applicable to the USA Today review, which looks at comparable jobs and doesn’t exaggerate the numbers as Sen. Brown did. Yes, it also refers to Brown and quotes Cato’s Chris Edwards, but they’re not talking about the same study.

Is it too much to ask that you read something before you try to poke holes in it?

Kyle Wingfield

April 14th, 2010
10:34 pm

And, unsurprisingly, CJ has ignored the main point here: That our model for public pensions was designed in an era when the private sector paid better, and government needed a way to offer better compensation to attract good workers. The point is that we are still operating that old model when — for whatever reason, although CJ prefers to cling to good ol’ greed — the circumstances have changed.

But explaining why we should stick to an obsolete model would be more difficult for CJ than trotting out good ol’ greed.

The Cynical White Boy

April 14th, 2010
10:52 pm

Having worked for a Georgia Congressman who sat on the Ways & Means Committee (tax writing committee), I know that the rich and the corporate powers will always have their tax shelters protected from harm…so…

The next Revolution, if there ever is one, will arise from the middle class. The rich and the corporate will have their tax shelters, the ‘poor’ will have cradle-to-grave Obama benefits and never pay taxes, so the middle class will work and pay and work and pay and work and pay until the day that the Bastille is finally stormed.


April 14th, 2010
11:45 pm

Kyle is correct. I did ignore his main point.

Why? Because anybody who votes Republican has zero credibility when complaining about deficits and unfunded liabilities. Let’s forget about Reagan, Bush 41 and 43, the Republican Congress, and the enormous financial burdens each left behind for a moment, and look at another example close to home.

Even today — as our state struggles financially, as college tuition rises dramatically, as school districts close schools, layoff or furlough teachers, and increase class sizes dramatically (while our education system remains among the worst in the nation), as our roads become more congested, as we struggle with water issues, as we struggle to fund care for children in foster homes, as we struggle to fund our justice system — today our Republican-led state legislature voted to phase in $387 million in tax cuts, including eliminating state income taxes for seniors. These tax cuts include no triggers in the event of financial catastrophe or provisions for rainy day funds or provisions to fund underfunded pensions. They’re just another present from the Republicans in the state house for the rest of us to grapple with in the years to come.

Of course, they legislate these future tax cuts intending that their cost will eventually be transferred to the poor and middle class in the form of increased state sales taxes and other regressive forms of taxation. But, if they have their way, one place that the $387 million that has just been cut will not go is to keep the promises made to teachers by fully funding their pension plans.

So directly to Kyle’s point, the model for public pensions for teachers and others are only obsolete to the extent that people who vote Republican make them so.

Gerald West

April 15th, 2010
5:55 am

Kyle, you and many of those readers who comment on your column just don’t get it!

Government jobs are the only jobs worth having! You get good pay and benefits, and don’t have to worry much about layoffs and recessions.

Government-backed health care is the only health care worth having! You pay reasonable premiums and co-pay fees, you gain access to the medical providers of your choice, you can never be denied coverage, and there are no lifetime limits.

Why don’t you people wise up and support more government benefits and higher taxes? Over time and with better management, the US might even catch up with the social democracies of northwest Europe and Japan in prosperity and quality of life. Not one of those countries is as poor in income and household worth, or as lacking in prospects for a secure future, or as uncompetitive in private enterprise as our own state and its backward neighbors.


April 15th, 2010
6:46 am

The libs on this blog who whine about Republican debt and deficits are both right and wrong. Both parties ARE responsible for this catastrophic mess. But there is no comaparison between what Obama is doing and what Bush did. And for the record, there were lots of us who WERE complaining when Bush was spending too much money. All you can do is say “Bush did it too!” like a bunch of 4 year olds. Why don’t you just admit that America made a huge mistake on November 4th, 2008? Anyone who is not completely partisan can see that. If Republicans go back to overspending we’ll throw them out of office as well.

Whacks Eloquent

April 15th, 2010
6:53 am

Geez Kyle, don’t you remember that the term “black hole” is racist?!?

Refresh your memory: http://www.foxnews.com/story/0,2933,380143,00.html

Seriously, when will it stop?

Buzz G

April 15th, 2010
7:34 am

Yes, Republicans under Bush spent too much. But Obama and the Democrats have made the Republicans look like rank amateurs. It is now a race against the calendar to get the Democrats under control before we can kick their corrupt butts to the curb in November. It now looks like before we can get rid of them, they will have run the national debt to an amazing $13.6 trillion. I cannot even get my brain around a trillion dollars.

When I was young people used to say “When I get old I do not want to be a burden on my children.” Now days we elect Democrats to steal from our children and our grandchildren. Our grandchildren will have every right to judge us harshly.

Ole Guy

April 15th, 2010
7:46 am

OK…so we’ve more-than-amply identified the problem(s). Any (logical) proposals to remedy the situation, or are we on a slippery slope from which recovery is all but moot? “Throw out the bums” is part rational and part inconceivable…who, after unmet pre-election rhetoric, do we oust? Pre-election lies, after all, have become the norm for American politics. Term limits? Who, in Congress, will have the guts to introduce that one?

We’ve talked about the problems; unfortunately, talk, alone, won’t achieve much of anything. I, and generations before me, have been educated to a reasonable standard. I, and generations before me, will probably see Social Security. But I sure as hell can’t imagine a USA, in another 30 to 50 years, achieving, much less maintaining, the global imminence we’ve enjoyed throughout the 20th Century. Those of us with kids had better prepare them for a bleak future…OR, WE CAN DO THE HARD AND UNPOPULAR THINGS TODAY. YOU IN?


April 15th, 2010
7:59 am

Buzz G, if the Republicans who yell “Fiscal Responsibility” every chance they get and THEN do the exact opposite are allowed to do what they do…I call then the “don’t tax and spend more anyway” party…, why do you expect the Democrats who are open about their spending to spend less? Guess what! you moral hypocrite Republicans are providing a bad example. You idiots screaming about the Dems after what your party did is completely laughable. Wonder why no one takes the GOP seriously anymore? THAT is why.


April 15th, 2010
8:13 am

“Happy Tax Day. It won’t get any easier from here.”

No it will not. It will only get much worse. You guys 45 and under are in for a long hard climb.

But do yourself a favor and think about how we got into this mess. If you want to blame Democrats, go ahead, it is cute to do so, but only that. If you want to blame Republicans, go ahead, it is cute to do so, but only that.

Who you need to blame is the incumbents you have been trained to send to congress and your state legislatures year after year after year.

Here are some interesting numbers about who has controlled what the past 29 years since we started this policy of increasing spending while cutting taxes & the debt has jumped from $957 billion to $12.8 trillion:

Republicans in the WH – 20 of 29 years
Democrats in the House – 17 of 29 years
Republicans in the Senate – 16 of 29 years.

For 29 straight years the House and Senate have sent the president deficit creating tax & spending bills. For 29 straight years every president has signed into law deficit creating tax and spending bills.

Now who is at fault?


April 15th, 2010
8:19 am

Vote out the incumbents and start over


April 15th, 2010
8:38 am

This should make everyone feel better:



April 15th, 2010
9:10 am

Nov. 15, 2002
Dick Cheney
“Reagan proved deficits don’t matter.”

One would have to be a total idiot to view republicans as fiscally responsible . Please name the Republican administration that sought out to reduce government spending . Power & promises is a bad combination . Both parties are irresponsible with our tax dollars according to history . Until this Tea party movement forms its own party or throws its weight behind the libertarian or constitution party I have no respect for it . Even Ron Paul , Americas new conservative darling , said the only reason he is in the Republican party is because it was the only way to be elected .

As far as the article , from what I understand Clinton is responsible for the short fall in social security , medicare , & probably pensions as well . His supposed balanced budget came from paying down public debt at the expense of these programs & government holdings .


April 15th, 2010
9:12 am

Buzz G,
“Yes, Republicans under Bush spent too much. But Obama and the Democrats have made the Republicans look like rank amateurs.”

True, but the democrats never claimed to be fiscally conservative.


April 15th, 2010
9:14 am

Jason T,

“Always amazing how the Dems and libtards defend The Imperial Federal Government, with all their wealth distribution schemes and money lost in black holes, waste and fraud.”

And if you think that’s bad, just wait till you get a republican wealth distribution scheme like Florida’s A+ plan.

Tyler Durden

April 15th, 2010
9:16 am

Kyle has a valid point that the current system is based on a bygone era when gov’t had to compete with the private sector. Of course, the knee-jerk response by many here to blame Dems for that is neither surprising nor credible. And other posts have equally valid observations that it’s hard to take conservative criticism of current deficits seriously when their heros (Reagan and Dubious) did FAR WORSE in the exact same arena. In fact, Dubious mangled all forms of gov’t policy across the board, yet nary a word of criticism was heard from those squelching loudest now. Ditto for their previous ‘respect the President’ arguments during Dubious that have convenientely turned into ‘Dissent is Partiotic’ now.

If hypocrisy was an art form, these folks would be modern-day Picassos…


April 15th, 2010
9:35 am

Yes, Republicans under Bush spent too much. But Obama and the Democrats have made the Republicans look like rank amateurs.

Any Econ 101 textbook not written by Thomas Sowell would say that the feds should run surpluses in times of economic growth and temporary deficits in times of economic decline or instability to make up for the temporary hole in private sector spending. Otherwise, the economy continues to contract, revenues continue to fall, and yes, long-run deficits grow even bigger as a result.

Excluding the portion of the current and most recent deficit caused by lost revenue from the Bush recession (about $1 trillion, give or take) the Dems are running temporary deficits (aka: stimulus) deliberately to make up for the shortfall in the economy due to the loss of private sector spending. These deficits brought us back from the brink of depression, and we need to continue running deficits in the short term until the economy stabilizes and private sector spending picks up again.

In short, rather than complaining about the deficits under Obama, we should be thankful for them. If McCain were elected, he would have run us into the ground.

As I said, when those who vote for Republicans — who run deficits at times of economic growth or stability and complain about them in times of economic instability — speak about deficits and debt, they have zero credibility.

Chris Broe

April 15th, 2010
9:38 am

Reading the comments today makes even the most budget-conscious flat-earthers support funding for more dunce caps, castor oil and detention monitors. Perhaps we could pay for this with an IQ-subtracted tax.

Conservatives SUX

April 15th, 2010
9:43 am

I cosign with CJ.

Kyle Wingfield

April 15th, 2010
10:00 am

Here’s how “temporary” those deficits are, CJ (see page 12): http://bit.ly/butzqu

Or, if you prefer a visual: http://bit.ly/9zmJcr

Now, try to explain how those numbers compare favorably to Reagan and Bush.

Kyle Wingfield

April 15th, 2010
10:01 am

The point being, “bad” and “horrific” don’t mean the same thing.

Kyle Wingfield

April 15th, 2010
10:06 am

And as jconservative points out, the president isn’t the sole creator of budgets. He isn’t even the main creator of them.

I’ll also wait for CJ to explain how the early 1980s and 2000s were “times of economic growth or stability.”

Kyle Wingfield

April 15th, 2010
10:17 am

Now, back to the real topic hand: What to do about all this debt.

I’ll hazard a guess that you could get broad support, even among many conservatives, for a tax hike on the following conditions:
1) Every penny — every fraction of a penny — every fraction of a fraction of a penny — was explicitly and irrevocably dedicated to paying off debt.
2) The tax hike was statutorily required to sunset as soon as the debt fell below a certain percentage of GDP. Something above zero, because frankly there is a point at which it does less damage to the economy to have some degree of debt than to keep taking money out of the productive sectors.
3) The tax hike was designed to be as small, transparent and broadly applicable as possible. That’s right: All of us, not just “the rich,” pay for the debt that all of us have built up.
4) Spending was cut in real terms. I don’t mean decreasing the amount of increases forecast, which is how both parties in Congress typically talk about cutting spending. I mean a reduction of spending in inflation-adjusted dollars.

All of that may be fantasy. But as Ole Guy says, some of us at some point are going to have to make some hard decisions.


April 15th, 2010
10:47 am

I’ll also wait for CJ to explain how the early 1980s and 2000s were “times of economic growth or stability.”

Despite his implication to the contrary, I’m confident that Kyle understands the difference between temporary deficit spending for stimulus and long-term deficit spending for no reason whatsoever other than the view that “deficits don’t matter”.

For example, the $1.8 trillion dollar tax cuts that Bush “rammed down our throats” (with Cheney casting the tie breaking vote in the Senate) were not stimulus cuts — they were put into effect for ten years. The only reason they weren’t permanent is that Republicans used the now-evil reconciliation process to get larger cuts passed (to their discredit, some Senate Dems supported smaller permanent cuts at a time when we still had a $5.4 trillion debt).

Kyle Wingfield

April 15th, 2010
10:53 am

I’ll respond, CJ, but I’m waiting for you to view the information I linked above and explain how the Obama deficits are temporary. Otherwise, there really is very little point in this exchange.


April 15th, 2010
10:55 am

Nice post Kyle . It takes a big republican to propose a new tax : ) Fantasy indeed . Once a source of revenue comes into play it would just about take an act of god to have it removed . Think the 400 toll road . Both parties are addicted to spending . They just want to spend it on different stuff . Don’t shoot me but I think I would go the tariff route .

Kyle Wingfield

April 15th, 2010
11:06 am

Glenn, you raise a good point: What kind of tax? Almost every tax is avoidable to some degree, and the most onerous ones give birth to the most creative methods of avoidance. This is one reason that limits on CEO pay and tax-the-rich schemes almost never produce the money expected: CEOs and the rich have more resources than the rest of us to find (legal, usually) ways to avoid the restrictions placed on them. Meanwhile, we all suffer from the resulting inefficiencies.

A tariff would be just about the most damaging tax we could propose. (Smoot-Hawley, anyone?) There’s no such thing as a unilateral tariff hike; they’re always reciprocated, hurting the people and producers of all countries involved.

This is the problem with trying to erase the debt through taxation. Growing the economy, and tax revenues along the way, is still the most palatable choice. But it requires really holding the line on spending, which, as I noted above, happens rarely if ever.


April 15th, 2010
11:09 am

We have been run into the ground, and we are digging deeper. The idea that the deficits we are creating today are temporary sound much more like a rationalization than an explaination. Obama and his band of academics, and lawyers have shown a gross ignorance of what makes our economy work, and have wasted a trillion dollars in the process trying to stimulate by growing government and funding pet projects. He has crippled small businesses with increased costs, while totally ignoring the fact that they create over 70% of the private sector jobs in this country. I cannot think of a single thing he has done which had a positive effect on business.

The Tar and Feathers Party

April 15th, 2010
11:09 am

The more you give to government, the more they demand. The solution is to reduce property taxes in Georgia at least, cut teacher pay, reduce schools to teaching read, writing, and arithmetic, and nothing else. Raise class size to 50, and cut administration to one principal per school, no secretaries, no vice principles, just the principle and teachers. We may not be able to cut the already promised pensions, but we can surely reduce the number of teachers and hangers on, and reduce their top pay level. A 50% across the board pay cut will mean the teachers top 5 years of earnings will all be in the past. There will be no maxing out in the last five years of work. Remember the Social Security Trust fund theft that Kyle so helpfully deleted from yesterday’s blog? Well that fund gave 2 trillion dollars to the government to save toward paying for the baby boomer’s retirement on social security. Did the government save that 2 trillion dollars? No, they spent every penny on pork barrel projects, gifts to foreign nations (mostly israel), and wars, wars, wars. Proof positive that the government will spend every penny we give them, and they will demand more, more, more. I say cut, cut, cut government down to size, and punish the thieves who have already robbed us.


April 15th, 2010
11:18 am


When Clinton came into office and introduced his first budgets, the CBO/JCT 10 year projections were similar — growing deficits as far as the eye could see.

When Bush came into office and introduced his first budgets, the CBO/JCT 10 year projections were similar — growing surpluses as far as the eye could see (incidentally, lobbying for tax cuts, Alan Greenspan testified at the time that those surpluses could be detrimental to our economy).

You can rely on that data if you want, but the evidence is clear that Presidents don’t propose, and Congresses don’t pass, operating budgets and then leave them on auto-pilot for a decade.


April 15th, 2010
11:20 am

cut teacher pay, reduce schools to teaching read, writing, and arithmetic, and nothing else? Are you serious? That’s the dumbest thing I ever heard.


April 15th, 2010
11:27 am


When Obama came into office and bulldozed the stimulus program through, he projected that unemployment would be held to 8%. And what happened to the millions of new jobs? Anyone who thinks our government can spend itself out of a financial hole is rationalizing, not thinking.


April 15th, 2010
11:27 am

Now Kyle we all know our biggest trade partners , China as well as Saudi Arabia , are manipulating our currency . Does it get more protectionist than that ? If we could reduce our imports & help strengthen our manufacturing sector how could that be a bad thing ? We need to keep more of our money in this country . We have been running a trade deficit for decades. All Smoot Hawley really showed is that tariffs harm the supply side country which we have not been for awhile . China is MUCH more protectionist than us anyhow .

Kyle Wingfield

April 15th, 2010
11:42 am

That’s not quite right, CJ. When Bush introduced his first budget — for FY2002, which began 19 days after the twin towers fell — the budget surpluses were already in decline. Clinton had the good luck to leave office right before a bubble popped and terrorists attacked. Anyone who thought Bush or any president could have maintained surpluses at that time is a real Pollyanna.

Similarly, Bush’s deficits were in decline before the housing market crashed and financial markets panicked. The TARP sent deficits shooting back up in Bush’s last budget, FY2009. Obama’s job now is to make sure the deficits fall, and sharply. My reading of his policies is that they won’t do anything of the sort. I hope I’m wrong.

In any case, the data I linked are based on the CBO’s analysis of the Obama administration’s own projections. We are not talking about Bush-era figures, or figures that somehow predate the recession, the stimulus, etc. And the point of that particular CBO report is that the administration is only able to claim that its deficits are “temporary” because it bases them on wholly unreasonable estimates of economic growth.


April 15th, 2010
11:43 am

You’re right Jess. Unemployment wasn’t held to 8%. The stimulus should have been bigger and more specifically focused on job creation.

Kyle Wingfield

April 15th, 2010
11:45 am

Glenn, if you believe that we can operate a closed economy, then you’re right — not much ill would come of increased tariffs. The point of the Smoot-Hawley reference was that we’ve known at least as far back as the 1920s that the only closed economy is the world economy, as Robert Mundell likes to say.