Wednesday, August 26, 2009

Federal Budget Forecasts and Amnesia

The national debt is expected to grow by approximately $9 trillion over the next ten years according to the Obama Administration's own forecasts. The Concord Coalition recently projected a 10 year debt of closer to $14 trillion. Either way you look at it, these are historically large numbers but numbers that often lack political and historical context when discussed in the media by political operatives.

Many Republicans are quick to criticize the President for these large deficits but always fail to suggest what the deficits might be had they controlled the White House and Congress. Maybe the Republicans believe they could have helped us get out of the longest recession since the Great Depression by spending only $8 trillion, maybe $7 trillion? Pick a number. No doubt Democrats would take the opportunity to criticize Republicans for spending too much.

No matter how you slice it, federal deficits increase during a recession if only because tax revenues are down and automatic stabilizers like unemployment compensation and other income security programs increase. Throw in a large tax cut for households and businesses, and I have no doubt that Republicans would be facing a very similar budget outlook. Recent evidence suggests this might be true.

During the Bush Administration, the national debt increased from $5.67 trillion on 9/30/2000 to $10.02 trillion on 9/30/2008 ( During his presidency, Bush's budgets averaged over $350 billion in deficits and added over $2.5 trillion to the national debt ( Yet during most of this period, the Bush Administration presided over a growing economy and a soaring stock market until the last year of his term. I also recall Bush Administration spokespeople boasting about the millions of jobs created during his term. So how is it that his presidency left us with a national debt almost twice as large as when he took office? It took 40 years to create the deficit Bush began office with and only 8 years for it to double. Did Republicans forget about that? President Obama hasn't even had a chance to reside over a growing economy yet. I'm not trying to deflect the discussion or defend our current administration, the looming national debt may very well be the catalyst for our next crisis and we need to get real about the idea of raising taxes.

Politicians and political pundits are blessed with amnesia, it's the only logical explanation besides suggesting that they blatantly misrepresent the facts or manipulate the truth.

1 comment:

  1. Great post. It really describes the current state of politics and the economy. The "blame game" has become business as usual on Capitol Hill. Our two major parties are both quick to blame each other for the problems at hand, while third-parties blame them both from the outside, looking in. The funny thing is that, during the eras in which we've seen rampant growth in the national debt, we've had both republican and democratic administrations. Think FDR, LBJ, Reagan, Bush43. It was not the party politics causing the increase in debt, it was the economics of the time.