Making Bush Look Like a Piker
Wednesday, September 30, 2009
The Bush-era deficits were bad. I know. I spent eight years complaining about them. How does President Obama stack up?
The Bush-era deficits were bad. I know. I spent eight years complaining about the president’s lack of fiscal responsibly (here and here for instance). I even wrote that Republicans during Bush’s time in office made French socialists look like Reagan. However, President Obama's new projected deficits are truly frightening. And the worse part: we haven’t seen it all yet.
Based on Congressional Budget Office (CBO) data, the following chart shows a projection of deficit numbers for each year until fiscal 2018. Each color represents the difference between the projected deficits at different points in time. The purple bars represent the deficit numbers as they were projected back in September 2008; the black and red bars represent the difference between the projected deficits at other points in time. The black bars represent the growth in the projected deficit numbers between September 2008 and January 2009. The red bars represent the difference between the January 2009 projections and the new deficit numbers as projected in August 2009. Finally, the orange bars represent the actual deficit numbers during President Clinton’s last year in office (fiscal 2001) and President Bush’s two terms.
Here are a few interesting things about this data:
First, while President Obama is fond of promoting what he calls a "new ethic of responsibility"—in fact he named his first budget, for fiscal 2010, "A New Era of Responsibility"—that is a misrepresentation of his actual budget plan. For each of Obama’s years in office, the deficit is projected to be larger than any year during Bush’s terms.
For each of Obama’s years in office, the deficit is projected to be larger than any year during Bush’s terms.
Second, Obama is right to note that he inherited a large deficit in fiscal 2009. But as we can see here, he is responsible for growing the deficit beyond expectations in fiscal 2009 and thereafter. In fact, in its January 2009 projections, the CBO built in most of the Bush-era policy spending, including the TARP bailout (which President Obama voted for as a senator) and the takeovers of Fannie Mae and Freddie Mac. In spite of his rhetoric, President Obama bears most of the responsibility for the red part of the bar in fiscal 2009, which includes, among other things, some auto bailouts and $31 billion of additional funding for the omnibus bill, the share of the stimulus funding spent in that fiscal year.
Third, Obama’s deficits are frightening but they promise to get worse. Each month that goes by the president adds spending to the deficit. The August 2009 projections for instance, do not include any of the president’s healthcare reform spending and they assume that the “temporary” stimulus spending will not be prolonged past fiscal 2011. Finally, they also assume that the economy will recover soon and that it will grow enough to generate increasing tax revenue, in spite of the president’s plan to impose new taxes and regulations on the private sector. In other words, the deficit will likely continue to deteriorate beyond the current projections.
The president is right. A new era has started. It’s an era of even bigger government.
Veronique de Rugy is senior research fellow at the Mercatus Center.
FURTHER READING: De Rugy also wrote “Is This What Deregulation Looks Like?” on how it is hard to argue that deregulation of the financial services industry was rampant in Washington when the spending on finance and banking regulatory agencies kept growing so fast.
Image by Darren Wamboldt/Bergman Group.