“Over the last four years, the deficit has gone up, but 90 percent of that is as a consequence of two wars that weren’t paid for, as a consequence of tax cuts that weren’t paid for, a prescription drug plan that was not paid for, and then the worst economic crisis since the Great Depression. Now we took some emergency actions, but that accounts for about 10 percent of this increase in the deficit and we have actually seen the federal government grow at a slower pace than at any time since Dwight Eisenhower."
— President Obama, interview on CBS’s “60 Minutes,” recorded on Sept. 12, 2012, and aired on Sept. 23
There are a lot of numbers and assertions in these statements by the president. We will primarily focus on the first statement, since it raises interesting questions of presidential responsibility.
Let’s examine more closely Obama’s two key assertions during 60 Minutes — that only 10 percent of the current deficit comes from his policies and that the federal government has grown under his watch at a “a slower pace than at any time since Dwight Eisenhower.” Are those claims correct?
In support of the first statement, the Obama campaign pointed us to a chart made by the Treasury Department.
This chart looks backward, to the reasons why the projected $5.6 trillion surplus from 2001 disappeared. It is based on these CBO data, which the Fact Checker column first brought to public view in early 2011. So we are quite familiar with it. This is how we broke down the numbers then in explaining the reasons for the disappearance of the surplus and the rise of monster deficits:
Increased spending (discretionary and mandatory): $4.3 trillion (36.5 percent)
Incorrect CBO estimates (economic/technical reasons): $3.3 trillion (28 percent)
Tax cuts: $2.8 trillion (24 percent)
Higher interest costs: $1.4 trillion (12 percent)
Obama, in his remarks, doesn’t really say he is talking about the disappearance of the surplus. In fact, he prefaces his statement with a misleading phrase — “over the last four years” — which suggests he is only talking about the period in which he was president.
Because of compounding, however, the Treasury Department chart overemphasizes the impact of the events that happened early in the process (such as the Bush tax cuts) and minimizes more recent events (such as Obama’s policies.)
Under this theory, one could go back to the Lyndon Johnson administration and blame him for a huge chunk of the deficit, since he signed Medicare and Medicaid into law. In other words, every “old” policy will almost by definition appear to contribute much more to current deficits than recent policies.
Using the same CBO data, former Bush administration official Charles Blahous portrayed it another way, which gives an entirely different picture. This chart, drawn from a much longer study by Blahous, tries to place the tax cuts into context. (He also does not break down the spending into categories, such as the wars.)
The 2009 fiscal year is especially hard because that budget year is so much of an amalgam of Bush and Obama policies; we essentially split the cost of the Troubled Asset Relief Program between the two of them. Since this is not intended to be exact, but illustrative, we have rounded numbers and percentages:
Obama claims that “we have actually seen the federal government grow at a slower pace than at any time since Dwight Eisenhower.” We regret to say that the president is repeating a widely debunked column that appeared on MarketWatch earlier this year. We devoted three columns to the column’s faulty logic, and FactCheck.org and the Associated Press also said it was bunk. (PolitiFact said it was “half true.”)
We are not trying to make excuses for the fiscal excesses of the Bush administration — and Congress — in the last decade. But at some point, a president has to take ownership of his own actions.
Obama pushed for spending increases and tax cuts that also have contributed in important ways to the nation’s fiscal deterioration. He certainly could argue that these were necessary and important steps to take, but he can’t blithely suggest that 90 percent of the current deficit “is as a consequence” of his predecessor’s policies — and not his own.
As for the citing of the discredited MarketWatch column, we have repeatedly urged the administration to rely on estimates from official government agencies, such as the White House budget office. It is astonishing to see the president repeat this faulty claim once again, as if it were an established fact.
Read More: http://www.washingtonpost.com/blogs/fact-checker/post/obamas-claim-that-90-percent-of-the-current-deficit-is-due-to-bush-policies/2012/09/26/e9bfbcd0-077e-11e2-a10c-fa5a255a9258_blog.html