House Minority Leader Nancy Pelosi had some interesting things to say regarding the federal debt and deficit and the Obama and Bush records Friday, painting the sort of story one can only create by referencing just a handful of the relevant facts.
According to Pelosi, the $9 trillion added to the federal debt during Obama’s presidency is actually Bush’s fault and Obama ought to be praised that it isn’t higher.
“When President Obama stood on the steps on the Capitol eight years from next week, the [budget] deficit was $1.4 trillion — one year deficit,” [Pelosi] said. “It’s reduced by 70 percent in his administration. Much of the increase in the national debt that has occurred from this time still springs from two unpaid-for wars, cost that we owe our veterans following that, giveaways that they gave to the pharmaceutical industry, and the high-end tax cuts that have carried forward without any job production. Absent the work of President Obama, this national debt would be even higher.”
Pelosi noted the work done by former President Bill Clinton to balance the budget or leave a surplus.
Before I get into the many problems with this narrative, I should note that, as a fiscal conservative, I’m not overly impressed with President Bush’s record in this area. That being said, let’s be fair about that record.
I will consider four reasons that Pelosi’s thesis is dubious.
1. First, the premise is misleading. The federal deficit dropped about 70 percent from fiscal year 2009 (Obama’s first year in office) to fiscal year 2016, from around $1.4 trillion to around $440 billion. Rachel Maddow is one of a number of liberals to unquestioningly parrot this single fact.
But this fact fails to include much of reality. The left-leaning Politifact partially corrects the record.
First, it’s important to note that the deficit swelled in 2009 partly because of the massive stimulus program to jumpstart the cratering economy. This temporarily elevated level set the stage for the unusually precipitous decline.
“This is not to say that that the large deficit was his fault, but if one used the 2008 deficit as a frame of reference, the comparison would be quite different,” Alan Auerbach, University of California Berkeley professor of economics and law, told us a year ago.
Also, some economists we’ve consulted pointed out that the 2009 fiscal year was Obama’s first year in office, and so not necessarily a good starting point since he had little control over the spending in that year.
Politifact neglects to inform readers of two points. First, the 2009 fiscal year budget now includes a stimulus passed by President Obama. So while Obama did not have any sway over the original budget that year, his nearly $800 billion stimulus package is a major part of the deficit that year. Admittedly, a Republican would have passed a stimulus package as well, though the spending likely would have been lower, but essentially Pelosi is crediting Obama with reducing is abnormally high budget he is in large part responsible for.
Second, though Polifact notes that a better picture of the Obama deficit record following the Bush years might be the 2008 deficit, the article does not mention what it was that year. While in 2009, the fiscal deficit was 9.8 percent of GDP, in 2008, it was 3.1 percent — or about where it stands today. Comparing the fiscal year 2008 with fiscal year 2016 is much less misleading that 2009 to 2016, and it shows a deficit reduction of almost nothing.
2. Pelosi blames Bush, in part, for wars that were unpaid for — wars Obama has never really ended — and the Bush tax cuts — some of which have expired, while some were made permanent. The tax cuts were passed originally in order to kick start an economy on the way back from a recession at the very beginning of the Bush presidency.
Since President Bush had not affected policy by the point the recession began, this was probably a necessary adjustment following the economy under President Clinton. Pelosi, of course, praises the Clinton record, while bashing Bush’s, but she fails to take into account the differences in revenue the two presidents had to work with, which leads to my third point.
3. While President Bush dealt with a recession right off the bat that he wasn’t responsible for — much like President Obama — President Clinton enjoyed the “Dot Com Bubble” which pushed economic growth — and by extension, tax revenue — through the roof. Even the liberal Center for Economic and Policy Research admits that this bubble is most responsible for the Clinton-era balanced budget. Essentially, Clinton got lucky in holding office at a time when huge technological advancements were growing the economy.
The Center for Economic and Policy Research even admits, “The deficit did fall sharply under President Bush as the economy recovered from the 2001 recession, until the collapse of the housing bubble brought on the recession in 2008.” They do however, mention that much of this was due to the housing bubble.
4. Perhaps the biggest reason not to give Obama praise for deficit reduction: he has never signed a budget with a Republican Congress, meaning, essentially, that spending was in large part not a reflection of his doing or desires. To credit him with the reduction is to assume he would not have spent significantly more if he had his way. That simply does not stand up to reality.
First, no one seriously believes that the reason Congress and Obama never came to a reasonable compromise on the budget was due to his wanting to spend less than the Republican Congress wanted. Second, according to The New York Times, even the most recent budget he put forward would have increased the deficit almost $200 billion on top of where it already stands. There is solid evidence that spending, the deficit and the debt would be higher without an opposition.
Essentially, the story is a whole lot more complicated than Nancy Pelosi would like to admit. Obama did reduce the deficit, which was one he helped to create. He can’t be given credit for fully ending Bush policies that Pelosi claims worsened the deficit. And Bush’s record on the deficit really wasn’t that bad even compared to Clinton. Finally, Obama would have spent more had he had his way.
Naturally, I don’t expect anything but misleading rhetoric from Pelosi, but someone needs to fact check her.