Ezra Klein recently posted a New York Times graphic supporting his view that the deficit is primarily the fault of former President Bush and his predecessors, rather than President Obama. Interestingly, he makes no attempt to claim that Obama’s policies have reduced the deficit, just that Obama’s deficit increases were smaller than Bush’s.
Leave aside for a moment the fact that Bush’s entire eight-year record is being compared to policies enacted during Obama’s first two and a half years. The fundamental flaw in the New York Times graphic is that it assumes that a president’s fiscal policy is confined to “new” policies enacted under his watch. Every year, the president proposes a budget that contains a mix of new policies and old policies. The result is a comprehensive vision of what federal tax and spending policy ought to be. A president who simply continues the fiscal policy he inherits must bear his share of responsibility for its consequences.
A prime example of this is the “Bush tax cuts,” which the New York Times graphic charges solely to President Bush, conveniently ignoring the fact that President Obama supports making most of the cuts permanent and signed into law a two-year extension of all of them. President Bush also signed a new Medicare drug benefit into law. But President Obama didn’t repeal this new spending, he expanded it.
Below is a graphic that focuses on the results of fiscal policy, not simply on adjustments made on the margins of fiscal policy. If anything, the analysis is overly generous to President Obama because: (1) it assigns full responsibility for Fiscal Year 2009 to President Bush, despite the enactment by Obama of the stimulus, higher domestic appropriations and an expansion of TARP spending during that year; and (2) it gives Obama credit for the policies he intends to enact for the rest of his presidency, since we cannot judge his actual future record. The graphic compares the records of these two presidents based on the deficits, revenues and spending incurred by the federal government on their watch, expressed as a percentage of GDP.
The results show one surprise — thanks in part to the recession and tax stimulus measures which have temporarily lowered federal revenues, Bush and Obama tax policies yield virtually the same amount of revenues on average. But the real story is the comparison of spending. Obama’s policies result in historically high spending as a share of the economy, which in turn results in historically high deficits.
To President Obama’s credit, he has begun to embrace the need for a change in direction, though he was dragged there kicking and screaming by Republicans and continues to insist that significant spending cuts be linked to higher taxes. In contrast, Bush’s initiatives were opposed at every turn by congressional Democrats, who insisted on even higher spending.
Steve McMillin is a partner at Hamilton Place Strategies and the former deputy director of the Office of Management and Budget.