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Your Deficit in Charts

David Leonhardt's column deconstructing the projected federal deficit between 2009 and 2012 is better than a must-read. It's a must-bookmark. The question is fairly simple: In 2001, the Congressional Budget Office expected that the federal government would run an annual surplus of $800 billion or so in 2009, 2010, 2011 and 2012. Now it projects more than a trillion dollars in deficits. What happened? What accounts for the change?

The New York Times crunched the numbers. The answers, in descending order, are the downturn in the economy (37 percent of the change), the policies passed by George W. Bush (33 percent), the extension of policies passed by George W. Bush (20 percent), the stimulus bill (7 percent), and the rest of Barack Obama's agenda (3 percent). Matthew Yglesias offers this in graph form:

deficit.jpg

Some might be surprised that Obama's prospective agenda doesn't account for more on that graph. After all, health-care reform alone is expected to cost more than a hundred billion dollars a year. The only policies that increase the deficit, however, are those paid for by borrowed dollars. And the Obama administration is insisting on funding its policy proposals with existing dollars. It's a bit of a novel approach after the past eight years of debtor government -- so novel, in fact, that it's been effectively ignored. People are so used to assuming that government spending is deficit spending that health reform is being attacked for both being too expensive in a time of deficits even as the Obama administration gets tagged for all manner of proposals to raise revenue.

But this is why there's a big fight over capping the employer tax exclusion. This is why the Obama administration proposed capping itemized deductions. It would be easier to leave the tax code alone. But the administration needs the revenue to pay for health reform. That makes achieving health reform harder, but it makes the deficit much better.

By Ezra Klein  |  June 10, 2009; 6:00 PM ET
Categories:  Budget , Charts and Graphs  
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Comments

I find it absolutely amazing that the Republicans plan to win back their majority by simply lying about Obama's responsibility for the deficit.

You can honestly ding Obama for not doing enough to decrease Bush's deficit. But, I'm sorry, you can't suggest he or any of his initiatives are responsible for it.

Republicans' idea of health reform is to pay for a drug benefit with the deficit. Obama is doing the terrifying job of actually taking on groups to lower the cost, and of paying for it.

I'm sorry, it's the Republicans who ran up the insane balance on this credit card. You can slam Obama for not paying it off fast enough he's not the one who spent like a drunken sailor and put it on Daddy's card. That's Reagan, the elder Bush and especially the current Bush. Daddy's home and he's rightly pissed he has to pay this off.

Posted by: theorajones1 | June 10, 2009 6:36 PM | Report abuse

I agree that Bush was fiscally irresponsible. Especially with Medicare Part D and the Iraq War.

But if you expect $800 billion in surplus, what politician isn't going to cut taxes? Of course, the argument is that we should have wild surpluses in good times to fund wilder deficits in bad times, but that seems academic. What do you think Ezra?

Posted by: rizzuhjj | June 10, 2009 6:50 PM | Report abuse

I think we can all agree Bush blew the surplus. However, the problem is we now have to pay for it. By increasing medical costs to the taxpayer, Obama is making it worse. We need the taxes increases to pay for all of the stuff we already bought.

It's like getting married to someone with a huge credit card debt. Just because you get a little raise doesn't mean you should spend all of that money on a big vacation, you need to pay down the debt first. Money is fungible. Obama is increasing spending. End of story.

Posted by: staticvars | June 10, 2009 9:51 PM | Report abuse

It is beyond belief to suggest that the trillions already committed by the President accounts for only 3% of the deficit. Plus, the projected shortfall grows every time it's been revised. Once the President campaigned that he was going to do so many things and was going to give almost everyone a tax cut at the same time, the entire shortfall incurred from day one is his.

Posted by: ted22 | June 10, 2009 10:57 PM | Report abuse

In the same NYT article another expert from Univ. Of California was quoted – “ Bush was irresponsible and it is bad that is blamed on Obama. But it is also bad that Obama is doing ‘nothing’ to address this deficit.”

You forgot that.

We all know the sincerity of Obama in addressing Health Care Reform and the political capital he is investing in that. People wonder could he have invested the same political capital in reducing the deficit first, fixing Bush’s mess first while minimal stuff in Health Care so as to deal it a year later from a position of strength? Keep in mind that President’s time and focus is a ‘zero sum game’; as like how Iraq issue was pursued by Bush at the exclusion of everything else.

Priorities seem to be problematic here. It is not good for Obama to say that ‘I am only contributing to 3% of the deficit’. You don’t get elected to be a President to ‘choose battles you want to wage’. Really, what is he doing to solve the Bush’s deficit mess? It seems nothing. How absurd to pat yourself for the minimal addition of deficit when your real job is to reduce it in the first place. Republicans are not going to say that because of their complicity in the Bush mess. And for Americans pointing yet another ‘contradiction’ of Republicans hardly reduces their daily suffering.

Obama can argue strenuously that he is allowing this deficit to ‘fester’ for a while so as the growth comes back and then our increased ‘tax revenues’ would address the deficit. Who thinks Obama has credibility here? Tax receipts very well will increase, but what about additional expenses (health care for example) which are racked up by then?

If ‘propelling heads’ in White House are not for solving the deficit mess, then what are they for? They chase the ball which Obama throws. He has to throw it in the right direction. So far as deficits goes, he is ignoring that direction.

No wonder today’s 10 year bond auction did not go well and yield had to be increased. With the faulty stimulus package neither we will get growth nor the increasing deficit will give us any reprieve from inflation. Result – low growth and hard to contain inflation. Is it called the dreaded ‘stagflation’? And then we will see how ‘projected increase in tax receipts’ fall on its face.

Posted by: umesh409 | June 11, 2009 1:57 AM | Report abuse

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