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Obama's budget problem, and ours

budgethistorical.jgp.JPG

The graph above -- click on it for a larger version -- tracks federal spending, revenues and deficits/surpluses all the way back to 1980. What you'll see is that the budgets for 2008, 2009, 2010, 2011 and 2012 look pretty different than the rest of the graph. Revenues drops, spending rises, and deficits, as you'd expect, skyrocket. But the expected deficit moving into 2013 and beyond looks pretty much like the deficits across the rest of the graph. So too do the predictions for revenues and spending. That's the thing about extraordinary times. By definition, they end. Normalcy returns.

We talk about the budget as the president's budget, and that makes sense, as the president is the one proposing it. But this is also the country's budget. It reflects not just what the president is proposing, but what's actually happening, and what's been happening. It reflects the creation of Medicare (Lyndon Johnson) and Medicare Part D (George W. Bush), Social Security (FDR) and lower marginal tax rates (Ronald Reagan). It reflects economic growth, which can't be traced to any one president, and financial crises, which are similarly diffuse.

And that tends to make presidents look both better and worse than they actually are. The giant deficits that greeted Obama were not really his fault. The bottom fell out of the tax base. Medicaid and unemployment insurance both became much bigger because so many people needed their help. That might have been his problem, but it was not his fault.

And the same goes for the return to normalcy. The spending freeze and a handful of other policies might shave the deficit from about 5 percent of GDP to 4 percent of GDP. But what's bringing it down from 10 percent of GDP is the expected economic recovery. The Obama administration deserves some of the credit for that recovery, but not all of it, and many of the critical policies (like TARP) were passed before they came into office.

Commentary on this budget will focus on Obama and "his" deficits, but the reality is that the vast majority of this budget is ours, and the story it tells is only about Obama on the margins.

By Ezra Klein  |  February 1, 2010; 11:35 AM ET
Categories:  Budget  
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Comments

Gawd, look at that distopian hellscape of the late 90s! Good thing no one is proposing returning to that horror.

Posted by: AZProgressive | February 1, 2010 11:44 AM | Report abuse

yeah, but if Bush had included his wars in his budgets, a large part of that huge Obama spike would have come earlier. That's *the reason* Bush didn't include his wars in his budgets. Obama's an adult, and is acting like one.

Posted by: andrewlong | February 1, 2010 11:47 AM | Report abuse

the president should (but won't) get well deserved credit for at least being honest where Bush wasn't with budgets but I can't see how anyone can expect a defecit of -5% of GDP when all we're hearing about is the interest on the debt by that time as well as the true fact that healthcare costs will skyrocket over the next decade. I'd love to know how he does his math.

If nothing else this is the absolute best case scenario and while I'd love to be hopeful its difficult to see from here.

Posted by: visionbrkr | February 1, 2010 11:49 AM | Report abuse

"Commentary on this budget will focus on Obama and "his" deficits,"
" this budget is ours, and the story it tells is only about Obama on the margins."

no kidding.i thought that every cataclysm on the geologic time scale is now on his watch.
can we say with certainty that he had nothing to do with the first ice age?

Posted by: jkaren | February 1, 2010 12:04 PM | Report abuse

So the big deficits are happening now, but we'll assume they're going away later.

Posted by: tomtildrum | February 1, 2010 1:11 PM | Report abuse

Thank you Ezra - very clear discussion of the budget.

A question, can you boil this all down to a bumpersticker or catchy slogan so the right can comprehend it? It's amazing, in their world, our deficits all began on 1/20/2009.

Posted by: NotFooledTX | February 1, 2010 2:29 PM | Report abuse

andrewlong must not know what he is talking about. No government can hide their outlays and revenues by just "not including them in your budget." They are what they are and the chart above reflects that. I fear you don't know anything about public sector budgeting.

Bush didn't include war spending in his budget proposal, that is true, but the graph reflects actuals up until 2010, where it reflects estimates.

Again, I wish you wouldn't say something you don't understand. It misleads other people.

Posted by: lancediverson | February 1, 2010 2:34 PM | Report abuse

Lancediverson ... you bring up a good point. However, this graphic has the title of "The Budget in Perspective". I guess Ezra is the only one who can clear up this point. Take it away Ezra!

Posted by: dominik_12 | February 1, 2010 2:47 PM | Report abuse

I think lancediverson is wrong here, the graph is of the US federal BUDGET deficit. Not the federal deficit. Just look at 2009, I know that the federal deficit was more then 5% of GDP in 2009, but I can believe that the budget deficit was lower then that (as it is in the graph), since TARP and the stimulus wouldn't be included.

Government can and does hide the extent of the deficit in any given year; it's called inter-governmental borrowing. So, when there is money left over in social security every year (as has been the case since the 60s), you just take the 1/2 trillion and claim that the budget is balanced. A big part of the reason that the deficit is going to explode in the next 10 years, is baby-boomer retirement and social security approaching insolvency; suddenly we have to pay all that money back.

Posted by: liberty_equality_solidarity | February 1, 2010 3:13 PM | Report abuse

Has anybody investigated that this could have been Bill Clinton's Revenge on Barrack Obama, payback during the Campaign? To egged-on the Democratic Party, to pass ObamaCare even to bribe constituents to get it passed, when the Public is entirely against it.

The failure of ObamaCare will miniscule the Bill Clinton loss of Hillary Care (Love for Hillary) compared to what's going to happen to Democratic Party during Obama's Administration. What happened during the closed door meeting with Bill Clinton? Talk to the other Democrats in the room. Does Obama realized it too that is why he does not want to "triangulate."?

Posted by: radarusaf | February 1, 2010 3:20 PM | Report abuse

Ezra -
So you're saying everything is everyone's fault, so, in effect, nothing is anyone's fault...and no one can control or manage anything? Why do we have a "leader" like Obama then? Where I come from (obviously not DC), a leader is supposed to lead, to create positive change, to move negative to positive, and positive to more positive. Obama did effcet change - he drove the unemployment rate up >35% in one year (7.5% to over 10%), WHILE spending well multiples of what Bush did. I hate to say, with Liberal Progressives like you supporting him, with this logic he has no reason to ever improve anything...after all, it's not his fault.

Posted by: jdarcy_1999 | February 1, 2010 4:32 PM | Report abuse

Chart comparing John Edwards to Peter Orszag
Edwards Orszag
# of children 5 3
# of them
lived with
and raised 4 0
# of women traded
in for pret-
tier ones 0 2

Posted by: truck1 | February 1, 2010 6:47 PM | Report abuse

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