Tweet
"Facepalm" by Santiago Garcia Pimentel on flickr
This fact should have been highlighted in the news reporting on President Obama’s speech last night. President Obama asserted:
“For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug
program were simply added to our nation’s credit card.
As a result, the deficit was on track to top $1 trillion the year I took office.”
This is seriously mistaken.
The Congressional Budget Office’s projections from January of 2008, the last ones made before it recognized the housing bubble and the implications of its collapse, showed a deficit of just $198 billion for 2009, the year President Obama took office. In other words, the deficit was absolutely not “on track to top $1 trillion.”
This is what is known as a “gaffe” of enormous proportions. It indicates that President Obama does not have the most basic understanding of the nature of the budget problems the country faces. He apparently believes that there was a huge deficit on an ongoing basis as a result of the policies in place prior to the downturn. In fact, the deficits were relatively modest. The huge deficits came about entirely as a result of the economic downturn brought about by the collapse of the housing bubble. This misunderstanding of the origins of the budget deficit could explain President Obama’s willingness to make large cuts to core social welfare programs, like Social Security, Medicare, and Medicaid.
It is incredible that no major news outlet noted this enormous gaffe on the fundamentals of the most important issue facing the country today.
69 Comments
this is just great! We have a President that is not only bought by the Wall st but it looks he is dumb too! Sounds like another President we know! And the media does not report this fact? Is this is same media that couldn’t wait to us into Iraq? And we wonder why the country is going down the tubes!
“This is what is known as a “gaffe” of enormous proportions. It indicates that President Obama does not have the most basic understanding of the nature of the budget problems the country faces”
Sorry, I don’t buy it; I think Obama assumes that the bulk of the American public has no understanding of the facts and is cashing in on their apathy and ignorance to shave back the big 3! Good bye social safety net; hello Wall Street privatizations!
“It is incredible that no major news outlet noted this enormous gaffe on the fundamentals of the most important issue facing the country today.”
The above statement assumes that the Corporate Media (the new “Iron Curtain”) is not on the same page as Obama and Wall Street.
Dean, this is probably enormously naive on my part and I’m sure my face is going to be flaming for asking, but is there no way that you and Paul Krugman and James Galbraith…..you add the names here….could ask for a meeting with Obama?
That looks ridiculous in print but I’m asking anyway. An open letter in major papers, if not a meeting, but someone needs to sit down with that man, and fast.
President Bamboozle and the corporate media have their jobs to do. Manufacture a crisis and then capitalize on it for the benefit of the plutocracy.
“This is what is known as a ‘gaffe’ of enormous proportions. It indicates that President Obama does not have the most basic understanding of the nature of the budget problems the country faces.”
Obama is getting economic advice from his political advisors.
it is the kind of gaff the DISHONEST media likes as it overstate the phony problem….I bet no one catches the teabagger Walsh’s gaff of crediting regan/omics for the prosperity of the 80s. It was the babyboomers becoming married fulltime working adults with higher productivity, pay, consumption, and savings than in the 70s. Demographics create demand, demand creates jobs, and jobs create prosperity and good tax receipts for gov funding-unless it is looted by the elite (as was done). Walsh sounds like a rooster taking credit for the sun rising but so does Clinton when he does the same
It doesn’t matter if the news organizations notice gaffes big or little. It is too much work to follow through. They prefer some space filling crap when Biden screws up, or Sarah.
Perhaps he is looking at a second set of books that the Syndicate keeps, the ones that actually keep account of what’s what and that are not shared with the public… or OMB.
This is no gaffe Mr. Baker, it’s intentional and outright lying by Obama and the MOTU’s because they know that:
1) Most of the ‘we the people’ haven’t a clue as to the details of any of this, much less the cause or depth of the deficit. And most have NO clue as to COLO, Chained CPI, or Super Committee and what those mean to each individual.
2) Those of us who DO know what it is all about alfie, are easily marginalized by the utter and complete ownership of our political process, the media, judiciary, executive, congress, our politicians and most every facet of our daily lives . . . owned and operated by the corporate fascist oligarchy which operates this nation top to bottom with an iron fist.
No gaffe, out and out lying and they know they can get away with it pain and simple . . .
Not his political advisors, his overlords of the Corporate and Wall St. World.
And Obama is fully complicit!
Do NOT let him off the hook by suggesting his actions are based on BAD ADVICE.
That’s ridiculous, and misleading.
Agreed, Larue.
And I like your last three words …”pain and simple” … for they sum up reality for “the people” and for the truth.
DW
Vector 56 wrote:
“Sorry, I don’t buy it; I think Obama assumes that the bulk of the American public has no understanding of the facts and is cashing in on their apathy and ignorance to shave back the big 3! Good bye social safety net; hello Wall Street privatizations!”
~~~~~~~~~~~~~~~~~~~~~~~~~~
Good cop, bad cop. Same masters.
You have to add in two huge additions to the deficit that occurred in 2008 and prior to January 20, 2009 — TARP = $224BILLION and the 2008 Bush Stimulus added $773BILLION.
President Obama was correct even if he didn’t itemize.
dean baker -
i don’t doubt your critique, but i cannot quite put it in context.
i sense you’ve left out a connection to some larger set of “tax facts”, or budget facts.
perhaps you could expand your explanation to integrate the very modest 2009 budget deficit figure with the unfunded costs of the iraqi and afghan wars, unfunded medicare part d, and bush tax cuts.
you are familiar with this now-famous graph:
http://www.dailykos.com/story/2011/04/07/964474/-Franken-introduces-Pay-for-War-resolution
tx
Yes, Yes, and Yes.
Nail –>head
general note -
having a great deal of difficulty getting FDL pages to load this morning (with a cleared cache thankyouverymuch)
I usually don’t use Safari – but it is the only way to get pages to load under 3 minutes this am
That should be TARP = $224BILLION AND Bush Stimulus = AN ADDITIONAL $773BILLION, totaling $997BILLION added after the January 2008 CBO projections and before President Obama took office.
Obama is faithfully carrying out his scripted instructions from Wall Street and the banking industry.
But, stupid he is not.
A capitalistic criminal he is.
Although most here think this was not a gaffe, I think it exposes just how clueless Obama is on the economy. Since his basic understanding derives directly from supply-side economic theory he becomes a willing and convenient tool for the plutocracy. His economic managers make an argument to him that he thinks quite sensible, that tax cuts drive the economic engine. And that is why his stimulus plan included such a huge input of tax cuts rather than direct spending on jobs programs and why he plotted to renew the Bush tax cuts in spite of his campaign posture. He understands the economy about as imperfectly as he understands constitutional law. Thus, I think he is a dupe who has such a massive ego that he will ride his failed policies all the way to the bottom and take us all along. I think, as Bob Dylan sang, “his mind has been mismanaged with great skill.” He thinks he’s right and he won’t listen to alternatives. Whether he’s a poorly educated dupe (Harvard ain’t all that) or a sinister trojan horse of the plutocracy, though, his continued “leadership” is disastrous for us all (except maybe those that are shorting bonds).
Let’s not forget that the wars, costing about $200 billion/year, were done by supplemental and off the books when Bush was in office and were not in the budget deficit numbers.
the CBO doesn’t understand deficits either. remember their impossible forecasts for surpluses?
does ANYONE here understand deficits?
Obama was using semantics and you missed the fine arts of his political poetry. You assumed Obama was saying flat out that the deficit was one trillion the year he took office, but he did not. He said that year things were set in motion that would spend a trillion, using technically not untrue jargon. Did the policies that year eventually cost over a trillion? If so, they were in fact “on track”, it just took longer to quantify.
Obama obviously wants to make it sound like it happened as much as possible under Bush’s tenure, so he got crafty with wordplay. How creative he is!
Parsing political speech is not always easy, but just speaking in layman’s terms – we know the accounting on our wars was never designed to show debt promptly and transparently. The bill for Vietnam didn’t come due till Carter was in office, right?
We may not know the fiscal effect of tax cuts for the rich begun in 2001 for many more years. I would say Obama was using messaging designed to counter the right wing propaganda blaming all this spending on him. After all, the deficit and ceiling was never a big news story under Bush, it was all about terror.
Beyond this, you used projected figures between 2008 and 2009 but there was a massive economic collapse between those dates, major bank bailouts, secret loans made by the treasury and much more shenanigans.
Obama is privy to a lot of accounting that could show him how Bush left several time-release spending bombs behind, with soldier PSTD just one example of how deferred costs aren’t quantified right away.
Pain was a typo! SHoulda been plain, but hey, yer right it woiks!
LOL
Thanks, too . . . *G*
“It is incredible that no major news outlet noted this enormous gaffe on the fundamentals of the most important issue facing the country today.”
Why is it incredible that the DC Village Idiots blew another opportunity to report and comment factually? It’s what they get paid the big bucks (not) to do.
Yeah, it was messed up but as of about 9:15am Left Cost Time it’s runnin MUCH better . . . thot I was the only one with the problem! lol
All the same, Larue, it’s enormously important to get the ‘gaffe’ or ‘deliberate mislead’ straightened out – and for some people the way to best do that (because they haven’t extracted themselves from persuasive style) is for economists to simply counterargue with clarity, which is something Dean Baker can do and you and I can’t – well, at least I can’t.
I’ve called the statement about the deficit a ‘faulty premise’. Couldn’t do better than that but I knew that it made everything else that was said bogus. So, thank you, Mr. Baker – please keep educating us. I think we are at least putting a tiny spanner in the works and knowledge is power.
One the other side of the country, in Pittsburgh, things is still quite … odd, format wacky and loading very, very s….l….o….w
D…………W
I believe you are conflating deficit and CBO projections. An enormous gaffe would be, for example, saying that the Iraq war would pay for itself, or, in fact, hiding or obscuring the size of the true deficit, which is what is usually done, or saying that social security is broken.
I’ve been doing what the statue in the picture is doing ….for days now. sometimes with two hand, sometimes with one. OY!
Having real problems getting the site to load. Are the fix-it people around?
Don’t agree with Dean Baker (small deficit pre-Obama). True deficit
was masked by phony housing bubble. Objective accounting
would have shown a much larger deficit. Equivalent analogy-
was Madoff only in the “red” the last year of his operation?
Incidentally,I am no longer an Obama supporter (so,I’m not
seeking to defend his actions-any of them!)
Germany was destroyed by a “silver tongued orator” and the U.S. is in the process of being destroyed by it’s own silver tongued snake oil salesman. Many co-conspirators in the corporate media.
True, Larue.
A “gaffe”, or a lie?
Dean, good thread.
Sorry to ask, but could you give us your assessment of the housing bubble, and what caused it?
I know it’s been talked about before, and I’m not asking for a term paper; just the short version.
Thanks. :o)
‘Sup hoss!
Had some problems with the pages loading . . . thot it was fixed, recurred so I went to get some breakfast. Now all better it seems at 9:45am here left side . . .
I did a run around some other websites, main stream one’s and ‘sposed progy one’s . . . very few talking about obama’s giveaways to SS, MC, MedAid OR the Supreme Committee of 12 that both R’s AND Dem’s are supporting.
Just yer usual bs Dims good R’s bad shit.
Disgusting but hey, this place FDL.MyFDL is on fire with the truth and details like no other site I know so far.
Sweet.
*G*
Nevertheless, Hannipocrisy, I for one am very grateful to Mr. Baker for the following fact, which needs to be underlined:
“The huge deficits came about entirely as a result of the economic downturn brought about by the collapse of the housing bubble.”
That’s a subject we have tried to understand with the help of FDL here, and we know it is still ungoing, that destruction of social infrastructure which one can immediately see puts pressure on social programs as more of us need them. And it is a problem which has its origins completely in the financial sector which traded internationally in phony derivatives and that’s how our economy is worthy of devaluation, rating agencies be damned! Deficit ceiling be damned!
We need to be talking about the things which really are causing a crisis instead of pretend ones. How can you fix anything otherwise? And if we can get at the actual causes, surely they will be more understandable than all the smoke and mirrors we are currently getting.
I know, I sound exceedingly foggy, but I don’t think that’s my fault (well, not entirely.) Thank you FDL for all you do to promote reasoned discourse!
At the very least Obama is scapegoating Bush policies for running up the deficit and debt before he took office. In addition he’s adding to the phony crisis narrative, designed to hoodwink the electorate into believing that cuts are necessary. All of which will benefit Wall Street and corporate interests exclusively.
FDL has has numerous people and diaries and threads on both main page and at MyFDL that has made similar points.
It’s common knowledge amongst us proggies.
Nothing new here, choir n all that as I see it.
Mr. Baker is wonderful to read, but this one, been there done that.
Yeah, still off and on here now, again at 10am.
How do you square the above article with this:
http://www.bloomberg.com/news/2011-07-26/republican-leaders-voted-for-drivers-of-u-s-debt-they-now-blame-on-obama.html
I think Obama understands plenty.
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure … America has a debt problem and a failure of leadership. Americans deserve better.”
Can you elaborate on this:
“The huge deficits came about entirely as a result of the economic downturn brought about by the collapse of the housing bubble.”
You of all people think this is incredible? I hope you’re just being rhetorical.
The report you cited (which was created in 1998 and only lists projections forward from them) did not take into effect both the TARP and the Stimulus – both programs started by Bush.
Also, projections are only that…estimates based on what happens if nothing else happens.
That’s the only way you can get an estimate since you can’t predict the future.
It’s always been hard for me to understand that if you lower the amount of money the government takes in (tax cuts) and add to the amount of money you spend (TARP, Stimulus, two wars, poorly designed prescription drug plan) that you can end up with a fiscally strong nation with little debt….
I don’t think the President was lying.
He did add to those tax cuts in the lame duck session last year and hasn’t been able to do much to improve the economy with a political party that has made its single most important goal that he isn’t reelected next year. He also said that the fiscal mess we are in is the property of both parties, which is entirely true.
In my opinion it’s time both parties “put on their man pants” and solve it.
F
And add David Leonhardt so Obama can be disabused of the idea that “both parties caused this debt increase” and perhaps Obama could stop smearing the Democratic Party.
http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.html
Leonhardt, David (June 9, 2009). “NYT – Americas Sea of Red Ink Was Years in the Making
Indeed the agenda could be:
Republican Leaders Agree U.S. Default Would Be a “Financial Disaster”
Ronald Reagan Tripled the National Debt
George W. Bush Doubled the National Debt
Republicans Voted Seven Times to Raise Debt Ceiling for President Bush
Federal Taxes Are Now at a 60 Year Low
Bush Tax Cuts Didn’t Pay for Themselves or Spur “Job Creators”
Ryan Budget Delivers Another Tax Cut Windfall for Wealthy
Ryan Budget Will Require Raising Debt Ceiling – Repeatedly
Tax Cuts Drive the Next Decade of Debt
$3 Trillion Tab for Unfunded Wars Remains Unpaid
http://www.perrspectives.com/blog/archives/002197.htm
“It indicates that President Obama does not have the most basic understanding of the nature of the budget problems the country faces.”
Ok if I take a guess? What are JOBS?
Obama doesn’t understand the nature of the budget problems because he’s a self promoting, free marketeer, free trader who giggles and claps while Americans jump through flaming hoops for underpaid short term employment while entertaining the moneyed class with our petty concerns like where we will find some certainty in a country gone traitorous and mad.
I would like to avoid letting either Obama or the Republicans off of the hook on this one.
I don’t think there’s anything debatable about the Bloomberg analysis of Bush-era Republican spending — the interesting question is why they didn’t put common knowledge to ink earlier, when these facts have been in the public domain for years.
I do believe CBOs deficit 2008 deficit projection was an underestimate. Leaving aside the costs of the financial crisis, my recollection is that the Bush administration kept the costs of its wars off of those books by leaving them out of the annual spending requests.
That said, I think the article and discussion make a couple of very good points about Obama. These are that the President (a) does not conceive of the country’s economic crisis as demand driven and (b) conceives of government spending as part of the problem.
My “witness” on the first point is HAMP, a program which was clearly never meant to be more than a stand in for relief for underwater mortgage holders — shit, more than nine tenths of the funds devoted to it haven’t even been spent. Mortgage payment relief (through refinancing, cramdowns, or whatever) clearly bolsters demand by freeing householders to spend money on things other than debt service. Since it’s a long term, continuing solution, it would allow debtors to change their budgets and modify their spending upwards much more than any one-off like a tax cut ever will (by the way, does anyone know how much of Obama’s stimulus measures was spent on debt consolidation, which has no stimulative value whatsoever?) If Obama had been serious about a demand side solution, this is the kind of program he would have proposed, rather than mouth talking points about “deserving” and “undeserving” borrowers and shilling for a sham relief program. This one really sticks in my craw.
My “witness” for the second point is the whole “grand bargain” show of the last month or six weeks. At this point, there is absolutely no reason to believe that Mr. Obama really does not see cutting government spending, regardless of the pain or economic contraction it may cause, as a necessary part of the solution. I have yet to hear him talk about putting people back to work, raising revenues and growing our way out of an annual deficit that was/is largely caused by revenue losses and increased expenses brought upon the government by the unemployment that has come with this bubble induced recession.
Well, actually, there’s “winning the future.” Where, however, are the revenues for these investments in our country going to come from? The recent debate has made it clear that increasing the deficit and raising taxes are off the table. If it’s going to be PAYGO, that means existing programs will have to be cut more. Or, maybe, it’ll be like Ford’s ‘Whip Inflation Now’ (WIN:) all of the un- and underemployed can put in some of their forced free time volunteering to work on programs that’ll make the country a better place for the generations to come after to live in.
This begs the question of why, if the President is operating under the assumption that the Bush tax cuts and the wars are the root of the problem, why did he renew the tax cuts and continue the wars (even begging the Iraq government to keep us there for an unlimited time and starting a useless and unplanned conflict in Libya)?
And why then decide to cure the deficit by not touching either the tax cuts or the wars, and instead undermining the basic economic security of the American people.
Only under Clinton did all 5 groupings “lowest 20%, next 20%, next 20%, next 20%, highest 20%) grow in after tax after inflation standard of living (average income).
Demography does indeed affect economics – but children starting work/families can end up in economic messes – as under the Bush years.
“This misunderstanding of the origins of the budget deficit could explain President Obama’s willingness to make large cuts to core social welfare programs, like Social Security, Medicare, and Medicaid.”
Puhlease…. just how fucking stupid do you think Obama is? Really? You can play nice and give him an out by calling his Oligarchic favoring milddleclass/poor robbing actions as a “misunderstanding”, I think otherwise.
Just to give you a fig leaf, if he is a stupid as you claim he is, then do we really want such a dumb motherfucker who can’t negotiate worth a damm in the office as a Democrat? No. So, either way, the decision is the same. This corporatist cocksucker/dumbmotherfucker Obama needs to go. Period.
I’d rather have a crazy assclown in the office than Obama. A wolf at the door is far preferable than a Trojan Cancer eating you out from within.
Now, now, you are making too much sense!
Face Palm indeed.
Sir,
Of course you know that the 2008 deficit did not include the costs of both wars and the Medicare Part D program.
Obama is simply adding the real costs onto Bush’s fake budget.
Certainly.
Leaving aside TARP and the stimulus bill, which are direct additions to the government’s expenditures, the economic downturn exascebated the deficit in two other ways:
1. the unemployed don’t pay taxes, so government revenues fell;
2. when people become unemployed, the begin utilizing government services that they might not have otherwise drawn on (unemployment insurance, Medicare/Medicaid, Food Stamps, etc.) and thereby increase government’s costs.
Thus, rising unemployment both cut the federal government’s revenues and increased its expenses.
The same loss of revenues and increased expenditures also happened at the state level.
Missed “entirely:” without years of “deficits don’t matter” Republican rule, the depth of the national debt and the interest it costs to finance it wouldn’t figure in this whole cost cutting drama.
He’s lost my vote. And it ain’t coming back.
Actually judging by the report Baker has left, the 198 billion is after factoring in the 198 billion surplus in the SS trustfund.
If you don’t factor the surplus in SS which is meant to be used only for SS, the deficit stood nearly at 4oo billion
Was that high? By historical terms at least in absolute terms-yes! When Bush took office in 2001 it was a surplus and under Bush the deficit hit levels unprecedented in US history.
Dean’s point about the bad downturn being responsible for the 1 trillion deficit is accurate though since that downturn was achieved in the Bush years-the effects begun to show at the end of his term and into Obama’s- it doesn’t somehow make Bush less deserving of blame as the conservatives at the WSJ editorial page argue, et al.
To be sure this doesn’t mean that austerity is therefore legitimate just that what he said in the speech is not wrongheaded: we went from a surplus to a huge(at the time it was historic at least in absolute dollar terms) deficit. This was caused by the tax cuts and the wars.
“It is incredible that no major news outlet noted this enormous gaffe on the fundamentals of the most important issue facing the country today.”
Look, no surprise here folks.The media is there to do propaganda for the wealthy,so if they can hardly bat an eyebrow to do the correction,there job is done and so the nation corrals another peg on the pole to ignorance.
With all the defict hysteria has anyone seen MrBaker on any of the so called progressive TV shows,like MSNBC ? I will bet he has never been invited as they don’t want honesty on the Kabuki TV Progressive shows.
“The Congressional Budget Office’s projections from January of 2008, the last ones made before it recognized the housing bubble and the implications of its collapse, showed a deficit of just $198 billion for 2009, the year President Obama took office. In other words, the deficit was absolutely not “on track to top $1 trillion.””
This is simply wrong.
The CBO made a projection in September of 2008
http://www.cbo.gov/ftpdocs/97xx/doc9706/09-08-Update.pdf
The budget deficit for 2009 was $438 billion.
The CBO made a projection in January 2009 (which was before Obama had any Presidential influence on the budget)
http://www.cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf
The budget deficit projected by the CBO in January 2009 was $1.2 trillion.
It isn’t a gaffe because Dean Baker goofed up.
“The Congressional Budget Office’s projections from January of 2008, the last ones made before it recognized the housing bubble and the implications of its collapse, showed a deficit of just $198 billion for 2009, the year President Obama took office. In other words, the deficit was absolutely not “on track to top $1 trillion.””
This is simply wrong.
The CBO made a projection in September of 2008
http://www.cbo.gov/ftpdocs/97xx/doc9706/09-08-Update.pdf
The budget deficit for 2009 was $438 billion.
The CBO made a projection in January 2009 (which was before Obama had any Presidential influence on the budget)
http://www.cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf
The budget deficit projected by the CBO in January 2009 was $1.2 trillion.
No, it is Dean Baker relying on your inability or unwillingness to search the Congressional Budget Office website (cbo.gov). The CBO made projections in September 2008 of a 2009 deficit of $438 billion and in January 2009 of a 2009 deficit of $1.2 trillion.
Dean you are wrong!!!
Obama said “that the deficit was on tract to top $1 trillion the year I toook office” Well in January 2009 CBO was projecting the 2009 deficit to be above $1 trillion. Why do you choose the 2008 forecast? The 2009 forecast includes the effects of TARP and the recession that occurred on Bush’s watch and thus Obama is completely correct. What you could have said is that Obama did not list all the factors, but the $1 trillion figure is good.
“Not his political advisors, his overlords of the Corporate and Wall St. World.”
What’s the difference?
But, but…if you make him stop smearing the Democrats, Obama will cry! Do you want to make Your President cry??
I mean, hatred of the New Deal and Democratic Party is basically what gets him through the day. Man does not live by Unjustified Air of Superiority alone, you know.
http://realclearpolitics.blogs.time.com/2008/09/09/obama_on_the_deficit/
Sept 9, 2008
Following news that the budget deficit will break previous records, Obama said:
Today, we learned that Washington has run up a record budget deficit of $407 billion this year, more than $1 trillion worse than the budget surplus President Bush promised for 2008 in his first budget. John McCain wants us to think he represents change, but he wants to spend $3.4 trillion more than President Bush on tax cuts, most of which will go to the wealthiest corporations and big oil companies and leave more than 100 million middle-class families without a dime of tax relief. Barack Obama will bring real change by cutting taxes for middle-class families and small businesses, paying for all his proposals to reduce the deficit, and will put America on a path towards fiscal responsibility and a stronger economy.
Next time, try reading for comprehension.
“…the last ones made before it recognized the housing bubble and the implications of its collapse…” You even included it in the text you quoted.
By September, there was already an awareness – though not full recognition – that there was a serious problem and it would have a budgetary impact.
The reason Baker selected the January projection is not because he was trying to isolate any of Obama’s influence on the budget, it was to remove the impact of the financial crisis.
The point is that most of the current deficit is a result of the financial crisis – drop in revenues, increased spending due to stabilizers like unemployment insurance, etc. – but Obama is treating it as a structural problem. Yes, there is a structural component (mostly, the Bush tax cuts) but it is a relatively small part of the problem.
It is difficult to solve a problem if you don’t understand it.
Nov 6 2008
David Leonhardt in the NYT
http://query.nytimes.com/gst/fullpage.html?res=9407E7DD1231F935A35752C1A96E9C8B63&scp=6&sq=Obama+deficit&st=nyt
“Throughout the campaign, whenever Mr. Obama was asked about the financial crisis, he liked to turn the conversation back to his long-term plans, by saying that they were meant to solve the very problems that had caused the crisis in the first place. Back in January, he predicted to me that the financial troubles would probably get significantly worse in 2008. They had their roots in middle-class income stagnation, which helped cause an explosion in debt, and the mortgage meltdown was likely to be just the beginning, he said then. ”
– Anyone saying that Obama doesn’t understand the origins of the deficit is nuts.
I don’t think that you are correct. See this and many other references to the nation’s deficit for 2009.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aA8lChe4zUQU
I trillion+ from what I’ve read and recall.
This article shows $400 billion projected by Bush Jr.:
http://www.usatoday.com/news/washington/2008-07-27-deficit_N.htm
The article talks about the figure swelling, due to tax cuts, etc. An excerpt re what Obama inherited: “Curbing the deficit will fall to Bush’s successor and the next Congress following a time when taxes were cut and major spending initiatives were undertaken, including the wars in Iraq and Afghanistan, transportation projects, farm subsidies, Medicare prescription drug coverage and a recently passed expansion of veterans’ education benefits.
The actual 2009 deficit could climb still higher because the new projection does not reflect full funding for the wars. In addition, a worsening economy could add to the red ink by reducing tax revenue and increasing safety-net payments, such as jobless benefits and food stamps.
Both presidential candidates have proposed tax cuts that could further swell the deficit. The non-partisan Tax Policy Center estimates that Republican John McCain’s cuts would cost $4.2 trillion and Democrat Barack Obama’s $2.8 trillion over 10 years. Neither candidate has specified major spending cuts he would make to reduce the deficit.”