Debt, Deficits and Dishonesty
On Friday, President Obama declared the following in a speech:
But we don’t have an urgent deficit crisis. The only crisis we have is one that’s manufactured in Washington, and it’s ideological. And the basic notion is, is that we shouldn’t be helping people get health care, and we shouldn’t be helping kids who can’t help themselves and whose parents are under-resourced — we shouldn’t be helping them get a leg up. And so some of the proposals we’ve seen now are talking about even deeper cuts in programs like Head Start; even deeper cuts in education support; even deeper cuts in basic science and research.
So when we get back to Washington — when Congress gets back to Washington, this is going to be a major debate. It’s the same debate we’ve been having for the last two years. The difference is now deficits are already coming down. And what we should really be thinking about is how do we grow an economy so that we’re creating a growing, thriving middle class, and we’re creating more ladders of opportunity for people who are willing to work hard to get into the middle class.
The President is right; deficits are coming down. However, nobody in Washington is saying the fiscal crisis is about deficits. The fiscal crisis is about the national debt, which is the accumulation of deficits.
And the accumulation of deficits under President Obama has been atrocious, including the 2013 deficit. From Just Facts Daily, with emphasis added:
The deficits of recent years have been the largest in modern history, peaking at 10.1% of the entire nation’s economy (GDP) in 2009. For context, the 2009 deficit was 68% larger than any other deficit since the World War II era, and it was 6.1 times larger than the average deficit from 1947-2008 (see graph below).
So although the White House’s projected deficit for 2013 (4.7% of GDP) is less than half of the 2009 deficit, it is still 3.6 times higher than the average of the past 20 years, 3.2 times higher than the average of the past 40 years, and 4.2 times higher than the average of the past 60 years.
The President also said the deficit “is on a downward trajectory.” While Congressional Budget Office (CBO) projections show this is true in the near future, by 2018 deficits will be rising again. CBO also said the following in May:
For the 2014–2023 period, deficits in CBO’s baseline projections total $6.3 trillion. With such deficits, federal debt held by the public is projected to remain above 70 percent of GDP—far higher than the 39 percent average seen over the past four decades. (As recently as the end of 2007, federal debt equaled 36 percent of GDP.) Under current law, the debt is projected to decline from about 76 percent of GDP in 2014 to slightly below 71 percent in 2018 but then to start rising again; by 2023, if current laws remain in place, debt will equal 74 percent of GDP and continue to be on an upward path
So, yes, Mr. President, deficits are falling. But the debt crisis is only getting worse.