Chart of the Day

Keith Hennessey charts the "average budget deficits measured as a percent of GDP":


source: Keith Hennessey

Hennessey explains:

You can see that budget deficits during President Clinton’s eight years averaged 0.8 percent of GDP. Clinton folks will tell you this is because of his brilliant policies, and in particular the 1993 budget law. I think most of it is the result of tech bubble-induced higher capital gains revenues causing total taxes to surge to record levels. We can have that debate another time.

If I measure President Bush for the nine year period 2001-2009, thus assigning almost all TARP spending to his Presidency, I get an average budget deficit of 2.7% of GDP. (Historical numbers are from OMB’s historical tables. Obama numbers are from Table S-1 in his new budget.) In calculating this nine year average I am adding the horrible FY 2009 into the Bush average, using CBO’s projection for the FY 2009 deficit of 8.3% when President Bush left office in January 2009. Bush therefore gets the deficit hit for most of the TARP, but Obama gets the hit for his stimulus law and the further economic deterioration when he was in office, both of which pushed the actual 2009 deficit to 9.9% of GDP.

You can see a black line within the Bush column. That’s at 2.0%, the average Bush deficit for the eight year period of 2001-2008.

Now let’s turn to President Obama. Remember, we are measuring his average budget deficit through FY 2017, assuming he stays in office for two terms and his new budget is enacted as proposed. I am also being generous by using OMB’s scoring of the President’s budget. CBO is always more pessimistic and would make the Obama numbers look worse.

President Obama’s proposed deficits over the eight-year period FY 2009-2017 are 5.9% of GDP, the light blue bar. That’s more than twice as large as the Bush nine year 2.7% average, and almost three times as large as the Bush eight year 2.0% average. Update: This calculation assumes the full 9.9% FY 2009 deficit in the average, thus it includes the TARP spending and in a sense overlaps with the Bush red bar. The TARP money is being counted with each of them. The next three bars "solve" this problem by excluding all of 2009 (including TARP and stimulus) from the Obama average.

I can imagine someone replying that it’s not fair to blame President Obama for the big deficits we are running as we recover from a severe recession. The next three bars therefore exclude the first one, two, and three years of an assumed eight year Presidency. Surely no one can argue that President Obama should not be held responsible for the budget deficits in years four through eight!

Agreed.

(via Berman Post)