Who's responsible for federal budget deficits?
Amidst the continuing federal budgetary crisis, the contending parties make proposals based on their understanding of its causes. President Obama insists there is insufficient revenue and therefore favors higher tax rates, and Congressional Republicans counter that the problem is runaway federal spending and therefore propose cuts.
Who is right? The short answer is, both, for there is both insufficient revenue and too much spending. Many citizens, therefore, thought that the recent “fiscal cliff” was best avoided by compromise, with Republicans agreeing to tax increases and Democrats to spending cuts. But it did not work out that way at all.
Instead, we got income and inheritance tax increases on the most productive citizens and no spending cuts. The payroll tax went back to its previous rate, but that was necessary to help keep Social Security solvent.
But what caused the deficit? Consider a recent Obama budget, in 2011. Total revenue was $2.314 trillion and total expenditures were $3.640 trillion, with a deficit of $1.326 trillion. The deficit was more than 36 percent of total spending!
By that year, Republicans had regained control of the House of Representatives but were unable to curb spending because, since 2009 when Obama became president (and for every year since), the Democrat-controlled Senate has refused to pass a budget.
Now it is necessary to point out that the 43rd president is now longer in office. President Obama has run plus $1 trillion deficits every year since. Indeed, when Democrats controlled all three elective branches, the deficits were higher still. In 2009 the deficit was $1.436 trillion.
But Democrats say things were worse during the Bush presidency, but that is not so. There was a surplus of $160 billion in his first year, followed by seven years of much lower deficits, the highest being $480 billion in the 2004 at the height of the war in Iraq.
In his last six years, Bush had an average deficit of $368 billion. Now while this is not small change, that’s not even a third of the deficits in Obama’s Administration. If Bush’s one surplus year is included, the average annual deficit shrinks to $286 billion. The deficit jumped back up to $467 trillion in 2008, after the Democrats took over Congress.
Of course, wars are expensive, and Democrats no less than Republicans supported the war in Iraq, based on the Clinton Administration’s rationale in 1998, viz., that Saddam Hussein had weapons of mass destruction.
The Bush tax cuts of 2001 and 2003 are supposed to be big contributors to budget deficits, the assumption being that cuts in rates result in less revenue. Exactly the opposite is the case, as occurred in the Reagan, Kennedy and even Harding administrations. The explanation is that higher rates encourage tax avoidance.
Consider Al Gore, who just sold his broadcasting network to Al-Jazeera to avoid the higher income tax rates that just kicked from the last-minute “fiscal cliff” deal. Or the French actor who gave up his citizenship to avoid a new rate of 75 percent.
Democrats wax enthusiastic about the Clinton years when budget surpluses occurred. True, Bill Clinton had rising budget surpluses in the last three years of $92, $165 and $302 billion. But those years are notable because Republicans had taken control of Congress in 1995. In his first five years, Clinton had deficits averaging $214 billion, declining from $375 to $29 billion.
Even before Republicans won , Clinton’s health care plan (dubbed “Hillary care” because of his wife’s major role in drafting the complicated plan) was never enacted, sparing us hundreds of billions more.
Clearly, while Clinton’s deficits are comparable to Bush’s, neither come close to the massive deficits of the Obama Administration. When Bush took office, the national debt was approximately $6 trillion, which increased by $4 trillion in eight years. But Obama has added $6 trillion in half that time.
For those who blame Bush for massive deficits during the Obama Administration, these budget facts should lay that claim to rest, although they surely won’t. As John Adams once said, “Facts are stubborn things.” But we have to add, except for those for whom facts do not matter.
ABOUT THE WRITER
Richard Reeb taught political science, philosophy and journalism at Barstow College from 1970 to 2003. He is the author of “ Taking Journalism Seriously: ‘Objectivity’ as a Partisan Cause” (University Press of America, 1999). He can be contacted at email@example.com.