Friday, February 05, 2010

"Ten years ago..."

Excellent, excellent post from Keith Hennessey
On Monday when releasing his budget the President said:

The fact is, 10 years ago, we had a budget surplus of more than $200 billion, with projected surpluses stretching out toward the horizon. Yet over the course of the past 10 years, the previous administration and previous Congresses created an expensive new drug program, passed massive tax cuts for the wealthy, and funded two wars without paying for any of it -– all of which was compounded by recession and by rising health care costs. As a result, when I first walked through the door, the deficit stood at $1.3 trillion, with projected deficits of $8 trillion over the next decade.

This is a common refrain from the President and his team.
Keith then proceeds to examine this refrain, positing the arguments in support and then adressing those arguments with facts. For example:
Argument: As a result of these policies, when President Obama took office, the deficit stood at $1.3 trillion.

Response 1: The 2009 deficit President Obama inherited was large (CBO says $1.2 trillion rather than $1.3 trillion), but this is principally the result of a drop in revenues resulting from the severe recession beginning in September 2008, and from more than $400 B of projected 2009 spending for bailouts of Fannie Mae, Freddie Mac, the big banks, and other large financial institutions. Before the recession and financial collapse of 2008, annual budget deficits during the Bush Administration averaged 2.0% of GDP (which would be about $290 B in 2009), including the higher spending and lower revenues from the drug benefit, Iraq and Afghanistan, and tax cuts. President Obama is using one horrible year to mischaracterize the other seven.
This is important stuff - read it all. The economic situation this country is in right now is dreadful, but it can be made worse if this President is allowed to mischaracterize the sources and causes of the situation. If we don't understand where the problems come from, we cannot fix them....

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