The Sleight of Hand Man

Credit where credit is due. I think that President Obama’s move to put funding for the wars in Iraq and Afghanistan on-budget:

In addition to the substantive proposals, Obama’s team boasts of improving the budget process itself. For years, budget analysts complained that former president George W. Bush tried to make his deficits look smaller by excluding cost estimates for the war in Iraq and domestic disasters, minimizing the cost of payments to Medicare doctors and assuming that millions more families would pay the costly alternative minimum tax. Obama has banned those techniques, the senior official said.

is wholly salutary. I think that all federal revenues and expenditures, regardless of their nature, should be included when the budget is reckoned. It would at least give us the opportunity to see where we stand (which is in the red).

But notice, too, that by putting the wars on the budget, the Obama Administration will be able to take credit for reducing the deficit when (or if) they wind those actions down. Is there a pattern emerging here?

Many have commented on President Obama’s trope “jobs saved or created” which he repeated in his speech the other night. The phrase is either unverifiable or meaningless, depending. If you’re comparing the number of jobs at some undefined point in the future with the number of jobs projected for that point, how can one possibly tell whether the projections were accurate? Or have been inflated to suit? And whose projections?

President Obama has presented his first budget and its deficit is the largest in history, at least in dollar terms:

WASHINGTON – President Barack Obama is sending Congress a budget Thursday that projects the government’s deficit for this year will soar to $1.75 trillion, reflecting efforts to pull the nation out of a deep recession and a severe financial crisis.

A senior administration official told The Associated Press that Obama’s $3 trillion-plus spending blueprint also asks Congress to raise taxes on the wealthy in 2011 and cut Medicare costs to provide health care for the uninsured.

The president’s first budget also holds out the possibility of spending $250 billion more for additional financial industry rescue efforts on top of the $700 billion that Congress has already authorized, according to this official, who spoke on condition of anonymity before the formal release of the budget.

The official said the administration felt it would be prudent to ask for additional resources to deal with the financial crisis, the most severe to hit the country in seven decades. He called the request a “placeholder” in advance of a determination by the Treasury Department of what extra resources will actually be needed.

He’s also pledged to cut the deficit in half by the end of his first term. Another sleight of hand?

In doing that he’s pledging that the deficits over the next four years will be larger, again in dollar terms, than the deficits of any of his predecessors. At the end of the budget-cutting process, if any, halving the budget deficit would mean a deficit of just under $1 trillion per year and he’d have increased the public debt by 40% in just four years. If the GDP actually contracts over the next couple of years, those deficits could end up being larger than any previous deficits as a percentage of GDP as well. And, depending on how much the defense budget is cut (if at all) and what interests rates are in four years, it’s not beyond the realm of possibility that debt service could exceed defense as a proportion of the total budget.

Presidents inherit the circumstances under which they enter office from their predecessors. While in office they respond both to those circumstances and to what occurs during their term. That’s the nature of the job and, just as I don’t give President Clinton sole credit for the boom that occurred on his watch, I don’t give President Bush sole blame for what happened on his. Reagan’s increases in the defense budget which resulted in the previous deficit record were occasioned by the cuts that occurred in prior years. And so on.

I also won’t give President Obama sole blame for what happens over the next four or eight years. However, if he manages to give President George W. Bush sole blame for everything that happens on his, Obama’s, watch, he’ll have pulled off the greatest sleight of hand of all.

The graphic above is the property of

7 comments… add one
  • If you are going to use my picthure. You should atleast give credit. It is a copyrighted picture.

  • Done!

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