David Leonhardt has a somewhat hysterical bit of damage control over at the New York Times. Here’s his description of it:
The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II. This debt will constrain the country’s choices for years and could end up doing serious economic damage if foreign lenders become unwilling to finance it.
Unsurprisingly, the article assigns responsibility for the deficit as follows:
| Business cycle | 37% |
| Bush policies | 33% |
| Joint Bush/Obama policies | 20% |
| Obama policies | 7% |
For some reason it doesn’t add up to 100% and the methodology by which individual budget items were assigned to the categories doesn’t seem to appear. The article is accompanied by a massive graphic which I won’t reproduce here.
Partisans of all stripes have reacted predictably, Republicans with outrage, Democrats with glee. Barry Ritholz does reproduce the graphic so if you want to see it click on through. He makes the quite reasonable comment:
The two economic takeaways from the piece fits into some of the nonsense I have been criticizing here: 1) President Obama budgets are “responsible for only a sliver of the deficits†(despite what GOP critics say); and 2) Team Obama has no realistic plan to deal with the deficit (despite what DEM supporters say). This is simply the reality of the past 10 years.
Unless I misunderstand the article its authors make what I think is a systematic error of comparing projections to actual figures when it suits their purposes. And just, as President Obama is continuing some of the policies of the Bush Administration, didn’t President Bush continue some of the policies of the Clinton Admininstration? Where is that in the calculus? And so on back to George Washington?
Additionally, I think the complaint about the Bush tax cuts misses the mark. Tax cuts, assigned to the “Bush policies” category, were politically just as necessary as “safety net programs”, which are assigned to the business cycle category. That strikes me as arbitrary. I opposed the Bush tax cuts not because I thought that tax cuts were avoidable but because I thought they were pragmatically the wrong tax cuts. I believe that President Gore would have cut taxes in 2001, too. Any sitting president in 2001 would have.
Note, too, that Mr. Leonhardt is giving full credit for tax increases and spending cuts that haven’t been made yet.
In the final analysis I see things a little differently than so many seem to:
- Bush isn’t president.
- Obama is.
- Bush was president for eight years, Obama has been president for four months.
- Whatever mistakes his predecessor made, President Obama is making his own contributions to the deficit very rapidly.
- What next?
Update
David Leonhardt has a post at the NYT’s Economix blog that delves a bit into the methodology that was used in the article cited above and, unfortunately, the explanation at least partially supports the intuition I suggested above. I’ll need to mull it over a bit more but it looks to me as though the article is actually answering a question that’s different than you might think from its title. Rather than “why is the deficit so high?” the question may be “why were the projections so wrong?” That’s certainly how I interpret his conclusion:
Obviously, perhaps, the entire analysis is only as good as C.B.O.’s projections. If the economy booms in the next few years, the deficits will look less scary, at least in the short term. If the recession lingers — or if Congress adopts Mr. Obama’s new programs but not his tax increases and spending cuts — the deficit will be even worse.
