A number of policymakers and pundits — most recently House Minority Leader John Boehner — blame Obama Administration policies for the large deficits we confront. But the numbers tell a very different story.
As my colleague Jim Horney and I have explained, the causes of today’s large deficits lie largely outside the Administration’s control. Two weeks before President Obama took office, the Congressional Budget Office (CBO) projected that the 2009 deficit would exceed $1 trillion. CBO also warned that if we continued the policies the Obama Administration inherited, including the Bush tax cuts and funding for operations in Iraq and Afghanistan, deficits would average over $1 trillion a year in 2010-2019.
As the chart shows, the recession and the federal government’s responses to it under President Bush (e.g., the financial rescues) and President Obama (e.g., the Recovery Act) have certainly boosted deficits. But those factors are temporary and will fade in importance.
For example, the Recovery Act and related economic-recovery measures will add $1.1 trillion in deficits over the 2009-2019 period (including increased interest payments on the national debt). But most of that cost will occur in 2009-2011 — just when the economy is weakest. Running large deficits when the economy is weak is the right policy.
In contrast, key policies enacted in the Bush Administration will continue to harm the budget outlook throughout the next decade. For instance, the Bush tax cuts and the wars in Iraq and Afghanistan will account for nearly $7 trillion in deficits in 2009-2019.
Rep. Boehner and others are wrong to let the Bush Administration off the hook. If we hadn’t enacted unaffordable tax cuts, fought two wars on borrowed money, and created an expensive new drug benefit as part of Medicare without paying for it, we’d be in much better shape.