Posted by: Jeff | February 10, 2010

When Can We Blame the Deficits On Obama?

Megan McArdle is not happy about the tendency among many defenders of the Obama Administration to blame our current fiscal situation on Bush.

Whatever George W. Bush did or did not do, he’s no longer in office, and doesn’t have the power to do a damn thing about the budget.  Obama is the one who is president with the really humongous deficits.  Deficits of the size Bush ran are basically sustainable indefinitely; deficits of the size that Obama is apparently planning to run, aren’t.  If he doesn’t change those plans, he will be the one who led the government into fiscal crisis, even if changing them would be [sob!] politically difficult.

I have a serious question for the people who are mounting this defense:  at what point in his presidency is Obama actually responsible for any bad thing that happens?  Two years?  Five?  Can we pick a date for when bad things that happen on Obama’s are actually in some measure the responsibility of one Barack Obama, rather than his long gone predecessor?  And then stick with that date?

Not that anyone gives a damn what I think, but I’d say two years seems like a reasonable “cut-off” point. By then, the recession will (hopefully) be over and Bush’s tax cuts for those making over $250,000 a year will have expired. And February of 2012 still leaves plenty of time to assess Obama on his own terms and hold him accountable for the November elections. So there you go. “Jeff says budget situation is all Obama’s bag as of February 2012.”

It’s worth pointing out that Obama doesn’t actually have humongous deficits yet. What he and all of us have are predictions that budget deficits will be really humongous if our current course remains unchanged. And that’s the problem. As McArdle herself has pointed out in the past, a few years of big deficit spending won’t run you into the ground. Indeed, a few years of big deficit spending is appropriate when you get hit by a massive recession – which, lo and behold, we have. The size of the 2010 or even the 2011 deficit isn’t the problem. It’s the size of the deficits through 2019 and on out that are the problem, and they’re what needs to change.

So far, Obama’s budgets have not proposed that necessary change, but they have not made the situation significantly worse either. The same cannot be said for Bush. He and the Republicans gave us tax cuts we didn’t need, a war we didn’t need, and a drug benefit for seniors that was insanely irresponsible in its fiscal construction. Thanks to Bush and the Republicans, our fiscal situation going into the recession was significantly worse than it otherwise needed to be. (I don’t blame them for eliminating the surplus. I do blame them for turning the surplus into a deficit.) Those aren’t projections; they’re real. They’re done and in the ground.

But the fact is that most of the deficits we face now and into the future aren’t really anybody’s fault. The current deficits are the result of the recession – both the loss in tax revenue, and the emergency programs like TARP and the stimulus needed to combat the recession. The deficits going out to 2019 and beyond are, more than anything else, a result of the Medicare and Medicaid fiscal timebomb finally going off. Unlike any other mandatory entitlement, Medicare and Medicaid deal with health care. And health care costs are projected to rise violently over the next few decades. As go the costs of health care, so goes the Medicare and Medicaid budget.

On top of that, Medicare provides for seniors, who have much higher health care costs in comparison to the general population, and who will become a much larger portion of that population in the coming decades. I’m not sure who you blame for that. Lyndon B. Johnson? (And it’s not like anyone knew way back in 1965 that the pace of growth in health care costs was going to go off like a rocket four decades hence.)

To this extent, McArdle’s argument is correct; it’s not fair to Obama and it’s not his fault that he was the president caught holding the hot potato when our budget’s long ensconced structural screw-ups finally came a-callin’. Nonetheless, he is the president holding the hot potato. Which makes it his problem. And if he doesn’t have a credible plan for fixing that problem come the 2012 elections, I can’t say I’d blame anybody for not voting for him.

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Responses

  1. I think you’re making a pretty strong argument for a single-payer system.


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