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Myth-Busting: GOP Lies On the Deficit and Spending

Republicans repeatedly place the blame for both the size of the national deficit and an “extraordinary” growth in spending at the feet of President Obama, but nothing could be farther from the truth on either point. Of all the onerous lies, the GOP and GOP supporters repeat, this one is the most often because they are terrified that the truth will come out, and it strikes at the heart of the “conservative” mantra…spending.

Democrats, meanwhile, protest in vain, by weakly pointing to spending during the Bush years on the only two unfunded wars in U.S. history and huge tax cuts with drastically reduced revenue streams for the government coffers. All the while, Republicans moan about the huge deficit problem while the preceding Republican administrations from Ronald Reagan to George W. Bush proclaimed, “deficits don’t matter,”(Darth Cheney).

Do we, as Americans, really accept the notion that lies in politics don’t matter? Really?

The Truth About Spending (or GOP Lie # 4,993)

Federal government spending has risen under President Obama. The bulk of actual spending was the $800 billion stimulus expended to offset the deepest recession since the Great Depression that he inherited from President Bush. But even with this disadvantage from the day President Obama took office, the increase in federal spending under Obama is dwarfed by the increase under President Bush. Eat your heart out Joe Scarborough.

Here’s Federal Expenditures from 2000-2011 (quarterly figures, annualized), from the St. Louis Fed:

As above, from 2000 to 2008, under President Bush, Federal spending rose by $1.3 trillion, from $1.9 trillion a year to $3.2 trillion a year.

From 2009 to 2011, under President Obama, federal spending has risen by $600 billion, from $3.2 trillion a year to $3.8 trillion a year. It has also now begun to decline.

In other words, federal government spending under President Bush increased 2X as much as it has under President Obama, despite President Obama having to contend with decreased tax revenue from the effect of 700,000 Americans losing their jobs the month President Obama was sworn in. The Congressional Budget Office stated in December 2009, that not one penny of spending increased the deficit in President Obama’s first year.

Not one red cent.

Lost revenues, from taxes uncollected due to layoffs from George Bush’s eight previous years’ recession that were occurring the day President Obama took office, were $251 billion. The budget for President Obama’s first year in office was $223 billion over the last budget provided by George W. Bush.

By the time President Obama’s Oval Office chair conformed to the President’s butt cheeks, he was more than a trillion dollars in the hole for GOP policies, that they now intentionally and dishonestly attribute to President Obama.

But even with the 2009 stimulus program and the necessarily growing outlays for Medicaid, unemployment insurance, food stamps and other safety net programs, those trillions in deficits had less to do with Barack Obama boosting spending than the dramatic loss of tax revenue.

As former Reagan administration official Bruce Bartlett explained in October 2009:

To recap, the deficit came in $223 billion higher than projected [in January], but spending was $28 billion and revenues were $251 billion less than expected. Thus we can conclude that more than 100 percent of the increase in the deficit since January is accounted for by lower revenues. Not one penny is due to higher spending.

The Truth About the Deficit (or GOP Lie # 4,994)

Republicans bellow that the deficit is 100% President Obama’s fault, because he has “exploded government spending and failed to fix the economy”.

We have already shown the GOP deceptions regarding spending. Now for the deficit.

The chart below shows the rate of growth in the annual deficits under Presidents Bush and Obama. Bear in mind that President Bush, inherited a budget surplus (the first in decades).

A cyclical recession occurred and he immediately took the budget into deficit. To make matters worse, he:

Cut taxes reducing tax revenues to the government without offsetting reductions elsewhere
He sent $300 checks to anyone who paid taxes the previous year without offsetting spending elsewhere which cost the government an additional $152 billion.
Then, Bush made the biggest, most common mistake that economists make whether economic policies are Austrian, Austerity or Keynesian based. They fail to balance the economic equation.
When the economy mini-boomed Bush did not restore the tax cuts. He doubled down and reduced revenues even more with a second tax cut, causing the economy to begin a further decline towards ultimately sliding into recession in 2007.
When “the Mother of all Real Estate and Investment Bank Crises” hit in late 2008, the die had already cast. President Obama took office as the financial tsunami hit its full stride.
In early 2009, President Obama took over, amid the worst recession since the Great Depression. President Obama signed an $800 billion spending increase at the same time that GDP and tax collections completely tanked. The combination of these two factors, growth in spending and a drop in revenue, exploded the deficit to $1.4 trillion. In 2010, the economy and tax collections improved modestly, and the deficit shrank to $1.3 trillion annualized.

Republicans endlessly shriek that it’s clearly President Obama that has exploded the size of federal government spending in his short tenure as President. While it is true that he has increased it, President Bush actually increased future federal spending by more than 3X as such as Obama; as shown below from the Washington Post

If you believe the facts, growth during the “Bush Boom” was a debt-fueled mirage and that the blame is properly attributed to President Bush. His combination of reduced taxes and increased spending took the US from a surplus to a deficit, and even the economic boom from a massive housing bubble and enormous borrowing didn’t close the gap.

Even if you think the “Bush Boom” was real, the recession and financial crisis began on his watch, and the deficit was already exploding when President Obama took office. So it’s very hard to escape the conclusion that President Bush bears a lot of the responsibility for our current mess.

Actual evidence still clearly shows that it is Republicans and their so-called “conservative trickle-down bull***t” that has crippled our economy, destroyed millions of American families, dreams, and retirements. And even worse? Paul Ryan’s budget that Willard Mitt Romney has endorsed, would INCREASE the deficit BY $5 TRILLION while dismantling Social Security.

This is, of course, notwithstanding the eye-rolling, righteous condescension, and incredulity displayed daily by the bobble-heads at FOX, or the shrieking squinty-eyed Morning Joe (Scarborough) on MSNBC, or proselytizing by NBC’s David Gregory, the most biased “moderator” of Meat the Press in its long and previously distinguished history.

My gosh I miss Tim Russert, and thank the lord for Bob Schieffer on CBS, and to an extent CNN.

THE ONLY workable, minimally-disruptive, all-inclusive solution is my own One Penny Solution (see here:

For god’s sake people, quit listening to the boobs at FOX, NBC, and all the other corporate-owned, broadcast media* who have a vested interest in corporate-friendly Republican victories. Read Bloomberg, Reuters, The Financial Times…but do not be fooled that there is widespread fair and accurate “News” on your television.

Most are no more unprejudiced or revealing than “Professional Wrestling” or Texas Hold ‘em on ESPN are really sports.

*NBC=Comcast / ABC=Disney / CBS=Viacom / FOX=Rupert Murdoch

Source: HgTransEcon


 

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