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Bush turned a a $236 billion budget surplus into a $1.3 trillion deficit

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Author Topic: Bush turned a a $236 billion budget surplus into a $1.3 trillion deficit  (Read 126 times)
Janilee Wolff
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Posts: 3511

« on: September 18, 2010, 08:57:54 pm »

Axelrod claims Bush saddled Obama with a big deficit
Mostly True
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It's the war of the op-eds.

On Jan. 10, 2009, former Bush administration adviser Karl Rove wrote in the Washington Post that Democrats "will run up more debt by October than Bush did in eight years. (We checked his claim here.)

David Axelrod, chief adviser to President Barack Obama, fired back on Jan. 15 in Post that Rove had it all wrong and that Bush had been the big spender.

"The day the Bush administration took over from President Bill Clinton in 2001, America enjoyed a $236 billion budget surplus -- with a projected 10-year surplus of $5.6 trillion," Axelrod wrote. "When the Bush administration left office, it handed President Obama a $1.3 trillion deficit -- and projected shortfalls of $8 trillion for the next decade."

His point was that it was Bush, not Obama, who got the country in a financial mess. He said Bush approved big-ticket items during his tenure that included tax cuts, a new prescription drug benefit for the elderly, and the Troubled Asset Relief Program (TARP), which allowed the government to spend up to $700 billion to shore up troubled assets and bolster various industries.

And now, Axelrod wrote, the Obama administration is stuck with the bill.

We wondered whether Axelrod's numbers were correct.

When we asked for his sources, the White House pointed us to several documents. The first was a 2002 report from the Congressional Budget Office, an independent agency, that reported the 2000 federal budget ended with a $236 billion surplus. So Axelrod was right on that point.

The report provides an interesting trip down memory lane, when budget estimates were downright cheery: "The outlook for the federal budget over the next decade continues to be bright," the report said. "Assuming that current tax and spending policies are maintained, the Congressional Budget Office (CBO) projects that mounting federal revenues will continue to outstrip spending and produce growing budget surpluses for the next 10 years."

Yes, the word "bright" was in a budget estimate.

That meant big surpluses -- estimated to total about $5.6 trillion by 2011. So Axelrod was right on that, too.

Another cheery line: "Under current policies, total surpluses would accumulate to an estimated $2 trillion over the next five years and $5.6 trillion over the coming decade, and would be sufficient by 2006 to pay off all publicly held debt that is available for redemption."

The future didn't turn out like that, of course.

On Jan. 7, 2009, two weeks before Obama took office, the CBO reported the deficit was projected to be $1.2 trillion. The 10-year projection was estimated to be about $3.1 trillion. So Axelrod was slightly off on the 2009 deficit (he said $1.3 trillion) but substantially off on the 10-year projection (he said $8 trillion).

The White House said Axelrod's number was based on a budget overview published by the Obama administration shortly after Obama took office, when the 2009 deficit was estimated to be $1.5 trillion, totaling about $9 trillion over the next decade. The White House explained that the figure included the $787 billion economic stimulus package. But because Bush was not president when it was approved, they subtracted the appropriate portion of it for each year, to get $1.3 trillion and $8 trillion, respectively, that the Obama White House believed was approved under Bush.

Why the $5 trillion difference between the White House and the CBO's projections?

Josh Gordon, policy director for the Concord Coalition, said it has to do with fundamental approaches in how the two offices estimate the future. The CBO based its projections on the assumption that the Bush tax cuts would expire in 2010 and that a patch to fix the alternative minimum tax would expire, among other things. The White House does not; instead, it assumes that nothing changes in current law.

Gordon and another budget expert we spoke with, Brian Riedl of the conservative Heritage Foundation, said they believe the White House approach is more realistic because it assumes current policy will continue.

"I think the president is correct to make the shift," said Riedl. "What current policy looks like makes more sense."

(However, Riedl disagrees with Axelrod's larger point, that Bush deserves the blame for the big deficit. "I'd argue that some of the TARP should be assigned to Obama," he said. There are only three parts of TARP that are losing money, he said, the auto company bailouts, AIG and the home loan program. Most of the auto bailouts and the home loan program were initiated by Obama, he said.)

Back to Axelrod's original claim. His overall point is correct that the government was enjoying a substantial surplus when Bush took office and had a big deficit when he departed.

Specifically, Axelrod is right about the surplus Bush began with, and the projected surplus at that point. Axelrod is very close on the deficit at the end of Bush's presidency, but there are two different ways to measure the 10-year projection when Bush left office. The CBO's estimate is $5 trillion lower than the White House numbers, though economists don't quibble with the White House methodology. So given that discussion, we'll take Axelrod down a notch to Mostly True.
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Published: Friday, January 15th, 2010 at 6:13 p.m.

Subjects: Federal Budget


The Congressional Budget Office, September 2008 Update

The Congressional Budget Office, January 2009 Outlook

The White House, Budget Summary Tables, Feb. 20, 2009

The New York Times, How Trillion-Dollar Deficits Were Created, June 10, 2009

The Congressional Budget Office, The Budget and Economic Outlook: An Update, Aug., 2009

The Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2002-2011, Jan. 2001

The Center for Budget and Policy Priorities, Obama Administration Largely Inherited Today's Huge Deficits, accessed Jan. 15, 2010

Interview, Jim Horney, Director of Federal Fiscal Policy at the Center on Budget and Policy Priorities, Jan. 15, 2010

Written by: Catharine Richert
Researched by: Catharine Richert
Edited by: Bill Adair
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« Reply #1 on: September 24, 2010, 01:46:07 pm »

It's all part of the Bilderberger's plan to bankrupt and destroy America.
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