How much has President Obama added to the national debt? There are two answers: More than $4 trillion, or about $983 billion. The first answer is simple and wrong. The second answer is more complicated, but a lot closer to being right.
How much has President Obama added to the national debt? There are two answers: More than $4 trillion; or, about $983 billion. The first answer is simple and wrong. The second answer is more complicated, but a lot closer to being right.
When Obama took office, the national debt was about $10.5 trillion. Today, it’s about $15.2 trillion. Simple subtraction gives you the answer preferred by most of Obama’s critics: $4.7 trillion.
But ask yourself: Which of Obama’s policies added $4.7 trillion to the debt? The stimulus? Less than $800 billion. Troubled Assets Relief Program, or TARP? Passed under George W. Bush, and mostly repaid.
There is a way to tally the effects Obama has had on the deficit. Look at every piece of legislation he has signed into law. Every time Congress passes a bill, either the Congressional Budget Office or the Joint Committee on Taxation estimates the effect it will have on the budget over 10 years. The two then continue to estimate changes to those bills. If you know how to read their numbers, you can come up with an estimate that zeros in on the laws Obama has had a hand in.
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The Center on Budget and Policy Priorities helped provide a comprehensive estimate of Obama’s effect on the deficit. As the nonpartisan research-and-policy institute explained, it’s harder than it sounds.
Obama, for instance, clearly is responsible for the stimulus. The health-care law, too.
When Obama entered office, the Bush tax cuts were in place and two wars were ongoing. Is it fair to blame Obama for war costs four months after he was inaugurated, or tax collections 10 days after he took office?
So the center built a baseline that includes everything that predated Obama, and everything known about the path of the economy and the trajectory of spending through August 2011. Deviations from the baseline represent decisions made by the Obama administration. The projected costs of Obama’s policies were then measured.
In two instances, this made Obama’s policies look more costly. First, Obama’s decision to extend the Bush tax cuts for two years, at a total cost of $620 billion, should be added to his total. If Obama follows through on his promise to extend all cuts for income of less than $250,000 in 2013, it will add trillions more to the deficit.
The other judgment call was when to end the analysis. After 10 years? After the first term? The years through 2017, when a hypothetical Obama second term would end, are the years Obama might be blamed for, so they seemed like the ones to watch. But Obama’s spending is front-loaded, and his savings are backloaded. The stimulus bill, for instance, is mostly finished. But the Budget Control Act is expected to save $2.1 trillion over 10 years. The health-care law is expected to save more than $1 trillion in its second decade. If the numbers were extended further, the analysis would have reflected more of Obama’s planned deficit reduction.
There’s also the issue of who deserves credit for what. In this analysis, anything Obama signed is attributed to him. But reality is more complicated. The $2.1 trillion debt-ceiling deal wouldn’t have happened without Republicans. But a larger deficit-reduction deal, one including tax increases and spending cuts, might have.
In total, the policies Obama has signed into law can be expected to add almost $1 trillion to deficits. But behind that total are policies that point in different directions. The stimulus, for instance, cost more than $800 billion. So did the 2010 tax deal, which included more than $600 billion to extend the Bush tax cuts for two years, and hundreds of billions more in unemployment insurance and the payroll-tax cut. Obama’s first budget increased domestic discretionary spending by quite a bit, but more recent legislation has cut it substantially. On the other hand, the Budget Control Act, the legislation that resolved August’s debt-ceiling standoff, saves more than $1 trillion, and the health-care law saves more than $100 billion.
For comparison’s sake, using the same method, beginning in 2001 and ending in 2009, George W. Bush added more than $5 trillion to the deficit.
What often is assumed in this conversation is that all deficit spending is equal, and all of it is bad. That’s not the case. Deficit spending when the economy is growing is different from deficit spending when the economy is in crisis.
Nor is all deficit reduction alike. Sometimes, cutting the deficit will grow the economy. Sometimes, cutting the deficit will shrink the economy.