What Would the Deficit Look Like Without Bush?

More

The Obama administration is projecting a $9 trillion deficit over the next 10 years and a debt/GDP ratio of 77 percent by 2019. That's a pretty scary monster, no matter what kind of pretty bow you tie on it. But how much should we blame Obama's policies for that figure? Paul Krugman does some back-of-the-napkin math and concludes that without Bush's tax cuts and the Iraq War, our debt wouldn't be nearly as scary.


Krugman:

There were two big-ticket Bush policies. One was the tax cuts, which cost around $1.8 trillion in revenue; add in interest costs, and we're presumably talking about more than $2 trillion in debt. The other was the Iraq War, which has cost at least $700 billion, and will cost more before we finally extract ourselves.

Without these gratuitous drains on the budget, it seems fair to assert that we'd be coming into this economic crisis with a federal debt around 20 percent of GDP ($2.8 trillion) smaller than we are. And that, in turn, means that we'd be looking at projected net debt in 2019 of around 50 percent of GDP, not 70.

And that would definitely not be a scary number. Net federal debt was 49 percent of GDP in 1993, at the end of the Reagan-Bush years; Bill Clinton did move to reduce that number, and succeeded, but the nation wasn't facing imminent crisis.

Part of this is unfair -- with the government running a surplus in the late 90s, it was inevitable that the next administration would offer some kind of tax break. But the vast majority of Krugman's calculus is spot on, and he doesn't even mention other expensive policies like Medicare D. It's been well-reported that the nearly $2 trillion deficit under Obama this year really has very little to do with Obama's policies (see this essential David Leonhardt piece). In fact, Obama's most criminal contribution to our deficit is his continuation of Bush policies, including tax cuts for households making under $250K and the ongoing wars in the Middle East.

Another way to look at this, as I wrote yesterday, is to ask: What would the long-term deficit look like under a President John McCain? The answer is: About 93 percent the same. The right way to rail on Obama's fiscal policy is to say he found the house and fire and hasn't produced a plan to extinguish it. But let's not pretend the guy in office for seven months lit the flame.

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

Tracing Sriracha's Origin to a Seaside Town in Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Where the Wild Things Go

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Adults Need Playtime Too

When was the last time you played your favorite childhood game?

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In