Barack Obama, Deficit-Cutter?

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Jon Chait takes exception to my suggestion that the Obama budget lays out a kind of starve-the-beast in reverse:

In the most important sense, this is completely wrong. Obama's budget is not a net spender. It would reduce the deficit by some $2 trillion over the next decade (big PDF link; see page 115) compared to continuing current policy. (You can quibble about the "current policy" baseline -- some of the Iraq expenditures would probably have declined under even a Republican administration -- but the basic fact that Obama's policies reduce the deficit on the whole is hard to dispute.) By contrast, all of Bush's major deficit-increasing initiatives -- the tax cuts, the war in Iraq, the Medicare benefit -- came without any attempt at all to pay for them. And, by the way, most of the people who are complaining about Obama's fiscal irresponsibility today uttered not a peep of complaint about Bush.

Ramesh Ponnuru isn't convinced, and neither am I. That deceptive baseline makes all the difference in the world; take it away, and what you have is Obama reducing the deficit from recession-era highs created by TARP and the stimulus package - which are both designed to be temporary anyway - to recovery-era lows that are no lower, as a percentage of GDP, than the deficits Bush ran during his administration's years of economic growth. (This is leaving aside the rosiness of the growth and revenue-collection scenarios underlying the budget's number-crunching, and the fact that it only includes a "down payment" on the still-hypothetical health care reform that Obama wants as the domestic-policy centerpiece of his administration.) Now it's true that some voices within the Obama Administration wanted to run a higher deficit still, and the President apparently sided against them. But that doesn't change the fact that the projected post-recession deficits are in the same range as Bush's pre-recession deficits, if not slightly higher.

But don't listen to me; listen to Jon Chait:

Now, I'll concede that Douthat has a point in spirit. Obama does not get the deficit all the way to where it ought to be. If the economy recovers by 2011, as he projects, and we experience continued growth through 2019, and we're still running the 3.1 percent of GDP deficit he forecasts -- well, that would be a problem. [emphasis mine - RD] It's totally unfair to compare a president who made the problem vastly worse with one who alleviates the problem considerably. But it is interesting to ponder why Obama doesn't go further in the direction of fiscal responsibility.

This isn't a point "in spirit" - it's a point in fact. When the recession is over, and the stimulus spending has finished running through the economy, Barack Obama's budget projects the same level of deficit spending that the United States experienced from 2000 to 2007. The difference is that whereas Bush ran deficits in part as an attempt to establish a lower baseline for tax rates, Obama would run deficits in part as an attempt to establish a higher baseline for government spending. His accounting may more honest than Bush's, as Chait argues in a follow-up post, but that doesn't change the basic reality of what this administration is proposing: Its budgets would use substantial deficit spending to finance an expansion of government, while putting off the tax increases that would be required to pay for it. And I think it's fair to call that "starve the beast" in reverse.

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Ross Douthat is a former writer and editor at The Atlantic.

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