StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



With The Bush Gimmicks The 2009 Obama Deficit Would Have Been...?

27 Feb 2009
Posted by Stan Collender

The Obama budget projected a 2009 deficit of $1.75 trillion.  But that number would have been much lower had the White House used the same accounting tricks and conventions used by the Bush administration.

Follow the bouncing deficit:

  1. The $1.75 trillion deficit included $250 billion for additional assistance for financial institutions that the White says it's not requesting in the budget but may need later in the year.  The Bush budget would have excluded this from the budget and simply added it later if and when the funds were needed.  Excluding it from the Obama budget as Bush would have done would have reduced the apparent deficit to $1.5 trillion.
  2. The Obama budget included $75.5 billion for additional funds for activities in Iraq and Afghanistan.  This would also have been excluded from the Bush budget.  Doing that here would have reduced the apparent deficit to about $1.4 trillion.
  3. The Obama budget included about $70 billion in lower revenue from the one-year patch for the Alternative Minimumn Tax that was included in the stimulus bill.  The Bush budget typically assumed that the AMT would not be patched even though everyone knew it would be.  The Bush accounting treatment would have reduced the deficit to about $1.35 trillion.*
  4. The Obama budget included about $20 billion for natural disasters; the Bush budgets always assumed that there would be no floods, earthquakes, droughts, hurricanes, tornadoes, etc.  Using the Bush budget rules, this would have reduced the 2009 deficit to $1.33 trillion.
  5. Finally, the Bush budgets always assumed that the physician reimbursement provisions in Medicare would go into effect as planned even though, just like the AMT patch, it was virtually guaranteed to be scaled back.  This would have reduced the deficit to about $1.3 trillion.

* Note: Because the patch has already been enacted for 2009 rather than being just a proposal, its cost absolutely should be included in the budget numbers at this point.

But on the other hand, the

But on the other hand, the Bush people always found ways to inflate the deficit so that they could show "improvement" when the midsession review came out. I rather suspect that the Obama people are doing a bit of the same. It makes sense for them to throw everything including the kitchen sink into this budget so that that any of the positive breaks they get will look as good as possible.


Where's the rest of the documents?

Bruce is right, and I remember bitching about it at the time, though I don't recall the components of the inflated estimates.

By the way, does anybody know the status of all the rest of the usual budget documents -- the Appendix, the Analytical Perspectives, Historical Stats? They don't seem to have been issued.


This was always intended to

This was always intended to be just a summary document.  The full proposal is currently scheduled to be release March 30.


Thanks.

Thanks.


I wouldn't be surprised if

I wouldn't be surprised if the game here is to make the first year budget deficit as large as possible as its the one the current administration can most blame on the previous one. I expect we'll see "improvement" as defined by percentage reductions against the baseline.


Bush.

Bush sucks. :]


Deficit

That's definitely saying something, considering the amount of spending that Bush did. Bush was not the president who I thought that we elected. He did an excellent job in many areas but the spending was a different story. I would fully expect Obama to outspend him because he is definitely to the left of the most left in this country. Let's see where this budget takes us.

I always say mind your own shop and go on with your life once the politicians have made their decisions. But if everybody did this I guess there would be no politics ;)
Ryan


Huh?

Aside from FDR, the left most presidents have decreased the debt as a percentage of GDP. In fact, the only presidents to significantly increase the debt as a percentage of GDP over their administrations since World War II is Reagan, Bush, and Bush.

The most conservative presidents actually have ended up spending us into the most debt. It is possible that Obama is going to spend more than Bush, and will likely have more of an FDR impact on the budget than any of his other liberal predecessors since WWII. However there is absolutely no evidence that the recent right-leaning presidents have any less reluctance to spend than any of the left-leaning presidents between FDR and Obama. In fact, history shows just the opposite is true.

http://zfacts.com/p/318.html


Do you think the stimulus and the housing plan will work?

Do you think the stimulus and the housing plan will work? I wonder. The deficit is going up and inflation may be just around the corner. I saw a good article on this on

http://www.recessioninfocenter.com


Par for the political course

When one first arrives on the job one makes everything look as bad as possible (the fault of one's predecessor) so the future will look better by comparison. Standard operating procedure.

Obama's doing exactly that -- while making the future look better by projecting 4% average GDP growth over the period 2010-2013 (starting next year, whatever happened to "the worst economy since the Great Depression"??) ... and while using a baseline that projects Iraq war spending greater than Bush planned to be able to claim "cutting" it as savings, and so on.

But the bottom-line reality is this: over the last four years 2005-2008 the dreadful, horrible, wastrel Bush deficits averaged 2.2% of GDP as per CBO (3.2% in the last year, 2008).

Obama is starting off with a 12% of GDP deficit and promises to cut it over the years to only 3.5% -- assuming four years of average 4% GDP growth (we haven't had even one year of GDP growth over 3.7% since the 1990s) ... and that somehow all the new programs with temporary authorization in the stimulus bill will expire (same story as with the "temporary" Bush tax cuts only on the other side), etc.

And this is being sold as tough new stringency in budget planning. Even though, even with all the assumptions, it doesn't even pretend to get the deficits down to the actual level of 2005-8.

Looks like the same old politics to me.

Though I am glad the economic crisis is now projected to end so happily so soon -- with 2010's projected GDP growth rate being the second highest of the last ten years. Even if it does make one wonder about the real urgency of pushing a trillion dollars of deficit spending into 2010.


Bush Not So Thrifty

It sounds 'official', Mr. Glass, when you cite percentages of GCP and say they are backed up by OMB, but the methodology of budgeting has been changed.

In the article that started these comments, the author applied the Bush accounting principles to Obama's deficit and came up with a reduction of 24%, from $1.75T down to $1.33T, or a reduction of $420B.

If the expenditures being counted have been doctored, and this article gave examples to show it was, then how do you make a case for comparing the two (Bush and Obama, if you're having trouble keeping up).

Obama started out with more than 3/4 of a Trillion dollars as a Stimulus package...something over and above the 'normal' budget process. That, and the War, and other expenditures are being fullly counted for the first time. I'd say it is a step in the correct direction.


Curtailing interest after 2011 or so?

Wasn't there another trick the Bushies used in which they pretended that payment of interest (? or was it tax cuts?) would stop after some date in the near future?




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