BANQUO: It will be rain to-night.
FIRST MURDERER: Let it come down.
[They all set upon BANQUO.]
Possibly the baddest few lines of script and stage direction in Shakespeare's plays, and here I've gone and appropriated it for a boring post on President Obama's looming budget deficits.* This is reason no. 502 why the internet sucks.**
Anyhow: if you haven't heard of President Obama's looming budget crisis, you will. Obama and the Democratically-controlled Congress are creating debts and deficits larger than any other US government in the history of the Republic, under any measure, with the singular exceptions of the governments that got involved in a bet-the-country war. This chart, which reflects yearly deficits under Presidents (W.) Bush and Obama, cannot be repeated enough:
Just this week we started to see higher long-term US Treasury yields, which are perhaps the first stage of the "crowding out", inflation, and general crappiness that occurs when governments spend far more than they take in (and perhaps not, see ***, below). Megan McArdle has done yeoman's work in the past charting the problems with Obama's plan for more and growing deficits and larger and larger debts. These are predictable effects of what happens when you run growing structural deficits forever and ever and ever. Moreover, there is no silver lining in these clouds:
- The stimulus package is a negligible portion of the total year-by-year deficits. Obama's deficits are structural deficits. They are by design. They are long term.
- The CBO is, as always, doing a better job than the administration at forecasting the true extent of Obama's deficits. As reflected in the above chart, Obama's team initially forecasted a deficit of about 1.75 trillion in 2009. Two months later, the Obama administration was forced to revise its own forecast to 1.84 trillion in 2009 -- virtually identical to the CBO's forecast for 2009. Trust the CBO's forecasts, not Team Obama's, if you want to continue to hold reality with both hands.
- Every yearly deficit under President Obama is larger than any yearly deficit under President (W.) Bush, and the trend line at the conclusion of the CBO's forecast is up, not down. That means the national debt will be increasing at an accelerating rate just as the baby boomers get into the full swing of retirement.
This is a problem for President Obama and his supporters, not just an opportunity for Obama-skeptics like myself. Obama's deficits could very well threaten Obama's presidency if left uncontrolled. This Slate Magazine article regarding why conservatives did so well in Europe in EU elections a few days ago -- "For a start, they don't spend like drunken sailors," says the article's subhead -- doesn't quite come to grips with the political implications of Obama's remarkable deficits. But the writing is on the wall even if Slate won't report what it says. If Republicans are paying attention, they should be seeing a winning issue for 2010 and beyond: assuming, of course, they can get their own fiscal house in order (perhaps a too-tall order).
UPDATE: A number of commentators do not want to believe the graph, which was originally published in the Washington Post on March 21, 2009. (It has since been republished all around the web, although, apparently, not here.) The numbers for the chart come from the CBO's (Congressional Budget Office) March 20, 2009 Preliminary Analysis of President Obama's proposed budget (.pdf) and President Obama's own numbers. As the CBO itself explains, the primary drivers of the increasing deficits are (1) the short and long-term effects of the recession; (2) the short and long term effects of President Obama's stimulus package; and (3) the short and long term effects of President Obama's proposed spending.
Other commentators argue directly or indirectly that Obama's deficits don't matter because Bush also ran deficits (albeit smaller ones). That's illogical: two wrongs don't make a right; if anything, Bush's irresponsibility counsels for greater -- not less -- responsibility on the part of Obama. Attacks on me as a purported Bush supporter also don't change the facts (they are a variation on the old ad hominem fallacy: attacking the man doesn't make the argument untrue). They additionally overlook the fact that I never voted for Bush.
*Also the source for the title of a pretty good book by Paul Bowles.
**For the record, I am not reason no. 503 why the internet sucks. (I might be reason no. 2012, however.)
***There are a variety of other explanations for a rise in yields, and it may well be that this commentator is overstating the case. That said, crowding out is a real risk.