Good News On The Deficit
Looks like I spoke too soon. Last Thursday, I posted an article about the expected good news on the federal budget deficit for 2013. Today, the actual numbers were released. They are even better than expected.
After churning the data for the first two quarters of fiscal year 2013, the Congressional Budget Office is now predicting a deficit of $642 billion this year. This is down over $200 billion from their first-quarter estimate, mind you. They are also projecting a deficit of only $378 billion for next year.
As is my wont, I decided to put this into chart form, so here you go:
[Click on graph to see larger-scale version.]
That's pretty stunning, isn't it? In 2013, the deficit will be less than half what it was when Barack Obama took office. In 2014, it will be approximately one-fourth the size of the 2009 deficit. Whether in absolute terms or in proportion, this is likely to be the best deficit-reducing record in all of American history, in fact.
As I said last week, there are multiple reasons for the falling deficits, but the largest of these is likely the continued recovery and growth of the American economy. The recovery seems to be accelerating, in fact, since so far all the revisions in the CBO estimates have been because they've been too pessimistic. Which means the actual deficit for 2013 could be even lower than this chart shows (barring unforeseen economic calamities, of course).
The political ripples from this news are going to spread, as well. The budget battles in Washington for the rest of this year are going to be fought on much friendlier ground than the ones of the past few years. The voices crying for extreme austerity measures are going to be muted. Politicians will scramble to claim the good news as their own (or their own party's, at the very least).
I've always thought it rather unfair for any president to be either "blamed" or "credited" with macroeconomic trends, as the tools at their disposal to direct the American economy are a lot more limited than most people realize. Even having said that, I think that Barack Obama is going to reap the lion's share of the credit for the turnaround in the economy. It happened slower than everyone would have liked, but with numbers like these it is pretty indisputable the direction the economy now seems to be headed. Fair or not, Obama's going to get the credit for this turnaround.
Of course, this news breaks in a week full of other political news which will likely get a lot more attention than the deficit numbers. But these numbers will indeed have a major impact on the political scene for the rest of this year and on into the 2014 midterm elections. So I thought it was worth pausing and taking a look at the numbers today (even if my chart was rather hastily thrown together). Because if this trend continues, the American economy of Obama's second term is going to be a lot brighter than it was in his first.
I just can't help but wonder: wouldn't it be ironic if Obama goes down in history as the biggest deficit-cutting president of all time?
-- Chris Weigant
Follow Chris on Twitter: @ChrisWeigant
Nobody liked the graph?
:-(
(Heh.)
-CW
I liked it (aside from my usual comment about using deficit as a % of GDP since this factors in the time value of money).
If you wanted to be really Partisan (I know you don't really) you could have colour coded it to represent which President was responsible for which years (so blue for 1992-2001 when the deficit shrunk, red for 2002-2009 when it expanded, blue for 2010-present when it once again shrunk). But most people with a brain have already realized this anyway and those in denial will continue to be in denial whether or not you did this...
Also these are just projections the actual result could be worse. But it could also be BETTER - these projected deficits already had to revised downwards because unemployment numbers have been better than expected this year (plus some large bank bailout repayments).
If anything your graph should show that the deficit is starting to come under control and it is UNEMPLOYMENT that politicians should be interested in.
* Last paragraph: should show -> shows
Nobody liked the graph?
my lack of comment was because i think the graph actually makes obama look worse than he has actually been, not better. the reality is that the economy was in free-fall when he took over, and large deficits were necessary to prevent total collapse. however, without that context it looks like even obama's best year (the current one) is worse than bush's worst year - much less the trend under clinton.
michty6 -
Yeah, I didn't bother to use FY2013 constant dollars, either, but, hey, I kind of just threw it together on the spot. It serves the purposes it was designed for, in a sort of ad hoc fashion, though.
I did consider marking the presidential eras, but it would have been difficult due to the debate over inauguration years when the budget's already in place (like 2009 or 2001). Also, it took long enough to get the three #*&!ΒΆ colors to look right as it was... sigh... lots of Excel fun, as usual.
I was happy to see actual official CBO figures finally released, though. I guess I was just impatient last week, that's all...
:-)
nypoet22 -
See above comment on the overlap years. I tend to think of Obama getting handed that $1.4T deficit from Bush, but you've got to admit that the stimulus he passed had something to do with it as well (in a minor way). So it's impossible to be really accurate, although when that chart is filled in with the real figures for 2013, 2014, 2015... etc., I think Obama's stewardship will become plain for all to see, and incredibly positive overall. Maybe that's just me, though, I dunno. I am an incurable optimist...
:-)
-CW
I love the graph! Reposted and rec'd.
Of course you realize, if Obama starts kicking ass on the deficit, Republicans are going to have to start pivoting to a different economic position. Maybe they'll go back to deficit spending?
The contortions hurt the brain
And sorry for the time delay CW ... traveling on business to RTP.
-David
David -
I guess I really don't have a leg to stand on when it comes to complaining about late responses in the comments!
But hey, I've been trying to do a better job answering folks this week...
-CW