Deficits and Convenient Republican Memory Lose
INHERITING RECKLESSNESS: "Reagan proved deficits don't matter," Vice President Cheney said in 2002 when pushing for a fresh round of tax cuts. With this attitude in hand, Bush passed on a budgetary nightmare to his successor. Bush came into office with an advantage few presidents have enjoyed -- a $230 billion surplus. But due to a $1.35 trillion tax cut in 2001, a $1.5 trillion tax cut in 2003, and a massive defense buildup through the Iraq and Afghanistan wars, Bush quickly blew through that surplus. The next president will "inherit a fiscal meltdown," Senate Budget Committee Chairman Kent Conrad (D-ND) warned in February 2008, as the Bush administration projected a budget deficit of $400 billion. After the financial crisis emerged last fall and the ensuing bailouts, Bush's budget deficit ballooned to over $1 trillion. As Center for American Progress Vice President for Economic Policy Michael Ettlinger explained, budget deficits swelled under Bush because his supply-side tax policies slashed revenues while failing to deliver strong economic performance.
SIMPLE HONESTY: Obama has already made a departure from the Bush budget legacy by instilling new openness and transparency. Last week, the New York Times reported that Obama will not reject "four accounting gimmicks that President George W. Bush used to make deficit projections look smaller." In 2005, the Washington Post editorial board called Bush's budget proposal a "farce" for using accounting tricks. Obama's changes include accounting for the Iraq and Afghanistan wars (Bush relied on "emergency supplemental" war spending), assuming the Alternative Minimum Tax will be indexed for inflation, accounting for the full costs of Medicare reimbursements, and anticipating inevitable expenditures for natural disaster relief. The result of Obama's openness is a budget that is $2.7 trillion "deeper in the red over the next decade than it would otherwise appear." As The Wonk Room explained, "that debt was always there. It was just being hidden." "For too long, our budget process in Washington has been an exercise in deception -- a series of accounting tricks to hide the extent of our spending," Obama remarked yesterday.
THE NEW FISCAL HAWKS: While purporting to be deficit hawks, the Republican-led Congresses from 2001 to 2006 rubber-stamped the Bush agenda that created the current fiscal crisis. "[W]e're hopeful...that eventually the Democrats will decide...to move aside and let Republicans govern in the way that President Bush has led us to do," said former senator Rick Santorum in September 2006. The Congress shuttled through pork-stuffed legislation, massive tax cuts, and huge increases in defense spending. Yet those same members are trying to stifle the Obama agenda with concerns about the budget -- even as they proposed a $3.5 trillion tax-cut-only recovery package. The recovery package "spends far too much," Sen. Lindsey Graham (R-SC) said recently. Sen. Jon Kyl (R-AZ) remarked, "It's very wasteful...if you throw in the interest it's about $1.3 trillion." Yet many of the same Republicans eagerly supported Bush's $1.35 trillion tax cuts in 2001. Influential Republicans in Congress have also indicated that they may oppose Obama's housing plan because it is allegedly too expensive.
