Setting the Economic Record Straight

Jim Hoft reminds us of a few economic facts the mainstream media has been ignoring:

On July 11, 2006, the Bush Administration announced they were revising midyear budget estimates. They changed their projections after they discovered that greater than expected tax revenues would drop the deficit below 300 billion dollars. Budget Director Rob Portman drove home the message later that day telling reporters that this latest revision was proof that the administration's tax cuts were working.

This wasn't a one time event. During the Bush years, despite the 2000 Recession, the attacks on Sept. 11, the stock market scandals, Hurricane Katrina and wars in Iraq and Afghanistan, the Bush Administration was able to reduce the budget deficit from 412 billion dollars in 2004 to 162 billion dollars in 2007, a sixty percent drop. In 2004, the federal budget deficit was 412 billion dollars. In 2005, it dropped to 318 billion dollars. In 2006, the deficit dipped to 248 billion dollars. And, in 2007, it fell below 200 billion to 162 billion dollars. During the Bush years, the average unemployment rate was 5.2 percent, the economy saw the strongest productivity growth in four decades and there was robust GDP growth. These were amazing accomplishments considering the unexpected challenges. You certainly didn't read much about this in the press.

But, things changed in 2007. Democrats took over Congress, gas prices started to rise, and at the end of the year and into 2008 several financial institutions started to crumble as the housing bubble began to burst. Of course, it should be noted that President Bush publicly called for the reform of Fannie Mae and Freddie Mac 17 times in 2008 alone before Congress acted. Democrats, on the other hand, blocked reform numerous times. It was later reported after the 2008 election that Bush had nothing to do with the financial crisis. Hoover Institution visiting fellow Scott S. Powell wrote in Barron's in February of this year that the present crisis began in the 1970s, during the Carter administration, with passage of the Community Reinvestment Act to stem bank redlining and liberalize lending in order to extend home ownership in lower-income communities. This risk was acknowledged in the Bush administration's first fiscal-year budget, released in April 2001. Sadly these warnings were ignored by Congress.

But, this didn't stop Barack Obama and other liberals from blaming George Bush for the market meltdown last year. And, of course, the media didn't bother to correct them. In fact, Barack Obama started attacking President Bush on the economy long before the September 2008 meltdown. Obama was campaigning against George Bush's "failed economic policies" back in June of last year. Even back in February of last year, Barack Obama was hammering Bush on his economic record. And, he carried it right on through the Inauguration. His unprecedented Bush-bashing continues to this day. Bush has become the Obama bogeyman.

In January of this year, Obama officials said the new president would inherit nearly a trillion dollar deficit. Obama repeated this claim that he had inherited a trillion dollar deficit in his address to Congress in February. But, only a few weeks later in March, in his weekly radio address, Obama said his administration had inherited a 1.3-trillion-dollar budget deficit. That was some fancy work by Bush, huh?

The media has helped Obama right along with this line. In March, the Washington Post blamed Bush for leaving Obama with a trillion dollar deficit. By April, Associated Press reported that Obama inherited the entire deficit, which will balloon to 1.8 trillion dollars this year.

Phooey. This is complete rubbish. The truth is that Obama inherited a 2008 budget deficit of 459 billion dollars. He voted for the 700 billion dollar bank rescue in the fall. He was left 350 billion from this spending bill when he took office. He then spent 787 billion dollars on a Stimulus Bill, 33 billion dollars on the SCHIP bill, and 410 billion dollars on his record-setting Omnibus Bill. Karl Rove explained that if Obama didn't like the banking bailout bill he could have refused to spend that 350 billion dollars that Bush left him but he didn't. Obama went ahead and spent it anyway.

The CBO estimated that the Obama budget deficit will total an astounding 13.1 percent of GDP this year. As a comparison, under George Bush, the federal deficit for 2008 was 3.2 percent of GDP. The deficit for fiscal year 2007, in the last budget adopted when Congress was controlled by Republican majorities, was 1.2 percent of GDP. Obama's deficit will force the United States to borrow nearly $10 trillion in the next decade.

Obama has already created an unbelievable federal deficit of 1.8 trillion dollars this year. This is his deficit. He can't blame Bush the bogeyman. Bush didn't tell him to borrow and spend this much money. Bush didn't tell Obama he had to spend his way out of this recession. Barack Obama created it. Barack Obama owns it.

Blaming his predecessor has been a standard part of Obama's stump speech, but the facts don't support the rhetoric.