Who's to blame for deep debt?
A while ago, Politifact reviewed a Mitt Romney claim that Obama's first term added more debt than the first 43 presidents. They rated it "Mostly True" because the calculations relied on where you started his term. So depending on where you start and stop counting, Obama has increased the debt to between 170 and 205 percent of what it was when he took office.*
The chart's numbers largely check out, although the number for the Bush tax cuts are high because they represent the total impact, including years in which he's not in office. Even if you cut away those years, Bush's added expenditures outnumber Obama's.
But how can Bush be responsible for more new spending and Obama be responsible for more debt? The reason: continuation. Look at the programs Bush started at the left. Which of the ongoing ones (i.e., not TARP or 2008 stimulus) did Obama cut?
As far as I know, not one. The Iraq war may be on the wane**, but the Afghanistan war is basically as costly as ever and the Bush tax cuts have been left untouched.
So while Obama is responsible for starting new ongoing expenditures, he hasn't stopped many, hence his budget's responsibility for a good chunk of our debt.***
Debt Ceiling Crisis 101
The United States has never yet defaulted on its debt. (Edit: see bottom for details) The government shutdowns you may recall from the past were results of failing to pass a budget and debt payments continued on even if other things didn't. Mostly because of this, America enjoys a AAA rating, meaning investors can trust they will be highly likely to be repaid. But if the federal government were to stop repaying investors they would lose their trust in the government's ability to do so.
The effects would likely ripple out beyond U.S. treasury bond investors, and hurt the global economy, especially the United States's.
At this point I turn it over to more capable hands. (I do not want to describe the messy politics behind the debt ceiling negotiations.) So here are some helpful links:
- The Washington Post's excellent take, all the way back from April. (Ignore the part about hitting the limit in May.)
- PBS Newshour's video and transcript on the subject, from May. (This explains why we haven't hit the limit yet, among other things.)
- Ratings agencies considering downgrading U.S. credit.
- The Washington Post again, but more recently. (Not exactly the same info as April article.)
- The New York Times on why negotiations failed.
The links are in chronological order. You can probably skip the top two, but I'd read the bottom three if possible. If you can only read one, though, read the second-to-last Washington Post article. That'll bring you up to speed the quickest.
I'd like to do a post like this again; it really helps me get to figure out what's going on myself. Feedback as always is welcome!
*I calculated the percentages from the numbers given in the Politifact article (linked to above), which in turn come from the Office of Management and Budget and the Congressional Budget Office.
**This does not seem to account for the tiny black box in the upper corner representing $126 billion in cuts. That mostly came through miscellaneous savings.
***Since the president cannot, constitutionally speaking, set a budget without congressional approval, it technically is not entirely his responsibility. However, it is something of a bipartisan convention to assign all the blame/praise to the president and quicker to write.
Edit(7/29/11): Phil Rosenthal recently wrote in the Chicago Tribune that the default is not unprecedented, in contrast to what many articles and commentators are saying. In 1979, the United States defaulted on a small number of payments because of an unexpected surge in demand. The dates given for default are always approximate and in that case caused a small but significant problem. His column has more details.
The '79 mini-default notwithstanding, the United States has never had a full-scale default, which could still happen if congress doesn't raise the ceiling.
