CBS news study on the national debt shows appalling innumeracy
TPM DC reports on a CBS news study that made the following claims:
“The debt was $10.626 trillion on the day Mr. Obama took office. The latest calculation from Treasury shows the debt has now hit $14.639 trillion.
It’s the most rapid increase in the debt under any U.S. president.
The national debt increased $4.9 trillion during the eight-year presidency of George W. Bush. The debt now is rising at a pace to surpass that amount during Mr. Obama’s four-year term.”
For technical reasons the real number as calculated by CBS news should have been just the debt owed by the US government to creditors, excluding the debt owed to itself for social security, and that’s about $3.7T.
But that’s not the big problem in these claims.
First, as TPM points out, the relevant metric is the size of the debt relative to the size of the GDP, not the absolute nominal amount of debt.
Second, there’s the question of causality. All statisticians know that assigning causality is often difficult, but that’s really the crux of the matter. If you can assign causality accurately you’ve got the gold standard of proof. And in that regard this report is deeply flawed.
The report implies that Obama’s policies are to blame for this increase in debt, and certain of his policies contributed, but they are small compared to the bigger structural problems he inherited. For example, one can fairly assign Obama responsibility for the stimulus package in 2009, the bailout of the auto companies, the end of year 2010 tax deal (which extended the Bush tax cuts), and the costs of war in Afghanistan in 2009 and 2010 (which he argued in support of in the campaign, and which he continued and expanded).
But Obama inherited an economy in freefall, and it turned out to be significantly worse than what the Congressional Budget Office initially projected in early 2009. He also inherited the Iraq war, which he strenuously argued against and it almost certainly wouldn’t have happened had he been president (he wound it down as quickly as he could, but those things take time to do responsibly). He inherited TARP (which has largely been paid back) and the AIG bailout (which still will cost us). He inherited Medicare Part D, which was not paid for. He also inherited the Bush tax cuts, which were slated to expire at the end of 2010 (and also weren’t paid for). Surely President Obama shouldn’t be assigned responsibility for the deficits induced by the tax cuts (except post 2010, when he extended the cuts in a deal with Republicans, but even then, he got some things in return for that deal that need to be weighed against those costs). I also suspect that some of this increase in debt is related to the honest accounting of the costs of the Iraq and Afghan wars, which were treated by the previous administration as “off budget” (perhaps someone with more knowledge of the budget process can illuminate us about that).
And remember that when Obama came into office in January 2009 the government was operating under budgets approved by the previous congress and administration, so it’s not reasonable to argue that the first month or two of his administration Obama is responsible for the debt. He’s also clearly not responsible for the unemployment figures in February 2009, which were the worst in 25 years. At some point (probably starting in May or June of 2009) he can reasonably be assigned responsibility but it’s not reasonable to argue that events in the first couple of months of his term were clearly caused by his policies, because they hadn’t been implemented yet. This was the same argument Ronald Reagan made when he came into office–it was correct then and it is correct now, as any fair minded observer must admit.
So whatever your political persuasion might be, there is a reasonable and fair minded way to look at this issue, and by any measure, the idea that President Obama’s policies added to the debt in an unprecedented way is simply false (for a text and graphical presentation of that result go to this Wikipedia entry on the national debt and a graph from the NYT based on Congressional Budget Office data). Those who imply otherwise are arguing against the laws of arithmetic, and they just embarrass themselves by doing so. One can reasonably argue against some of the President’s policies but disputing basic math and confusing elementary assignation of causality is something I’d expect from middle school students, not our elected representatives (but of course, I’m an optimist).
Finally, there is a separate question of what the debt is being used to do. Not all debt is created equal. Debt that is used to finance investments (like improved infrastructure, research and development (R&D), or education) is very different than that used to fund consumption (like wars or consumer spending). More debt to fund infrastructure that will yield returns to the economy in faster shipping or travel times is clearly worth doing when the private sector won’t fund these things. Same for educating the populace to do more skilled jobs or funding basic R&D. The justification for such investments is well established in economics, because they yield “public goods”, and the private sector will underinvest in those (because no one actor can exclude others from benefitting from those investments).
Distinguishing between the costs and benefits of debt used to do different things may be too much to ask (alas), but at least let’s agree that the laws of arithmetic are valid and that facts are facts. My granddad used to say that if his employees sent him budgets and 2 + 2 didn’t equal 4, he’d send them back until things added up, and that’s what we should do with this CBS report and the people trying to make political hay with it.
Addendum October 11, 2011: I just saw this nice chart summarizing the contribution of the various Bush administration policies for the national debt, which reinforces the arguments I made above.
Addendum October 21, 2011: Talking Points Memo posted a wonderful chart of the sources of US government revenue over the past 60 years, which I repost below. It shows significant declines in corporate and excise taxes, and an increase in payroll taxes. The explanation of the graph is here.
