Fabulous picture, but…

by Russ Roberts on August 3, 2011

in Debt and Deficits, Uncategorized

James Fallows called this picture which uses numbers from the CBO and the Center on Budget and Policy Priorities, the “chart that should accompany all discussions of the debt ceiling:

The debt ceiling debate is over for now, but I found this to be a very useful chart. Fallows has some interesting observations but one of his points is that the Bush tax cuts are the “largest single contributor” to the Federal deficit.

That’s one way to look at it. A richer perspective is that during the Bush Administration, the government spent like a drunken sailor while cutting taxes. So while the tax cuts are measured to have decreased revenue by their full amount (I assume that the CBO and CBPP neglect any incentive effects of lower rates), you can’t help but be struck by the magnitude of the spending increases. So another way to interpret the chart is that roughly 2/3 of the increases in deficit in the Bush years came from spending. A lot of spending.

But for me the more interesting (and misleading) aspect of the chart is the “modest” increases in the deficit coming from Obama, a “mere” $1.44 trilion. There’s a pernicious assumption built into that conclusion, that all previous spending is “mandatory.” I put that word in quotes because it is used all the time in a way that has nothing to do with its use in the English language.

(I am reminded of the scene from the Princess Bride when Inigo says “You keep using that word. I do not think it means what you think it means.” Here’s a clip.)

Mandatory in English means you have to. Mandatory in Washington-speak means optional but let’s pretend otherwise.

So Obama stays in Iraq, stays in Afghanistan, stays in Guantanamo Bay and opens a war with Libya. What does the chart say? He gets some “Savings” (modest, but real evidently) on defense spending. Notice that the Bush part of the chart includes wars and defense. I assume that any changes in the wars under Obama (and I have no idea if spending has increased or decreased on net) aren’t in the chart because other than Libya, they aren’t new. They aren’t “New Policies.”

So the decision to keep the insanity of Bush’s spending is irrelevant. The chart acts as if Obama is stuck with that. That’s mandatory. It isn’t his. And so the decision to add another $1.44 trillion seems something like small potatoes. But that’s a terrible way to look at it. The same point can be made about the Bush tax cuts. Obama voted to extend them. Why aren’t they part of his fiscal record?

Suppose you take a loan and buy a Lexus. You decide to buy a car for your wife. You keep the Lexus and take out a second loan to buy her a Ferrari. Your wife loses her job, so you’re struggling to make the payments on both cars and your teenaged daughter asks for a car and you buy her an Acura. So what’s the source of your impending bankruptcy? It can’t be the Acura, right? That’s only a small part of your debt!

The chart is misleading on two counts. First, it implies that you can look at Obama’s contribution to the debt independently of what went before. And second, it implies that what went before has nothing to do with Obama. But when you’re living beyond your means and they’re about to take your Ferrari, you don’t buy an Acura, even if it’s a nice car and relatively affordable.

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Jeff neal August 3, 2011 at 5:18 pm

Good points. One question/criticism:

Why give the Dems the point on “Bush Tax Cuts” adding to the deficit? You mention incentive effects, yes, but the larger point is that a lack of revenue does not cause a shortfall – the wife losing her job didn’t cause the family to go broke; NOT SELLING the Ferrari took them to the poor house. Wishing she still had a salary doesn’t help matters anymore than wishing Bush had not cut tax rates.

While it’s possible that without the reduction in tax rates the Treasury MIGHT have collected more taxes, but it is undeniable that if we had not spent $XXX, the deficit would have been less by $XXX.

We spend too much – it’s simple if we don’t fall into the rhetorical traps of the statists.

Jim August 3, 2011 at 9:28 pm

I’ve seen this chart everywhere. No one with a thought to accuracy would draw such a chart. First, the lost revenue from tax cuts is just plain wrong. BTW, the Dems could have lifted them when they had a majority and did not. Does that mean they own them?

Both revenue and expenditures should be shown by year, not by presidency. Every legislation owns what they do.

Obama ran the anti-Bush campaign on everything: wars, Patriot act, taxes, spending. He has continued every one of them but Joe Nocera and his friends have stopped screaming.

And thus the graph.

Slappy McFee August 3, 2011 at 5:22 pm

Any blog post that uses Inigo Montoya clips automatically receives a thumbs up from this guy.

And thank you for pointing out the severe discrepency that this ‘chart’ had from the first day it was released from the CBPP. That only ‘new’ programs are included. You see, if you keep the program going, its your baby now.

Jake S. August 3, 2011 at 5:30 pm

“You see, if you keep the program going, its your baby now.”

It’s like an adoption…

Chris O'Leary August 3, 2011 at 5:48 pm

It also becomes non-extraordinary? You’d think Obama ended the wars and brought everybody home.

jcpederson August 3, 2011 at 5:52 pm

Have the wars in Iraq and Afghanistan been fought at no monetary cost under President Obama? Do the uniforms come with tipjars now?

Greg Webb August 3, 2011 at 5:59 pm

Russ, thanks for posting this marvelous example of the political sideshow that attempts to blame Republicans for excessive spending while obscuring the Democrats record of excessive spending. The problem is the spending, no matter how good the intentions, and the culprits are the politicians of both parties.

Josh August 3, 2011 at 6:00 pm

The comparisons between a family and the nation are getting old.

We have a revenue line and an expenditure line. Both of those lines are going to have to change trajectory to get a little closer to paralell. I have no illusions that those lines will ever be made to intersect. Russes podcast with the former senate minority leader’s aide was very enlightening into the political process and the reality. Congress has the power of the purse, and people who axe their constituents programs are going to be turfed. In a nutshel lol. So we can talk about the need to cut and the whatever, when the rubber hits the road, change is not going to be that dramatic. We will default on the debt first if need be, the aarp is the biggest lobby in washington. We will get our heirs to foot the bill. It may not be right, but is just that simple. The best solution is to try and get growth and employment up so that tax revenue also goes up. Nothing to do with tax rates, just incresing activity will create alot of revenue. Easier said than done of course, but austerity isn’t the answer. Britian is a good example right now. Our national debt isn’t our most pressing issue right now, it’s GDP and the unemplyment rate.

PrometheeFeu August 3, 2011 at 6:23 pm

Of course the debt is the most pressing issue. I’m a relatively recent entrant into the workforce and I have no interest in paying for the irresponsibility of those who voted before me. Every day that passes without taxing those people to pay the debt is another day they are foisting their irresponsibility onto me and those of my generation. Let’s get them before they make it out.

vikingvista August 4, 2011 at 3:39 pm

You are so sure of the guilt of all those you want to punish with taxes. Perhaps you can design a new justice system for us. Abolish the tedious system of due process and just punish people collectively.

Methinks1776 August 3, 2011 at 6:01 pm

The takeaway here is that we are ruled by drunken sailors.

Russ Roberts August 3, 2011 at 6:04 pm


Greg Webb August 3, 2011 at 6:07 pm

Methinks1776, comparing politicians to drunken sailors is insulting to both drunks and sailors…

Slappy McFee August 4, 2011 at 9:32 am

Yes, as someone who has been drunk on a boat, I was still able to understand that borrowing money from a buddy and throwing it overboard didn’t mean I didn’t have to pay him back.

Greg Webb August 4, 2011 at 12:01 pm

Exactly so. And, I have been drunk on a boat as well, and I still knew better.

Cynthia August 4, 2011 at 2:10 pm

But at least when drunken sailors run out of money they stop spending. :(

Don Boudreaux August 4, 2011 at 2:11 pm


Jeff neal August 4, 2011 at 2:18 pm

And at least they spend their own money.

SheetWise August 4, 2011 at 10:52 pm

RR at his best!

Jack August 5, 2011 at 12:19 pm

You are wrong: druken sailors stop drinking once they run out of money; the Federal Government keeps drinking on someone else’s tab…

jorod August 3, 2011 at 6:15 pm

I thought they were the Obama tax cuts… Silly me.

PrometheeFeu August 3, 2011 at 6:27 pm

The Washington focus on imaginary baselines really clarifies for me a point of cap and trade which I always thought was absurd. In cap and trade, you can gain carbon credits not just by reducing your emissions, but also by reducing your forecasted emissions.That always seemed absurd to me. The sensible baseline obviously had to be your current output since only that can be measured precisely. Also, it seemed way too easy to make up some future plans and then cancel them. But now I get it. This is the way they do things in Washington. They make up one number, then make up a new number and if the latest made-up number is smaller than the original one, it’s a saving. Only an idiot or a liar would call that a saving.

Mr. Blather August 3, 2011 at 8:42 pm

So, according to the logic of this chart, if there’s still torture going on at Abu-Ghraib, it’s Bush’s fault not Obama’s?

SheetWise August 4, 2011 at 10:56 pm

It’s really deeper than that, and you need to try and wrap you mind around the question of accountability. In the final analysis, if someone forgot to flush the toilet it’s Bush’s fault.

Jim August 3, 2011 at 9:40 pm

I can easily agree that Bush and Obama, while coming from different angles, arrive at the same place on a whole lot of issues; both are full fledged Progressives.

But seriously, does anyone look at that graph and believe it?

BTW, I thought that Obama crowed because TARP was paid back. And where’s the auto bailouts and Obamacare?

danny August 3, 2011 at 10:01 pm

This is the best entry i’ve seen in a while on cafehayek. It basically sums up eloquently what i’ve been arguing for 8 years ineloquently.

Hal_10000 August 3, 2011 at 10:02 pm

I attacked this when it slithered into discussion last week. It’s insane. Obama has continued the wars and the tax cuts but these are attributed entirely to Bush.

There’s another slight of hand. The deficit figures they have for Obama are “projections” over the next decade. Have we ever had spending come in under or even at the projected level? They are comparing eight years of actual Bush spending — with all the ups and downs and side journeys that characterize real life — with eight years of Obama Fantasyland.

EG August 3, 2011 at 10:09 pm

The numbers are wrong for several more reasons. Of course, the absurdity of saying that NOT taking your money is a “cost” to the thief…ie the tax cuts…the numbers on the wars are wrong for several reasons. 1) The cost isn’t anywhere near 1.4 trillion. The cost, according to the DoD, is around 757 billion. These estimates of 1-2-3 4 quadrillion dollars are all estimates out to 2017-2050 or some other fictitious date. heck…if we extend it out to 2245, the cost is likely to approach 19 trillion dollars. 2) The arguments that they include “interest to be paid out to 2050″ etc, are quite silly when the same standard isn’t applied to other spending as well. 3) Plus, last time I checked (as Don pointed out), Obama has been in Iraq for 3 of those 8 years. Somehow no costs apply to Obama for this.

So, if Bush in 8 years managed to increase “cost” 3.2 trillion dollars (excluding tax cats), and Obama managed to increase spending 1.44 trillion in 3 years (of course forgetting Cash for clunkers, Obamacare etc), that still means that Obama increased spending by 22% per year vs Bush.

Third, am I completely insane…or has defense spending increase to 964 billion in 2011, vs 848 billion in 2010, vs 794 billion in 2009…and yet Obama STILL managed to “save” 126 billion in defense? Thats a 14% increase in defense just this year.

Russ roberts August 4, 2011 at 9:56 am

I was trying to check that as well but couldn’t find a reliable source quickly. Where did you find the numbers you cited?

EG August 4, 2011 at 2:35 pm

usgovernmentspending dot com

Denton August 3, 2011 at 10:50 pm

I don’t think I have ever seen a Progressive’s chart that did not more accurately track the duplicitous nature of their personalities far better than it reflected real world phenomenon.

Ben Hughes August 4, 2011 at 1:22 am

Though not 100% related, it’s worth pointing out that there are really two pieces of government with respect to its effect on the private sector:
1. Government spending, which displaces that in the private sector
2. Government regulations (rules, etc.) and legal uncertainty that have effects on private sector activity but are very difficult to measure in pure dollars.

This chart – for all its flaws – is clearly trying to show that Obama has been less “costly” than Bush, but it only accounts for (1). My guess is Obama is *way* ahead of Bush on (2), though these things are so difficult to measure that we’ll probably just never know.

Ken Royall August 4, 2011 at 1:56 am

How is that Bush is “charged” for all spending through 2008? There was a big bump in 2007 when Democrats took control of Congress. The numbers don’t add up anyway. When Bush left office we had around a 9 trillion dollar debt, now it is north of 14 trillion.

This year alone we are projected to have a 1.4 trillion dollar shortfall between revenues and expenditures. Bush blew lots of money in 8 years, but at the rate Obama is going after not even 3 years he will make Bush look like a piker. ObamaCare alone is going to be huge.

Molon Labe August 4, 2011 at 3:34 am

I note the chart ignores the hidden costs of Obama’s policies. Obamacare has had no effect on costs? The massive increase in foodstamps, section 8, pigford is reflected where? Expanding the war to Yeman and Libya is reflected where?

EJ August 4, 2011 at 7:46 am

Not to mention that Obama hits the 1.44T mark in about 2 years, where bush was in for 8. So multiply by 4 and hes on the same annual pace.

Fred Bauer August 4, 2011 at 8:18 am

Err…Didn’t Bush 43 collect more tax revenues than Clinton? If a Democrat had lowered taxes rates and managed to collect more actual revenue, he would be a hero, right?


Warren Smith August 4, 2011 at 8:40 am

The Bush Administrations were disasters for taxpayers. By correctly pointing out that Obama and the Democrats are deeply complicitous in destroying the fiscal health of the nation you do absolutely nothing to absolve the string of Republican errors in managing this country.

If the Republicans want to win this election and bring any respite to the continuing slide toward deepening insolvency, then they should beg Bill Clinton to run as a Republican.

Scoundrel, hack, carnival barker; yet things were better when he left than when he arrived.

How many administrations can make that boast? A few, but very few.

Dan J August 4, 2011 at 11:10 pm

That would be due to republicans in congress and Clinton compromising. Also, Clinton was smart enuf to pass on Govt healthcare.

Lee Jamison August 4, 2011 at 8:43 am

I have commented on this farce of a chart elsewhere. The comments here are insightful, but miss the point that presidents don’t create budgets. Congress does. “Bush” tax cuts were cut by Congress. “Bush” spending increases were enacted by Congress. In both cases the reason they felt comfortable doing these acts was because they thought the credit and the blame would be off-loaded elsewhere. So far we’ve stupidly gone merrily along.
What is really interesting is what situations create the greatest imbalances in spending. Since 1974 the worst combination appears to be Democrats controlling the House of Representatives with a Republican in the presidency.

Dick Fitzwell August 4, 2011 at 9:48 am

The president is required by law to submit a budget to congress each year. Congressional committees construct resolutions based on this budget. Congress must authorize the spending but to suggest that the president has nothing to do with the budget process is way off.

Edsger Duckstrap August 5, 2011 at 3:53 pm

Of course the president has plenty to do with the budget process, but the ultimate responsibility lies with Congress. The president’s budget is still just a proposal. Congress could decline it and approve Dick Fitzwell’s budget instead if they wanted to.

Josh August 4, 2011 at 9:33 am

Borrowing is based on revenue projections as well. I don’t think congress took wall street’s implosion and resulting poop storm into account. If the deficit were 3% of GDP instead of 10% we wouldn’t be having this conversation.

Also, wars are a little hard to stop on a dime. Foreign policy objectives and operational safety considerations aside, theres just this titanic logistical problem. Much like government spending as a whole. Unlike a household budget there are millions of decision makers, millions of contracts and commitments, and millions of people dependent for their next meal

Dick Fitzwell August 4, 2011 at 9:36 am

I made similar comments on a blog a few days ago (see Hal’s comment above). Hal is right about Obama’s numbers being projected through 2017. The chart is saying that Obama will only be responsible for $1.44 trillion during his entire presidency. And that’s assuming a second term. C’mon man!

As I stated at Hal’s blog, tax cuts are not an expenditure. They don’t cost us anything. I would still like to hear a good explanation of how letting taxpayers keep more of their money actually costs them money.

Henry Bowman August 4, 2011 at 9:38 am

I am really tired of hearing about the “Bush tax cuts”. These were largely cuts in marginal tax rates, not actual tax cuts. And, the reality is that after their passage (the 2nd of the measures was passed in 2003), revenue to the Treasury set new records every fiscal year until the Great Recession hit us.

I’m not concluding that the so-called tax cuts caused such revenue to increase, but it is a possibility, as is the ridiculously low interest rates set by the Fed.

Jack W August 4, 2011 at 9:44 am

What really bothers me about this is that it completely ignores the actions of the Democrats in Congress during Bush’s time as President, including Obama’s time as a Senator. Except for the Iraq War, Obama supported almost all of the increased spending signed by Bush when he was a junior Senator from Illinois.

I will not disagree that Bush was not a conservative when it came to controlling spending. But he is not in the same league as Obama.

Here is a Blog post that shows some other graphs that are helpful…

Jack W August 4, 2011 at 9:45 am
tdp August 7, 2011 at 12:16 am

Gold. Post this everywhere you see that stupid chart.

Seth August 4, 2011 at 12:42 pm

“the chart that should accompany all discussions of the debt ceiling”

It’s not clear to me why this chart should accompany all discussions of the debt ceiling. It seems like a red herring to that discussion.

Russ S. August 4, 2011 at 2:55 pm

Crafty, comparing 8 years to less than 3 years. Also, don’t see an allocation to dems for Obamacare or is that the $152 million for health reform on the Obama side? I don’t think the stimulus amount doesn’t include interest… on debt to finance the stimulus. Finally, haven’t many portions of the Bush tax cuts been renewed by dems and dems and republicans? If so, are they really the “Bush” tax cuts and shouldn’t they also be allocated to the obama side? I never realized that tax cuts are new costs. The arrogance of big government is astounding.

mcwop August 4, 2011 at 2:56 pm

Bush sucked and so does Obama. Why are there comparisons to see who sucks more? Its like trying to kill James Bond with sharks or akin to saying serial killer X is worse than Y because he killed 10 and the other 5.

Ocaine August 4, 2011 at 3:34 pm

It shouldn’t matter. The problem is that we’re over our heads in debt, not which party caused it. But, I will give credit where it is due. The point that Republicans can run a deficit just as well as Democrats can does not need to be forgotten. Because if/when Republicans get into power, I don’t want their unjustified deficit spending either.

tdp August 7, 2011 at 12:17 am

We can certainly say, however, that it is politicians’ fault.

kyle8 August 4, 2011 at 6:16 pm

The chart has to be wrong from the word go since we know that the deficit has expanded wildly in just the last two years. If the Obama years added to spending at a much reduced rate, then you would expect that even with lower economic growth that the deficit would rise at a similar rate. But it hasn’t. Under Bush the deficit rose at a horrible rate of 2.5% per year. But under Obama, the rate is 4.5%!

I am not sure just what sort of BS is wrong with that chart, I just know that it is an impossibility.

Dan J August 4, 2011 at 11:16 pm

Tax cuts as a cost to govt? Only a collectivist or a lawyer would attempt such nonsense.
Like the mugger suing the woman whose purse he stole because there was only three dimes, two pennies, a stick of gum, and denture cream.

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