The Democratic Fisc: Budget Deficits/GDP: Obama Versus Reagan

Democrats have been running Congress for nearly four years, and President Obama has been at the White House for 18 months, so it's not too soon to ask: How's that working out? One devastating scorecard came out Friday from the White House, in the form of its own semi-annual budget review.

The message: Tax revenues are smaller, spending is greater, and the deficits are thus larger than the White House has been saying. No wonder it dumped the news on the eve of a sweltering mid-July weekend.

Mr. Obama inherited a recession, so let's give him a pass on the budget numbers for 2009. Clearly the deficit would have been large no matter who was President, even if the David Obey-Nancy Pelosi $862 billion stimulus made it larger than it otherwise would have been. What's striking about the latest budget estimates, however, is that the White House is predicting the numbers won't improve much through 2011, the third year of the President's term.

As a share of the economy, the White House now says the deficit in fiscal 2010, which ends on September 30, will be even larger than in 2009: 10%. That's after a full year of economic growth, given that the recovery began last summer. More remarkable still, the deficit will barely fall in fiscal 2011, declining only to 9.2% of GDP in the second year of a recovery that ought to be gaining steam.

To put this in historical context, consider the nearby table that compares deficits as a share of GDP under Presidents Reagan and Obama. The 1981-82 recession was comparable in severity to the one Mr. Obama inherited and reached similar heights of unemployment.

The deficits that resulted from that recession were the source of huge political consternation, with Democrats, the press corps and even some senior Reagan aides insisting that only a huge tax increase could save the country from ruin.

Yet as the table shows, the Reagan deficits never reached more than 6% of GDP, and that happened only in 1983, the first year of economic recovery. As the 1980s expansion continued, the deficits fell, especially as the pace of spending slowed in the latter part of Reagan's second term. Few remember now, but when Ross Perot won 19% of the Presidential vote in 1992 running more or less on the single issue of the deficit, the budget hole was only 4.7% of GDP.

The Obama deficits are double that, and more than one-third higher than even the Gipper's worst year. What explains this? Part of it is that Democrats are simply spending much more, sending outlays as a share of GDP above 25% for the first time since World War II. The White House now says outlays will be higher in 2011, at 25.1% of GDP, than at the height of the stimulus in 2009 and 2010.

This is an ironic tribute to the degree to which Democrats on Capitol Hill have been increasing spending willy-nilly below the media radar. The 111th Congress is the most spendthrift in a century outside of World Wars I and II.

Can’t compare Reagan and Obama.
You could trust Reagan has America’s best interest at heart.
You cannot trust Obama’s vision of America’s welfare state (wealth redistribution). He musta flunked World History 101.

It's amazing that Obama still polls in the 40s and sometimes the 50s, depending on the poll. I mean, wouldn't you say? Following FR's favourite historian, Tacitus, I have this to say of the Obama phenomenon, ObamaCare, Obamanomics, The Obama Reforms:

All enterprises that are entered into with indiscreet zeal may be pursued with great vigor at first, but are sure to collapse in the end.

We're in the end part I should think.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.