If there's one political blemish on Barack Obama's first four months in office, it's that he's losing the budget debate. Democrats are openly worrying about the red ink. Republicans have taunted Obama as less fiscally responsible than his predecessor. (House Republican John Campbell compared George W. Bush's deficits to a "couple of drinks," and Obama's to "falling down, throwing up and wasted.") The administration's hasty budget-cut announcements (first $100 million, then $17 billion) show signs of panic.
But Obama's budget is actually ... pretty responsible. You've probably seen those graphs of the deficit, with gigantic spikes under Obama dwarfing the deficits that came before him. News coverage of Obama and the deficits has relied upon verbs like "cause" or "create"--i.e., "the White House's tax and spending plans would create deficits totaling $2.3 trillion more ..." (The New York Times), or "Obama's policies would cause government spending to swell ..." (The Washington Post).
This has left the impression that Obama's policies hold the main responsibility for the deficits. But it's not true. Obama is inheriting a budget facing a structural deficit--that is, one that bleeds red ink even when the economy is running full tilt--and the deficit is exploding because the economy has cratered.
In fact, Obama's budget, on net, reduces the deficit. In recent years, Congress and the president have relied on a series of budget gimmicks to mask the size of the deficit. For instance, they would assume that certain tax breaks would expire starting a year in the future, but routinely extend them a year at a time. According to the Congressional Budget Office's numbers, Obama's budget--compared to continuing current policies--would make the deficit $900 billion lower over the next decade.
That's why it's unfair to compare Obama's fiscal stewardship unfavorably with his predecessor. Bush inherited a sound budget and made it vastly worse. Obama inherited a terrible budget and proposes to make it somewhat less terrible. Obama and his economic aides obviously feel bad for not doing more to improve things, and their regret has made them appear unduly guilty.
Watch senior editor Jonathan Chait discuss this article with editor Franklin Foer: