But let’s go back to the tape. There have been four major laws passed during the Obama administration. The health-care law, which Democrats bent over backwards to pay for, which the Congressional Budget Office scored as deficit-reducing, and which Paul Ryan has borrowed liberally from in order to achieve short-term Medicare savings in his budget. The stimulus, which increased the deficit by about $800 billion. The tax deal, which increased the deficit by about $850 billion. Then there was financial regulation, which had little impact on the deficit, though if it works to prevent another crisis, will end up shielding us from massive increases in the deficit.
So, the scorecard: The Obama administration’s most fiscally irresponsible proposal has been their effort to extend most of the Bush tax rates without paying for them. Price tag? About $3.2 trillion over 10 years. But that’s been exceeded by the GOP’s proposal to extend all of the tax cuts, at a cost of $4 trillion over 10 years. I consider the health-care reform law not just fiscally responsible, but fiscally necessary, as above and beyond its pay-fors it includes a host of policies and programs meant to control costs in the health-care sector — and I give the GOP a special demerit for taking direct aim at the law’s cost controls. The stimulus increased the deficit, though at a time when we needed to run a countercyclical deficit. Financial regulation isn’t, I think, really part of this discussion.
Of course, that’s not all that happened over the last two years. The financial crisis sent revenues plummeting and spending skyrocketing, as fewer people had income on which to pay taxes and more people needed Medicaid and unemployment insurance. There’s been more stimulus than is captured in the stimulus law. But overall, it’s a rather better record that the Obama administration is given credit for, and it reflects the fact that Obama hired most of the economists associated with the budget successes of the 1990s. These guys are deficit hawks through and through, though that’s been obscured because the last two years were an anomolous period in which temporary deficits were beneficial.
Now, the fact that many of the drivers of both our short-term deficits (the financial crisis, the tax cuts) and our long-term debt (health-care spending, tax cuts) predate Obama doesn’t mean the debt isn’t his problem, and I’ve been pretty rough on the administration for taking so long to propose a multi-year budget that lays out a sustainable path forward. But there’s a game Republicans are playing in which they try to deny any responsibility for the ongoing deficits in order to a) hurt the Democrats politically and b) leverage the debt ceiling vote to gain various policy concessions. The reality, however, is they had a big hand in the drivers of our debt, and insofar as they skeptical of Obama’s most fiscally irresponsible proposal, it’s only because they thought it wasn’t fiscally irresponsible enough.
This needs to be remembered because it has implications for how we go forward. For instance: Our current tax rates are historically low, and have made a major contribution to the deficit. Revenues have to be part of any solution — and I still think Obama is ducking reality when he proposes to make most of the Bush tax cuts permanent. Meanwhile, we need to raise the debt ceiling because of the combined impact of a large number of policies passed over many previous congresses. This isn’t something either party can duck, or hold hostage.