Fox News' $20 Trillion DeceptionNovember 2, 2012 1:41 PM EDT ››› THOMAS BISHOP
Fox News claimed that President Obama's economic plan is a "path to Greece" by deceptively comparing the national debt in 2009 to the debt projected in 2016. But economists agree that much of the debt added during the Obama presidency was a consequence of the recession and Bush administration policies, not new Obama policies.
On the November 2 edition of Fox News' Fox & Friends, Fox Business host Stuart Varney reported that the Office of Management and Budget projected the national debt to be $20.3 trillion by the end of 2016. Co-host Gretchen Carlson then compared the debt "when the president took office" to the those projected by the OMB in 2016. Varney responded, " I think it would be worse than that because the president's plan is to raise taxes."
In fact, the OMB's Mid-Session Review Report -- which contains the projected debt estimate Varney cited -- found that not only was the deficit for fiscal year 2012 expected to be $116 billion lower than originally projected, cumulative deficits for the following 10 years are also currently projected to be $240 billion lower than previously expected. The OMB also stated regarding Obama's proposed budget for fiscal year 2013:
In the 2013 Budget, the President put forward a plan that, building on the deficit reduction undertaken the previous year, would reduce the deficit over the next decade by more than $4 trillion, put the country on a course to achieve deficits below 3 percent of GDP by the end of the decade, and stabilize the debt relative to the size of the economy. The President's plan, as updated in the Mid-Session Review, achieves those results by following a balanced approach.
The OMB further noted that upon taking office, Obama faced a "10-year deficit of more than $8 trillion -- a figure that grew even larger as the depth of the recession became clear," an assessment bolstered by other economists:
- Center on Budget and Policy Priorities (CBPP) chief economist Chad Stone said in testimony before the Joint Economic Committee in June 2011 that "the economic downturn, tax cuts enacted under President Bush, and the wars in Afghanistan and Iraq explain virtually the entire federal budget deficit over the next ten years."
- Former Reagan and George H. W. Bush adviser Bruce Bartlett called the Republican claim that "all increases in the debt or deficit" since his inauguration are President Obama's fault "nonsense" because "[George W.] Bush is more responsible."
- After examining the numbers, PolitiFact determined that "using raw dollars, Obama did oversee the lowest annual increases in spending of any president in 60 years."
Washington Post columnist Ezra Klein estimated that Obama's policies are responsible for $983 billion of the nearly $5 trillion increase in public debt over the course of his administration, while the remainder of the debt increase is attributable to Bush-era policies. Klein's column was accompanied by a chart illustrating the claim:
Varney added, "You raise taxes in an already weak economy, and you weaken the economy even more, and therefore you produce less revenue going to the Treasury, so the deficit's bigger." But economists believe that ending the Bush tax cuts for upper-income taxpayers -- a key component of Obama's "fair share" tax plan -- would not hurt the economic recovery.
Tax Policy Center economist Howard Gleckman pointed out that tax cuts for the wealthy generally do not go back into the economy because " higher income households are more likely to bank the cash than spend it. As a result, tax cuts for these high-earners will do relatively little to boost the economy in the short run." Nobel Prize-winning economist Paul Krugman explained that during President Clinton's first term, "when the very rich paid much higher taxes than they do now, the economy added 11.5 million jobs."