O'Reilly: Deficit Rose Eightfold “Under President Obama”; After Stimulus, Federal Debt Rose To Record Levels

O'Reilly: Obama “Has Embraced Out-Of-Control Spending.” From the October 18 edition of Fox News' The O'Reilly Factor:

O'REILLY: There's no question the Obama administration has embraced out-of-control spending, it's not debatable. [Fox News, The O'Reilly Factor, 10/18/11, accessed via Nexis]

O'Reilly: Deficit Has Gone From $168 Billion To $1.3 Trillion In Four Years. From the October 18 O'Reilly Factor:

O'REILLY: Please listen closely to these statistics. In the year 2007, during the Bush administration, federal deficit spending was $161 billion despite the Iraq and Afghan wars. Four years later, four years, under President Obama the deficit spending $1.3 trillion, eight times as much. [Fox News, The O'Reilly Factor, 10/18/11, accessed via Nexis]

O'Reilly: After Stimulus, “Unemployment Went Up Considerably” And “The Federal Debt Rose To Record Levels.” From the October 18 O'Reilly Factor:

O'REILLY: So if you said the spend -- the stimulus spending work but unemployment went up considerably.

[crosstalk]

ALAN COLMES (Fox News contributor): Unemployment --

O'REILLY: And the federal debt rose to record levels. [Fox News, The O'Reilly Factor, 10/18/11, accessed via Nexis]

Fact: Large Deficit And Its Roots -- Tax Cuts And Recession -- Preceded Obama's Term In Office

O'Reilly Cherry-Picked 2007 Deficit -- It Was One Of Bush's Best Years. According to the Office of Management and Budget, the deficit was $158 billion in Fiscal Year 2002, $378 billion in 2003, $413 billion in 2004, $318 billion in 2005, $248 billion in 2006, $161 billion in 2007, $459 billion in 2008, and $1.4 trillion in 2009:

[From two images of an Office of Management and Budget table, accessed 10/19/11]

CBPP: Deficit For FY09 Was $1.4 Trillion; FY09 Began “More Than Three Months Before President Obama's Inauguration.” From the Center on Budget and Policy Priorities:

The deficit for fiscal year 2009 -- which began more than three months before President Obama's inauguration -- was $1.4 trillion and, at 10 percent of Gross Domestic Product (GDP), the largest deficit relative to the economy since the end of World War II. At $1.3 trillion and nearly 9 percent of GDP, the deficit in 2010 was only slightly lower. If current policies remain in place, deficits will likely resemble those figures in 2011 and hover near $1 trillion a year for the next decade. [Center on Budget and Policy Priorities, 5/10/11]

CBO Projected A $1.2 Trillion Deficit Before Obama's Inauguration. In a budget report released on January 7, 2009 -- before Obama took office -- CBO stated:

The ongoing turmoil in the housing and financial markets has taken a major toll on the federal budget. CBO currently projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. That total, however, does not include the effects of any future legislation. Enactment of an economic stimulus package, for example, would add to the 2009 deficit. In any event, as a percentage of GDP, the deficit will most likely shatter the previous post-World War II record high of 6.0 percent posted in 1983 (see Figure 11).

A drop in tax revenues and increased federal spending (much of it related to the government's actions to address the crisis in the housing and financial markets) both contribute to the robust growth in this year's deficit. Compared with receipts last year, collections from corporate income taxes are anticipated to decline by 27 percent and individual income taxes by 8 percent; in normal economic conditions, they would both grow by several percentage points. In addition, the estimated deficit includes outlays of more than $180 billion to reflect the cost of transactions of the TARP. [Congressional Budget Office, January 2009; Associated Press, 1/7/09]

CBPP: “If Not For The Bush Tax Cuts,” The “Wars In Iraq And Afghanistan,” And “The Worst Recession Since The Great Depression,” The U.S. Wouldn't Be Facing Such Large Deficits. From CBPP:

The events and policies that pushed deficits to these high levels in the near term were, for the most part, not of President Obama's making. If not for the Bush tax cuts, the deficit-financed wars in Iraq and Afghanistan, and the effects of the worst recession since the Great Depression (including the cost of policymakers' actions to combat it), we would not be facing these huge deficits in the near term. By themselves, in fact, the Bush tax cuts and the wars in Iraq and Afghanistan will account for almost half of the $20 trillion in debt that, under current policies, the nation will owe by 2019. The stimulus law and financial rescues will account for less than 10 percent of the debt at that time.

[Center on Budget and Policy Priorities, 5/10/11]

AP “Fact Check”: Rise In Federal Debt “Comes Not From Political Decisions” But From “Deep Recession.” From an August 20 AP article:

While spending's share of the GDP might be at a post-World War II high, tax revenues have fallen to 14.4 percent of the index, the lowest since 1950.

This disparity between what comes in and what goes out plays into the Republican argument about runaway spending.

But it also reflects the mathematical reality that during recessions, tax revenues go down sharply because people and companies make less money and so pay less in taxes. Federal spending goes up, even before stimulus programs, with an increasing demand for government help from food stamps and unemployment compensation and other safety-net programs.

At the same time, the negative economic growth associated with recessions lowers the GDP number on the bottom of the equation, further boosting the ratio of spending to GDP.

[...]

Much of the present large gap between tax revenues and federal spending comes not from political decisions but from what happens to a nation's finances during any deep recession, economists suggest. [AP, 8/20/11]

CBO: 2011 Deficit Due To The Recession And “An Imbalance Between Revenues And Spending That Predated The Recession.” From the Congressional Budget Office's Budget and Economic Outlook:

The deficit for 2011 reflects a difference between federal revenues that are much lower than average and federal outlays that are much higher than average. According to CBO's estimates, revenues this year will amount to 15.3 percent of GDP, compared with an average of 18.0 percent over the past 40 years, and outlays will amount to 23.8 percent of GDP, well above their 40-year average of 20.8 percent. The gap between revenues and outlays results from a combination of factors: an imbalance between revenues and spending that predated the recession, sharply lower revenues and elevated spending associated with the severe drop in economic activity, and the costs of various federal policies implemented in response to those conditions. [Congressional Budget Office, August 2011]

O'Reilly: U.S. Is On The Path To Greece

O'Reilly: “If The Deficit Spending Doesn't Stop, The U.S.A Will Become Like Greece, Insolvent And Chaotic.” From the October 18 O'Reilly Factor:

O'REILLY: Now you would think President Obama for his own political survival would support drastic cuts in federal spending but he doesn't and neither does the Democratic Party in general.

In fact, the far-left loons want to spend more believing there's all evidence that it will get us out of the sovereign recession. So if the Republicans are smart, a big if, they will simply run a campaign on economics. There's no question the Obama administration has embraced out- of-control spending, it's not debatable. And if the deficit spending doesn't stop the U.S.A. will become like Greece, insolvent and chaotic.

[...]

O'REILLY: OK so, everybody but Colmes, everybody, maybe the Wall Street protesters, maybe that. But everybody else who is not ideological is going to say got to put a lid on it or we're going to be Greece. We got to. Because we can't pay our bills, we can't pay it back. [Fox News, The O'Reilly Factor, 10/18/11, accessed via Nexis]

Fact: Greek And American Situations Are Fundamentally Different; Greek Problem Is “Impossible Here”

Bartlett: “The Sort Of Problem Greece Is Experiencing Is Impossible Here.” In a June 14, 2010, blog post, former Bush Treasury official and conservative economist Bruce Bartlett noted that “the sort of problem Greece is experiencing is impossible here.” From Bartlett's blog post:

The recent financial crisis in Greece has led to a lot of discussion about whether the United States might one day have a public debt so large that default becomes a real possibility. While the sort of problem Greece is experiencing is impossible here, we have another problem that, to my knowledge, no other nation on Earth has: a legal limit on government debt that Congress must raise periodically. This peculiarity of our fiscal system could indeed lead to a default on the debt, with repercussions that advocates of default -- yes, they exist -- have absolutely no clue about.

The main reason the U.S. cannot suffer the sort of debt problems of Greece and other eurozone countries is that all our debt is denominated in dollars, of which we essentially have an unlimited supply. Because its monetary policy is controlled by the European Central Bank, Greece can't just print euros the way we can print dollars. And the Federal Reserve will always ensure the success of a Treasury bond auction. De facto monetization of the debt could be inflationary, but default resulting from a lack of demand for Treasury bonds is not really possible. [Capital Gains And Games, 6/14/10]

Former White House Economist Romer: “At A Most Fundamental Level, The United States Is Clearly Completely Different.” From the Christian Science Monitor:

In response to a question about possible lessons for the US from the Greek experience, [Former White House Council of Economic Advisers Chair Christina] Romer pushed back strongly at a Monitor-sponsored breakfast with reporters. “At a most fundamental level, the United States is clearly completely different.... I think the important thing is the United States is the most credit-worthy country in the world,” she said.

Romer added, “No, I don't think there is actually a lesson for the United States. I think, for all of us, what we always knew is countries have to get their budget deficits under control, and the United States and the president certainly have a plan to do that.” [Christian Science Monitor, 2/12/10]

Time's Curious Capitalist: “The U.S. Is Not Greece. In Many Important Ways, The Situations These Two Countries Face Are Extremely Different.” From Michael Schuman, writing at Time magazine's Curious Capitalist blog:

With much of the developed world -- including the U.K., Japan, and yes, the U.S. -- facing heavy state debt burdens, the events taking place in Greece are a glimpse into the future for many of the global economy's most important nations. As politicians in Washington wrangle over the debt ceiling, budget cuts and taxes, we have to ask the question: Is the U.S. heading in the same direction as Greece?

I should state right at the state [sic] that the U.S. is not Greece. In many important ways, the situations these two countries face are extremely different. First, the debt burden of the U.S., relative to the size of its GDP, is not nearly as large -- just under 94% compared to 147% for Greece at the end of 2010, according to the OECD. Secondly, the level of U.S. debt is considered sustainable; Greece's isn't. Generally, there is a widespread belief among those who follow European finance that Greece is unlikely to be able to pay off its current debt load. Those very divergent perceptions are reflected in bond yields, a sign of the risk investors believe they take on by holding the bonds. Ten-year Treasuries are trading at a yield of only 3%; Greece's are at 17%. Third, the U.S. has far more flexibility in how it deals with its debt than Greece. The U.S. can devalue the dollar or inflate its way to a lower debt burden. Those measures have their own consequences, but they make an American default much less likely than a Greek default. Since joining the euro zone, however, Athens has lost control over its monetary policy -- it can't devalue the euro or control its supply. That means the adjustment for Greece will potentially be much more painful than the one America faces. And lastly, the U.S. still has control over its own fate and can choose the course it takes in tackling its debt and deficits. Greece is at the point of no return. The Greeks have the EU shoving austerity measures down their throats. They don't have options; the Americans do. Whether or not the U.S. ever ends up like Greece depends on what Washington does with those options. [Time, The Curious Capitalist, 6/29/11 (emphasis added)]

O'Reilly: Taxing The Rich Won't “Put A Dent” In Federal Debt

O'Reilly: Taxing The Rich Wouldn't “Even Put A Dent In The Federal Debt.” From the October 18 O'Reilly Factor:

O'REILLY: Well, “Talking Points” is playing Paul Revere this evening. Bankruptcy is coming and the Democrats are not considering that reality. The tax the rich mantra is a delusion. There are not enough rich people in the country to even put a dent in the federal debt. Government spending should revert back to the year 2007 when we had a manageable deficit.[Fox News, The O'Reilly Factor, 10/18/11, accessed via Nexis]

Fact: Sunsetting Bush Tax Cuts Over $250,000 Would Reduce Debt By $826 Billion Over 10 Years

CBPP: “Allowing Tax Cuts To Expire” For “The Top 2 Percent Of US Households” Would Prevent "$826 Billion In Added Deficits And Debt Over The Next Ten Years." From CBPP:

Allowing tax cuts to expire for married filers with incomes above $250,000 and single filers with incomes above $200,000-- the top 2 percent of U.S. households[1] -- will avert $826 billion in added deficits and debt over the next ten years. The savings from allowing the top two marginal tax rates to expire for those high-income households constitute $443 billion of that $826 billion. [2] There is broad consensus among economists and fiscal policy analysts that the deficit and debt levels the government will experience if current tax and spending policies are continued will ultimately be harmful to the economy. [CBPP, 2/1/10]

O'Reilly: Stimulus “Did Not Work Very Well”

O'Reilly: “As We All Know, Stimulus Spending Did Not Work Very Well.” From the October 18 O'Reilly Factor:

O'REILLY: Now, to be fair, the economy collapsed on Bush's watch and both Republicans and Democrats committed almost $1 trillion to prop up the economy. As we all know the stimulus spending did not work very well. [Fox News, The O'Reilly Factor, 10/18/11, accessed via Nexis]

Fact: Stimulus Worked As “Expected,” Reduced Unemployment, And Increased Economic Growth

Former White House Economist Bernstein: “The Weight Of The Evidence Is That The Recovery Act Did What We Expected It To Do.” Former White House economist Jared Bernstein, now a Senior Fellow at the Center on Budget and Policy Priorities, writes:

Though we can never know alternative histories -- in this case, how the economy would have performed absent the stimulus -- the weight of the evidence is that the Recovery Act did what we expected it to do.

It created a few million jobs and shaved a few percentage points off the unemployment rate. But most important, it kept a bad situation from getting a lot worse.

Lots of academic, nonpartisan evidence reveals the Recovery Act created or saved millions of jobs. The Congressional Budget Office, for example, just released a report finding that at its height about a year ago, the act created (taking the midrange of their estimates) around 2.5 million jobs, and shaved around 1.5 points off of the unemployment rate.

Again, that's what we expected in terms of unemployment reduction, though we clearly were too optimistic about the level of the jobless rate, in large part because we had not yet seen data on just how deep the unfolding downturn was.

[...]

What [critics] can't say, at least not without ignoring the evidence, is that the Recovery Act failed. It did what we expected it to do, creating jobs, lowering unemployment and preventing recession from morphing into depression. If anything, what the evidence shows is that it ended too soon. And that is why President Obama is, as we speak, crafting a smaller package of targeted jobs measures to build on the success of the Recovery Act. [CNN, 8/31/11]

CBO: Stimulus Increased Employment By More Than 1 Million Jobs. An August 2011 CBO report estimated that the American Recovery and Reinvestment Act "[l]owered the unemployment rate by between 0.5 percentage points and 1.6 percentage points" and that the law "[i]ncreased the number of people employed by between 1.0 million and 2.9 million" during the second quarter. [Congressional Budget Office, August 2011]

CBO: Stimulus Raised GDP. The same CBO report estimated that the Recovery Act “raised real (inflation-adjusted) gross domestic product (GDP) by between 0.8 percent and 2.5 percent.” [Congressional Budget Office, August 2011]

Private Analysts Estimate Stimulus Increased GDP By 1.8 To 2.7 Percent. In its seventh quarterly report on ARRA, the president's Council of Economic Advisers (CEA) estimated that the stimulus “has raised the level of GDP as of the first quarter of 2011, relative to what it otherwise would have been, by between 2.3 and 3.2 percent.” CEA also provided a chart showing that private analysts estimate that the stimulus boosted GDP between 1.8 and 2.7 percent:

[Council of Economic Advisers, 7/1/11]

Private Analysts Estimate Stimulus Increased Employment By 2.4 To 2.5 Million. In its report, the CEA provided the following chart showing that private forecasters estimate that as of the first quarter of 2011, the stimulus increased employment between 2.4 and 2.5 million:

[Council of Economic Advisers, 7/1/11]