Knoller Blamed Obama For Every Penny Of Debt Since “The Day Mr. Obama Took Office”

CBS' Knoller Claimed National Debt “Increased $4 Trillion On President Obama's Watch.” From Mark Knoller's August 22 article:

The latest posting by the Treasury Department shows the national debt has now increased $4 trillion on President Obama's watch.

The debt was $10.626 trillion on the day Mr. Obama took office. The latest calculation from Treasury shows the debt has now hit $14.639 trillion.

It's the most rapid increase in the debt under any U.S. president.

The national debt increased $4.9 trillion during the eight-year presidency of George W. Bush. The debt now is rising at a pace to surpass that amount during Mr. Obama's four-year term. [CBS News, 8/22/11]

But CBO Had Already Projected A $1.2 Trillion Deficit For 2009 Before Obama Took Office

CBO: $1.2 Trillion Projection Based On Legislation Bush Passed 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.” CBO further stated:

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]

Knoller Reported That Obama Blames Bush And The Recession

Knoller: “Obama Blames Policies Inherited From His Predecessor's Administration” And “The Recession.” Knoller wrote that Obama “blames policies inherited from his predecessor's administration for the soaring debt.” Knoller further reported:

[Obama] goes on to blame the recession, and its resulting decrease in tax revenue on businesses, for making fewer sales, and more employees being laid off. He says the recession also resulted in more government spending due to increased unemployment insurance payments, subsidies to farms and funding of infrastructure programs that were part of his stimulus program. [CBS News, 8/22/11]

Independent Analyses Agree That “Bush-Era” Policies Are Largely To Blame For Deficit

NY Times: “Nine Straight Years Of Deficits” Are Largely The Result Of “The Bush-Era Tax Cuts, War Spending In Iraq And Afghanistan, And Recessions.” From a July 23 New York Times article:

With President Obama and Republican leaders calling for cutting the budget by trillions over the next 10 years, it is worth asking how we got here -- from healthy surpluses at the end of the Clinton era, and the promise of future surpluses, to nine straight years of deficits, including the $1.3 trillion shortfall in 2010. The answer is largely the Bush-era tax cuts, war spending in Iraq and Afghanistan, and recessions.

[...]

In 2001, President George W. Bush inherited a surplus, with projections by the Congressional Budget Office for ever-increasing surpluses, assuming continuation of the good economy and President Bill Clinton's policies. But every year starting in 2002, the budget fell into deficit. In January 2009, just before President Obama took office, the budget office projected a $1.2 trillion deficit for 2009 and deficits in subsequent years, based on continuing Mr. Bush's policies and the effects of recession. Mr. Obama's policies in 2009 and 2010, including the stimulus package, added to the deficits in those years but are largely temporary.

The second graph shows that under Mr. Bush, tax cuts and war spending were the biggest policy drivers of the swing from projected surpluses to deficits from 2002 to 2009. Budget estimates that didn't foresee the recessions in 2001 and in 2008 and 2009 also contributed to deficits. Mr. Obama's policies, taken out to 2017, add to deficits, but not by nearly as much. [The New York Times, 7/23/11]

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.

Since 1970, federal spending has averaged just over 21 percent of GDP while tax revenues have averaged over 19 percent.

The last time since World War II that federal spending exceeded 23 percent of GDP was in 1982 and 1983, when it rose to 23.1 percent and 23.5 percent, respectively, during what was then called the worst recession since the Great Depression. A Republican, Ronald Reagan, was president, and he was hardly anyone's idea of a tax-and-spend liberal.

Federal spending is even higher now as a percentage of GDP, but not by much - just between 1 and 2 percentage points. That reflects the fact that the most recent recession was far deeper than the 1981-82 downturn, which lasted 16 months.

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. [Associated Press, 8/20/11]