In 2008 Speech, Obama Criticized Bush For Adding $4T To Debt In Part By Cutting Taxes For The Wealthy

Obama Criticized Borrowing Money To Maintain The Bush Tax Cuts For The Wealthy. In his July 3, 2008, speech cited by right-wing media figures, Obama said:

You know, there are all these Wall Street journal editorials and stuff: Obama wants to tax people.

I don't want to tax people. I would love if we could just say, “You know what? Nobody pays taxes. Tax holiday for everybody.” I would love to do that.

The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents -- number 43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back -- $30,000 for every man, woman and child.

That's irresponsible. It's unpatriotic.

(APPLAUSE)

And so, yes, I am going to roll back those Bush tax cuts that give people like me, who don't need it, a huge break. [Obama campaign speech, 7/3/08, accessed via Nexis]

Right-Wing Media Seize On 2008 Speech To Accuse Obama Of Debt Hypocrisy

NRO: “President Obama Calls His Own Actions Irresponsible And Unpatriotic.” In an August 24 post on National Review Online, Peter Kirsanow wrote:

CNSNews points out that during a campaign speech on July 3, 2008, then-candidate Obama said:

The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up the national debt from 5 trillion for the first 42 presidents -- number 43 added 4 trillion dollars by his lonesome, so that we now have 9 trillion dollars of debt that we are going to have to pay back -- $30,000 for every man, woman and child. That's irresponsible. It's unpatriotic.

President Obama has added another $4 trillion all by his lonesome. In just two and a half years, no less. That's $ 46,930 for every man, woman, and child.

Is that irresponsible? Is it unpatriotic? Or do the new rules regarding civility in public discourse render such questions (especially when uttered by Tea Partiers/terrorists) irresponsible and unpatriotic? [National Review Online, 8/24/11, emphasis in original]

Hoft: Obama Called Bush “Unpatriotic” For Adding To Debt “But That Was Before He ... Added A Record $4 Trillion To The National Debt.” In an August 24 post on Gateway Pundit, Jim Hoft wrote: “On July 3, 2008 -- the day before Independence Day -- Barack Obama said that adding $4 trillion in debt was irresponsible and 'unpatriotic['] ... But that was before he was president and before he added a record $4 trillion to the national debt in only 2 and a half years.” [Gateway Pundit, 8/24/11]

Powers: “Adding $4 Trillion In Debt Used To Be An Unpatriotic Act ... But That Was All Pre-Hope & Change.” In an August 24 post on Michelle Malkin's website, conservative blogger Doug Powers wrote:

Not surprisingly, adding $4 trillion in debt used to be an unpatriotic act.

The words below are from July 2008 -- before the rise of the oceans began to slow, the planet began to heal, good jobs were provided to the jobless, wars ended, Gitmo closed and the national credit card was cut up.

[...]

But that was all pre-Hope & Change™, back when the need to raise the debt ceiling meant a failure of leadership. Now it's a symbol of responsible economic stewardship. [MichelleMalkin.com, 8/24/11]

Fox Nation: “Flashback: Obama Says Adding $4 Trillion To National Debt 'Unpatriotic.' ” An August 24 Fox Nation post featured video of Obama's 2008 speech under the headline “Flashback: Obama Says Adding $4 Trillion to National Debt 'Unpatriotic.' ” From Fox Nation:

[Fox Nation, 8/24/11]

Morrissey: Obama “Questioned Bush's Patriotism For The Same Policies That Obama Accelerated As President Himself.” In an August 24 post on Hot Air, Ed Morrissey wrote:

Yesterday, I wrote about the CBS News story showing that Barack Obama had added over $4 trillion to the national debt in less than three years, which puts the current President on track in one term (and probably less) to beat the record that took his predecessor two terms to set. Some called this an unfair attack, noting that Congress authorizes spending, a point I addressed yesterday and which does Democrats no good at all. But guess who else blamed rising national debt on a President? Why, it's Candidate (and then-Senator) Obama,. who not only blamed George Bush for adding more national debt than his previous 42 predecessors combined, but also questioned Bush's patriotism for the same policies that Obama accelerated as President himself. [Hot Air, 8/24/11]

The Blaze: Obama's “Past Words As A Candidate Running For President Are Coming Back To Haunt His Reelection Campaign.” From an August 24 post on The Blaze:

You know the old saying: “You are your toughest critic.” In the case of President, this seems to be true as his past words as a candidate running for president are coming back to haunt his reelection campaign.

July 3, 2008: Candidate Obama criticizes President George W. Bush for adding $4 trillion to the nation's debt over the course of his eight years in office.

[...]

Flash-forward to today where the Treasury Department reports that President Obama has also added $4 trillion to the debt... in just 2 1/2 years. [The Blaze, 8/24/11]

Hannity: “Is The President Calling Himself Unpatriotic?” On the August 24 edition of Fox News' Hannity, host Sean Hannity played a clip of Obama's 2008 remarks and asked, “Is the president calling himself unpatriotic?” From Hannity:

HANNITY: And we have brand new numbers from the Congressional Budget Office. They now reveal more bad news for the already broken economy. Now, according to today's report, the national deficit will hit nearly $1.3 trillion this year. That makes 2011 the worst year in U.S. history, and that's behind, oh yeah, the years '09 and 2010, of course. Now, the CBO also predicts that budget deficits will be around $3.5 trillion over the next 10 years, at which point our debt will equal a whopping 61 percent of GDP. And if we look at 2008, well, then-Senator Obama claimed on the campaign trail that adding that much money to the debt was, believe it or not, unpatriotic.

[...]

Wow, pretty ironic, because according to the Treasury Department, $4 trillion is exactly how much of the national debt has increased under the president's watch. Now, it is the fastest debt increase under a president in U.S. history, shocking.

After Hannity later asked, “Is the president calling himself unpatriotic?” Fox News contributor Monica Crowley said that it is “amazing” that "$4 trillion spent in eight years under President Bush was, according to then-candidate Obama, unpatriotic. But adding 4 trillion in 2-and-half short years under Barack Obama is just fine." [Fox News, Hannity, 8/24/11]

Doocy: Obama “Is Running Up 152 Percent More Debt Than George Bush Per Month. So Does That Make This President 152 Percent More Unpatriotic?” On the August 25 edition of Fox News' Fox & Friends, co-host Steve Doocy, after playing video of Obama's remarks, asked:

DOOCY: When you look at the facts, this president over 31 months, has run up more than $4 trillion worth of debt. George Bush ran up $4 trillion worth of debt over eight years, 96 months. When you look at the average, this president is running up 152 percent more debt than George Bush per month. So does that make this president 152 percent more unpatriotic? [Fox News, Fox & Friends, 8/25/11]

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]

And Experts Agree That Deficits Under Obama Are Largely Due To The Recession, Bush-Era Policies

CBPP: "[V]irtually The Entire Deficit Over The Next Ten Years" Due To Bush Policies, Economic Downturn." The Center on Budget and Policy Priorities (CBPP) published an analysis of federal deficits in December 2009, which was most recently updated on June 28, 2010, titled, “Critics Still Wrong on What's Driving Deficits in Coming Years: Economic Downturn, Financial Rescues, and Bush-Era Policies Drive the Numbers.” The report noted:

Some critics continue to assert that President George W. Bush's policies bear little responsibility for the deficits the nation faces over the coming decade -- that, instead, the new policies of President Barack Obama and the 111th Congress are to blame. Most recently, a Heritage Foundation paper downplayed the role of Bush-era policies (for more on that paper, see p. 4). Nevertheless, the fact remains: Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years.

The report also graphed the effects of Bush's policies and the wars in Iraq and Afghanistan on the deficit. From the report:

[CBPP, updated 6/28/10, emphasis in original]

CAP: “Single Most Important [Cause Of The Deficit] Is The Legacy Of President George W. Bush's Legislative Agenda.” In an August 2009 analysis, the Center for American Progress (CAP) concluded that about two-thirds of the then-projected budget deterioration for 2009 and 2010 could be attributed to either Bush's policies or the economic downturn:

The report explained:

As for the deficit's cause, the single most important factor is the legacy of President George W. Bush's legislative agenda. Overall, changes in federal law during the Bush administration are responsible for 40 percent of the short-term fiscal problem. For example, we estimate that the tax cuts passed during the Bush presidency are reducing government revenue collections by $231 billion in 2009. Also, because of the additions to the federal debt due to Bush administration policies, the government will be paying $218 billion more in interest payments in 2009.

Had President Bush not cut taxes while simultaneously prosecuting two foreign wars and adopting other programs without paying for them, the current deficit would be only 4.7 percent of gross domestic product this year, instead of the eye-catching 11.2 percent--despite the weak economy and the costly efforts taken to restore it. In 2010, the deficit would be 3.2 percent instead of 9.6 percent.

The weak economy also plays a major role in the deficit picture. The failure of Bush economic policies--fiscal irresponsibility, regulatory indifference, fueling of an asset and credit bubble, a failure to focus on jobs and incomes, and inaction as the economy started slipping--contributed mightily to the nation's current economic situation. When the economy contracts, tax revenues decline and outlays increase for programs designed to keep people from falling deep into poverty (with the tax impact much larger than the spending impact). All told, the weak economy is responsible for 20 percent of the fiscal problems we face in 2009 and 2010.

President Obama's policies have also contributed to the federal deficit--but only 16 percent of the projected budget deterioration for 2009 and 2010 are attributable to those policies. The American Recovery and Reinvestment Act, designed to help bring the economy out of the recession is, by far, the largest single additional public spending under this administration. [CAP, 8/25/09]

Harvard Business Review Group Director: "[T]he Giant Deficit Is Mainly The Result Of The Collapse In Tax Receipts Brought On By The Recession." In an October 2010 post on his Reuters blog, Justin Fox, editorial director of the Harvard Business Review Group, analyzed the deficit and concluded that it was “mainly the result of the collapse in tax receipts brought on by the recession”:

The Treasury Department reported on Oct. 15 that the deficit in fiscal 2010, which ended Sept. 30, was $1.294 trillion. That's less than FY 2009's $1.416 trillion, but it's still really really big. Why is it so big, though? Is it because of all that stimulus and bailout spending? Or is something else going on?

To find out, I created a fantasy world. I figured out how fast federal spending and revenue grew over the last business cycle, from 2000 through 2007, and calculated where we'd be today if those growth rates had continued through 2010. I was originally motivated to do this for a commentary that's supposed to air tomorrow night on Nightly Business Report. But I'm thinking there's not a huge overlap between Felix Salmon readers and Nightly Business Report viewers, so I'll go ahead and share what I learned.

In my no-financial-crisis, no-bailout, no-recession, no-stimulus scenario, spending kept growing at 6.22% a year, and revenue kept growing at 3.45%. You can see from the difference between the two numbers that this was an unsustainable path. But it clearly could have been sustained for a few more years.

Where would it have left us in fiscal 2010? With $2.843 trillion in federal revenue and $3.270 trillion in spending, leaving a deficit of $427 billion. The actual revenue and spending totals for 2010 were $2.162 trillion and $3.456 trillion. So spending was $186 billion higher than if we'd stuck to the trend, and revenue was $681 billion lower. In other words, the giant deficit is mainly the result of the collapse in tax receipts brought on by the recession, not the increase in spending. Nice to know, huh? [Justin Fox,blogs.reuters.com, 10/25/10, emphasis added]

Other Independent Analyses Agree That “Bush-Era” Policies, Recession Are Largely To Blame For Current 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]

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]