The blog of the Columbia Journalism Review notes that the idea that the current deficit is the largest in history isn’t quite true. In dollar terms, this deficit is the biggest, but dollar terms aren’t relevant to deficits. What matters is the amount of deficit relative to overall GDP.
The current deficit is somewhere between 4.2% and 4.5% of total GDP, which is still way too high. It needs to be slashed to below 3% in order to be more manageable. However, it is not the highest deficit ever recorded in American history. As the CJR notes:
As a percentage of the gross domestic product — which many economists consider a better measure than simple dollar amounts — the currently projected deficit, at 4.2 percent according to the Congressional Budget Office or 4.5 percent according to the Bush administration, is equal to or smaller than those recorded in six years during the 1980s and 1990s (6.0 percent in 1983, 4.8 percent in 1984, 5.1 percent in 1985, 5.0 percent in 1986, 4.5 percent in 1991, and 4.7 percent in 1992).
That doesn’t excuse Bush’s spending habits, but it does put them in context. Those arguing that the current deficit is somehow the worst in history, or some great disaster are engaging in hyperbole. Yes, the deficit is bad, but it is not dangerously so. Bush does need to restrain spending, but his deficit is less than the deficits left by Ronald Reagan and his father at the end of their first terms.
So is your point that the past THREE Republican Presidents have been deficit spenders, or that Bush’s deficits are no worse than the ones that put his daddy in a recession, or that Clinton keeping deficit spending at 2.5% during his first two years was just really, really impressive?
He didn’t. The deficit in 1992 was 4.5% and didn’t significantly reduce until 1994. Plus, it wasn’t Clinton that was responsible for the budget being balanced, it was The Budget Enforcement Act of 1990’s PAYGO rules that restricted federal spending throughout the 1990’s as well as a split government that forced a government shutdown to avoid increasing the deficits. (See Allen Schick, The Federal Budget: Politics, Policy, Process, The Brookings Institution: 2000)
Jesus, Jay, the man was inaugurated in January of 1993, meaning that a significant reduction in the 1994 budget would be HOW long after he took office? The 1993 Budget reconciliation was Clinton’s first budget. That means if deficits were down by the end of 1994, as you just argued they were, that would be a reduction within Clinton’s first two years.
The deficit in 1993 was $255 billion, down from $290 billion in Bush I’s last year. The deficit in 1994 was $203 billion. And as if you needed reminding in 1999 we had a really nice surplus.
Also, is that Schick text a second or third edition? I ask because I thought that piece was published in 1995, when figures for 1994 probably would not have been completely analyzed.
The copy I have is the 2000 revised edition.
Clinton benefitted from the PAYGO rules as well as divided government. Had he gotten his way, the deficit would have ballooned. Fortunately the Internet boom erased the losses from his 1993 tax hike, and HillaryCare was DOA.
I’m willing to give Clinton credit where credit is due (NAFTA, Welfare reform), but only where credit was due. The reason the deficit disappeared in the 1990s was mainly due to PAYGO and a divided government that kept a lid on spending. Of course, as is always the case, the real reason for the prosperity of the 1990s has nothing to do with government and everything to do with the ingenuity of the American people.
In fact, the one area in which Howard Dean and I are in complete agreements is that PAYGO needs to be renewed in order to prevent the kind of massive spending that we’re seeing now.