Deficit of Truth: What Republicans Hope You Don’t Know and Never Find Out
Listening to Republicans in Congress wailing incessantly about our spendthrift culture raises a nagging question: What would they do, besides talking, if they actually wanted to reduce federal deficits and, eventually, the national debt?
First, they would admit that President Barack Obama's policies, including health care reform, have already reduced deficits sharply, as promised. Second, they would desist from their hostage-taking tactics over the debt ceiling, which have only damaged America's economy and international prestige. And then they would finally admit that basic investment and job creation, rather than cutting food stamps, represent the best way to reduce both deficits and debt — indeed, the only way — through economic growth.
Fortunately for those Republicans and sadly for everyone else, the American public has little comprehension of current fiscal realities. Most people don't even know that the deficit is shrinking rather than growing. According to a poll released on Feb. 4 by the Huffington Post and YouGov, an Internet marketing firm, well over half believe the budget deficit has increased since 2009, while less than 20 percent are aware that it has steadily decreased. (Another 14 percent believe the deficit has remained constant during Obama's presidency.)
Unsurprisingly, perhaps, it is Republican voters, misinformed by Fox News, who most fervently and consistently insist on these mistaken ideas, with 85 percent telling pollsters that the deficit has increased. Less than a third of Democrats gave that answer. But nearly 60 percent of independent voters agree with the Republicans on that question, and only 30 percent of Democrats understand the truth — an implicit repudiation, as The Huffington Post noted, of the president's political decision to prioritize deficit reduction rather than job creation.
The facts are simple enough even for a tea party politician to understand. The federal deficit reached its peak — in dollar amount and as a share of the national economy — in 2009, which happens to be the year that Obama took office.
Thanks to the profligate war and tax policies of the Bush administration — which undid the fiscal stabilization achieved under former President Bill Clinton — the Treasury had no financial margin when the Great Recession struck. Federal spending required to avoid another (and possibly far worse) worldwide depression, combined with declining tax revenues that resulted from economic stagnation and tax cuts, led inevitably to that record deficit.
Over the past five years, the red ink has swiftly faded. This year's deficit will be about $514 billion, or about one-third of the $1.5 trillion deficit in 2009; next year's will be even lower, at around $478 billion. As when Clinton was president, those marked fiscal improvements are mainly the product of a slowly recovering economy and growing incomes, along with federal budget cuts.
But not only is the good news about the shrinking deficit widely ignored; it isn't actually good news at all. By avoiding a mostly mythical "budget crisis," federal policy has created a very real jobs crisis that persists, with particular harm to working families. The latest Congressional Budget Office report on the fiscal outlook for the coming decade strongly suggests that the cost of reducing the deficit has been — and will continue to be — substantial losses in potential economic growth and employment.
The ironic consequence, as former White House economist Jared Bernstein recently explained, is that the fiscal outlook for the next 10 years will be somewhat dimmer than expected. In other words, we will return to higher deficits because fiscal austerity — enforced by Republicans and accepted by Obama — is still dragging the economy down.
To restore the kind of growth that lets families prosper and ultimately erases deficits, the Republicans would have to listen to the president — especially when he calls for public investment in infrastructure and an increased minimum wage, first steps toward robust growth and fiscal stability.
If Americans understood the truth about deficits and debt — and how the federal budget affects their jobs and income — the congressional obstruction caucus, also known as the GOP, would have no other choice.