Rep. Joe WilsonJoe WilsonPAC to host holiday fundraiser for veterans Week ahead: Defense hawks bristle at spending plan GOP calls for modernizing veteran care MORE (R-S.C.) might have said, “You lie,” but we’ll settle for “You distort.”
(As Mark Twain once said, there are three kinds of lies: “lies, damn lies and statistics.”)
In 2008, George W. Bush ran a deficit of $485 billion. By the time the fiscal year started, on Oct. 1, 2008, it had gone up by another $100 billion due to increased recession-related spending and depressed revenues. So it was about $600 billion at the start of the fiscal crisis. That was the real Bush deficit.
But when the fiscal crisis hit, Bush had to pass the Troubled Asset Relief Program (TARP) in the final months of his presidency, which cost $700 billion. Under the federal budget rules, a loan and a grant are treated the same. So the $700 billion pushed the deficit — officially — up to $1.3 trillion. But not really. The $700 billion was a short-term loan. $500 billion of it has already been repaid.
So what was the real deficit Obama inherited? The $600 billion deficit Bush was running plus the $200 billion of TARP money that probably won’t be repaid (mainly AIG and Fannie Mae and Freddie Mac). That totals $800 billion. That was the real deficit Obama inherited.
Then … he added $300 billion in his stimulus package, bringing the deficit to $1.1 trillion. This $300 billion was, of course, totally qualitatively different from the TARP money in that it was spending, not lending. It would never be paid back. Once it was out the door, it was gone. Other spending and falling revenues due to the recession pushed the final numbers for Obama’s 2009 deficit up to $1.4 trillion.
So, effectively, Obama came close to doubling the deficit.
Obama seems not to understand that the deficit is the jobs problem. To add to the deficit in the hope of creating more jobs is an oxymoron. Additional deficit spending just crowds out small businesses trying to borrow money to create jobs and consumers seeking credit to buy cars and homes.
Soon, when the Fed stops printing money and we have to borrow real funds from real lenders, the high deficit will send interest rates soaring, further retarding growth and creating a cost-push inflation.
The interest rate we are now paying for the debt — about 3.5 percent — is totally artificial and based on the massive injection of money supply created by the purchase of mortgage-backed securities by an obliging Federal Reserve. Once these injections of currency stop, the rate will more than double, sending our debt service spending into the stratosphere. Once we had to choose between guns and butter. Now we will have to choose between guns and butter on the one hand and paying our debt service on the other.
Obama’s program of fiscal austerity in this new budget is a joke. He freezes very selected budget items while he shovels out new spending in his stimulus packages. If he wanted to lower the deficit, here’s what he could do:
1. Cancel the remaining $500 billion of stimulus spending; and
2. Cancel the $300 billion of spending in stimulus II.
Those are the real numbers. Or, as Al GoreAl GoreCould bipartisanship rise with Trump government? Overnight Energy: Opponents aim to tie up Dakota pipeline for years | Gore meets Trump Savannah Guthrie extends contract with NBC News: report MORE would have it, “the inconvenient truth.”
Morris, a former adviser to Sen. Trent Lott (R-Miss.) and President Bill ClintonBill ClintonOvernight Finance: Trump advisor offers new hope for NAFTA | Funding bill to be released Tuesday | Senate Dems fight for miner pensions Press: You can’t blame Bernie Former trade official says ditching TPP would be massive mistake MORE, is the author of Outrage and Fleeced. To get all of his and Eileen McGann’s columns for free by e-mail or to order a signed copy of their new best-selling book, Catastrophe, go to dickmorris.com. In August, Morris became a strategist for the League of American Voters, which is running ads opposing the president’s healthcare reforms.