Earlier this week, President Obama took the first steps toward establishing financial responsibility in Washington, banning the use of several accounting gimmicks repeatedly employed by the Bush Administration to conceal the true size of the federal deficit. While the country is already anxious over the size of our budget shortfall, the real picture is worse, because President Bush's White House routinely practiced the following deceits:
- Excluding the price of the wars in Iraq and Afghanistan
- Not counting Medicare reimbursements to physicians as spending
- Omitting expenditures related to disaster response and relief
- Failing to adjust revenue projections to account for annual adjustments to the Alternative Minimum Tax (AMT). (Despite the yearly and near-certain authorization of one-time fixes to the AMT, the White House assumed that it would not be addressed, thus overstating revenue.)
Republicans, meanwhile, eager to paint the recently passed economic stimulus package as irresponsible pork barrel spending, are finding themselves outflanked, as Mr. Obama is making no bones about stating that he inherited this now fully-revealed deficit from his predecessor. But are they right? Should we be listening to the GOP on matters of the national purse?
In a word, no, as the graph [h/t Crooks and Liars] below illustrates.
The national debt as a percentage of Gross Domestic Product (GDP) was at its lowest point after the second world war, when Ronald Reagan took office. In the era of Reagan Republicanism that followed (defined to include Presidents Reagan, Bush I and Bush II) - aside from a brief period of financial sanity during the Clinton Administration - the national debt has exploded. If history is any judge, then, modern Republican policies have fully demonstrated themselves to be anything but fiscally responsible. (Many people are unaware that the United States has, in aggregate, fared better economically under Democrats than Republicans since World War II. For more, see Time to Side-Step the Obstructionists and the Misinformed)
Of course, this in no way means that the stimulus bill is perfect, or that our new president can do no wrong. Far from it. However, Mr. Obama is taking what I regard to be the right first steps to put the country back on track after 8 years of wretched and divisive excess. So the next time a Republican shill or politician squawks about the need for fiscal responsibility, think about this graph, and just who got us into the mess we're in today.