Obama’s Dumb Deficit Promise

Never open your mouth until you know the shot. Macroeconomically speaking. Photo: Scott Olson/Getty Images

As the recovery apparently accelerates, Republicans are slowly changing their critique of President Obama from economic (he destroyed business confidence!) to fiscal (he drove up the deficit.) The talking point du jour is that Obama broke his promise to cut the deficit in half by the end of his term.

It’s certainly true that he has broken his promise. And thank goodness. Cutting the deficit in half would mean half a trillion dollars in spending cuts or tax hikes this year, which would almost certainly stop the recovery in its tracks. The problem with Obama’s promise isn’t that he broke it, but that he made it in the first place, underestimating the depth and length of the economic crisis, which he now concedes.

Pete Wehner, who served as Karl Rove’s deputy during the Bush administration, lambastes Obama for his lies and says that Obama knew full well just how deep the recession was in 2009:

In fact, Obama was repeating his commitment as late as December 2009, which is terribly inconvenient for those who say the president’s original broken promise can be forgiven because “there was a deeper hole to dig out of than anyone could have envisioned in January 2009.”

In fact, Obama and his team knew how deep the hole was in February 2009. But certainly by December 2009 — 11 months after he had been sworn in — it was clear to all the world just how deep the hole was.

Actually, in real fact, it was not clear how deep the hole was in February or even December of 2009. The economy was initially estimated to have contracted at a 3.8 percent annual rate in the last quarter of 2008, but the figure was subsequently revised downward several times, and not until 2011 did we realize that the economy shrank at a staggering 8.9 percent annual rate that quarter.

Now, it’s true that Obama eventually will have to do more to address the long-term fiscal imbalance, which was wrecked before he took office by Wehner and his colleagues in the Bush administration. Raising taxes for the rich and squeezing the discretionary spending budget is a start, but eventually Obama is going to have to coax the public into accepting either middle-class tax hikes or deeper entitlement cuts. In the meantime, the actual problem with deficits over the last three years is not that they’ve been too high but that they’ve been too low. Had we run higher deficits to this point, the recovery would be on more certain ground and we could be moving on to long-term fiscal balance.