President Obama's misplaced budget priorities may be the result of his misdiagnosing the cause of the deficits. During his State of the Union speech, the President asserted that "by the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program."
This is simply not true.
The policies mentioned by President Obama were implemented in the early 2000s. Yet even with all those policies in place, the 2007 budget deficit stood at only $162 billion. The trillion-dollar deficits did not begin until 2009 (driven by financial bailouts, stimulus, and declining revenues) as the recession hit its trough.
And the policies mentioned by the President certainly could not be responsible for most of the trillion-deficits over the next decade, given that most war spending will phased out by then and the tax cuts and Medicare drug benefit are expected to cost a combined 2 percent of GDP over the next decade--even as the baseline budget deficit rises past 8 percent of GDP.
Still, it is hypocritical of Obama to rail about ANY deficit spending under the Bush administration, when his own policies will create more debt than has been created by all of the presidents who held office before him ... combined.
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