Monday, August 08, 2011
To Be Fair, Obama’s Responsibility for the Downgrade Is only 15 Percent
August 7, 2011 by Dan Mitchell
It was a strange experience to read the comments and emails generated by yesterday’s post on the “Obama downgrade.”
Democrats and liberals were upset that I blamed Obama for the downgrade, as you might expect. Republicans and conservatives, however, were agitated that my first sentence pointed out that Bush bore significant responsibility for the spending binge that created the fiscal crisis.
This got me thinking about the underlying causes of America’s long-term fiscal problems and whether it might be possible to come up with some sort of reasonable estimate on which Presidents are most responsible for fiscal crisis.
So I decided to look at the most recent long-run forecast from the Congressional Budget Office. As you might suspect, entitlement programs are THE reason why the United States is in deep trouble.
What does this allow us to say about various presidents? Well, it turns out that Social Security is a relatively minor part of the problem, so even though President Roosevelt’s policies exacerbated and extended the Great Depression, the program he created is only responsible for a small share of the fiscal crisis. To give the illusion of scientific exactitude, let’s assign FDR 13.2 percent of the blame.
The health care numbers are much harder to disentangle because it’s not apparent how much of the increase is due to Medicare, Medicaid, Bush’s prescription drug entitlement, and Obamacare. A healthcare policy wonk may know these numbers, but the CBO long-run forecast didn’t provide much detail.
So with a big caveat that these are just wild estimations, I feel reasonably comfortable in saying that both Bush and Obama made matters worse with their reckless entitlement expansions, but that they merely deepened a fiscal hole that was created when President Johnson imposed Medicare and Medicaid.
With that in mind (and ignoring, for the sake of simplicity, the role of other Presidents – such as Nixon – who expanded the size and scope of health entitlements), here is my ranking of presidential responsibility for America’s fiscal decline.
This does not mean, however, that it was unfair yesterday to apply the “Obama Downgrade” label.
In part, he is responsible because the downgrade from Standard & Poor happened on his watch. But the real reason he earned that label is that he doubled down on the reckless policies of his predecessors and demagogued against lawmakers such as Cong. Paul Ryan who actually have tried to solve the problem.