In discussing the federal budget deficit and national debt, people make a lot of fuss about which president inherited what deficit or surplus, and who handed it to them.
For instance, pundit Gene Lyons wants to undermine the “lies” and “public misconceptions about Obama” by pointing out that: “President George W. Bush, who inherited a $236 billion government surplus from the Clinton administration in 2001, handed President Obama a stacked deck eight years later.”
Similarly, former senator and Democratic presidential candidate George McGovern blames the deficits of the 1980s on President Ronald Reagan: “This is not a partisan judgment. It is a statement of exactly what happened. President Clinton added to the national debt during his years in office, but at a far lower rate than either Reagan or President George H.W. Bush.”
The picture that’s typically being painted by such assertions is that Democrat presidents (for instance, Bill Clinton) incurred less debt and created budget surpluses, whereas Republican presidents (for instance, Ronald Reagan, George H.W. Bush, and George W. Bush) incurred more debt and created budget deficits.
But this is mistaken. There are three things to know about presidents and their relationship to budgets and debts, particularly in recent decades.
First, presidents don’t make budgets or borrow money on their own. They can only sign or veto what Congress gives them. Therefore, Congress must share in any credit or blame for federal debt, deficits, or surpluses.
Republican presidents Reagan and George H.W. Bush were almost always dealing with Democrat-controlled houses of Congress. Blame for any debts or deficits racked up during these Republican administrations must therefore partly be shared by Democrats. Democrats also controlled Congress for the last two years of George W. Bush’s presidency, just before Obama took over.
Likewise, Republicans controlled both houses of Congress for the last the last six years — the last three-quarters — of Clinton’s presidency. Don’t Republicans deserve to share credit for the surplus that occurred on Clinton’s watch?
Second, when it comes to the Clinton administration, it’s important to remember that Clinton did not get all of the spending that he wanted.
In 1993, the Clinton administration pushed for health care reform legislation (often referred to as HillaryCare). The legislation was defeated, but if it had passed, it would have involved significant spending by the federal government. How much spending is unclear, but in the seven years prior to George W. Bush taking over from Clinton, $34 billion a year in spending on Clinton’s health care legislation would have been sufficient to wipe out the $236 billion surplus Clinton “handed” to Bush.
Would Clinton’s plan have spent that much? I’m not sure. But President Barack Obama’s recently passed health care reform legislation (often referred to as ObamaCare) spends at least $90 billion a year on average. So, if Clinton’s plan was a third as large as Obama’s is, goodbye surplus.
Again, I’m not certain about the numbers, particularly given the difficult-to-prove claims by Clinton (and Obama) that health care reform would cut deficits in the long run. But this much is clear: the surplus at the end of Clinton’s presidency was significantly dependent on Clinton not accomplishing one of his chief policy goals.
Third, tax revenues to the federal government spiked at the end of Clinton’s term because of the dot-com bubble. This bump in tax revenue would likely have happened with or without Clinton and the Republican Congress. And the subsequent drop in tax revenue after the bubble burst would likely have happened just in time for Clinton’s successor, whether it was George W. Bush or Al Gore.
Which I guess leads us to a fourth point, which is that government often has little control over the economy. The mere fact the the economy is good or bad during a certain presidency (or while a certain party controls Congress) shouldn’t cause us to praise or blame that president (or congress). They might have had very little to do with it.
Unfortunately, people tend to make these lazy attributions of economic responsibility to the president:
The economy was good after Clinton became president, therefore the economy was good because Clinton was president;
The economy went bad while Bush was president, therefore the economy was bad because Bush was president;
The economy recovered weakly after Obama became president, therefore the economy recovered weakly because Obama was president.
This is what’s known as the post hoc ergo propter hoc fallacy: A happens before B, therefore A must be the cause of B. This is flawed reasoning.
Unfortunately, in politics, flawed reasoning is often popular.