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Fact-checking Obama’s claim that federal deficits are falling at the fastest rate in 60 years

true-pf

Don’t tell your conservative friends about THIS STUFF from PolitiFact.com. It will only confuse them.

President Barack Obama aimed to refocus the national debate and put the economy front and center with a speech at Knox College in Illinois. It was the same place he spoke as a senator in 2005 about the need for the government to help the middle class. He stuck to that theme in this speech, but now as president, he summarized the improvements that have come on his watch.

He talked about millions of new jobs, burgeoning energy production, and the nation’s improving balance sheet. “Our deficits are falling at the fastest rate in 60 years,” Obama told the crowd.

In light of Obama’s ongoing battle with Republicans over taxes and spending, we thought this would be an interesting claim to examine. In this factcheck, we look at whether we are really seeing one of the most rapid declines in the deficit in many decades.

(Snip)

We rate the statement True.

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4 Comments

  1. expdoc

    “One reason Obama is able to point to an historically high decline is because the deficit as a percent of GDP had never been higher. Steve Ellis of Taxpayers for Common Sense, an advocacy group focused on taxes and spending, said the reduction is significant. But at the same time, he said, “Let’s face it, there was a lot to reduce. The deficit was morbidly obese.”

    Similarly, the economy took a major hit which gave it more room for improvement in historic terms. So even a moderate recovery has eased the deficit by both increasing tax receipts and reducing demand for government aid such as unemployment support.

    Lastly, while the deficit might decline, the country’s accumulated debt is projected to grow.

    “The future path is not captured in snapshots of what happened over the past few years, Peuquet said. “It ignores the unsustainable debt trajectory the country still faces.””

  2. Neftali

    expdoc – I was about to make the exact same point, but you beat me to it. The fact checking article is stat cherry picking at its finest.

    Check out White House Budget Historical tables, found here:

    http://www.whitehouse.gov/omb/budget/Historicals

    Here’s another fact: The current budget deficit for FY2012 is still twice as bad as Bush’s first 7 years in terms of percentage of GDP, In current Dollars, and in Constant (FY 2005) Dollars.

  3. Robert

    I’d like someone to point out to me what has changed over the past 5 years that is causing these supposed “good times”. Have we brought back good paying jobs to America from the countries we’ve outsourced them to? (No) Have we changed the banking rules that caused the economy to tank in 2008-2009? (No). Where would the stock market be if it wasn’t being pumped with Fed dollars to the tune of billions of dollars each month? What happens to the market when the Fed hints its going to start scaling back the pump? (it tanks). How is housing in Rockford? Are you feeling the recovery? This is just another bubble and most people who play the stock market know it. Nothing has changed except the euphoria that the Fed can provide with endless printing of money. Ride this bubble while its there because they all pop. As an accounting person once told me, you can make charts and graphs mean anything you want them to.

  4. Neftali

    Robert – Not quite true to the question of “Have we changed the banking rules that caused the economy to tank in 2008-2009?”

    There was the Dodd–Frank Wall Street Reform and Consumer Protection Act. It created all sorts of new rules (243 to be exact) including monitoring the derivatives exchange market for the first time.

    http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act

    Granted, there is still the need to put the Glass-Steagall measures back in place, but this bill adds a whole slew of new regulations. Will it prevent future major financial crises? Who knows? But it’s better than what we had before.

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