President Obama really likes to talk about short-term deficits, just not the long-term national debt, a message that bears little resemblance to his past warnings about the threat of a rising tide of red ink.
A president who once called it “unpatriotic” to ignore the nation’s borrowing has watched the national debt eclipse $18 trillion, a 70 percent increase since he took office. Yet Obama sounded no alarm when the federal government recently reached that dubious milestone, brushing off warnings by budget hawks that he was putting the United States in a perilous fiscal situation.
For Obama, the shift in tone has been driven by the lack of momentum for reforms on Capitol Hill, sluggish economic growth, and the calculation that other big-ticket items are more central to his legacy.
“Neither the president nor the congressional leadership are focused on the long-run debt problem at the moment,” said Alice Rivlin, former budget director under President Clinton. “That is partly because addressing the problem would require reviving the effort to find a bipartisan ‘grand bargain,’ and neither side sees any prospect of doing that.”
Instead of highlighting a long-term spending forecast, the White House prefers to focus on shrinking annual deficits, a metric that is more politically advantageous for Obama. Though such deficits have dropped by nearly two-thirds, the national debt has increased by roughly the same degree under his watch.
The debt was $10.6 trillion when Obama assumed office in 2009. In comparison, annual deficits have dropped from $1.4 trillion to $483 billion during his presidency.
In using his preferred measuring stick, the president is demanding credit for his fiscal stewardship.
“The good news in all this is the incredible progress we’ve made on our short-term deficits,” Obama told a group of business leaders last week. “Nobody talks about them anymore. I will say that’s one of the frustrating things about Washington. … People are really good about hollering about problems, and then when we solve them, nobody talks about them.”
The problem, some analysts say, is that growing the economy and slowing the growth of the national debt should not be viewed as mutually exclusive issues. And the White House cannot bank on further declines in annual deficits, they warn.
“Federal debt held by the public will equal 74 percent of GDP at the end of this year and 79 percent in 2024,” the Congressional Budget Office warned in a report earlier this year. “Such large and growing federal debt could have serious negative consequences, including restraining economic growth in the long term, giving policymakers less flexibility to respond to unexpected challenges and eventually increasing the risk of a fiscal crisis.”
The CBO’s outlook wasn’t much rosier on annual deficits, saying they are “projected to start rising — both in dollar terms and relative to the size of the economy — because revenues are expected to grow at roughly the same pace as GDP whereas spending is expected to grow more rapidly than GDP.”
Obama sees no political gain in broaching the subject, especially since much of his second term has been devoted to defending the expansion of government programs.
In previous years Democrats were mad at Obama for suggesting even modest changes to entitlements, and those close to the president say he has little incentive to go down that path again.
“What’s the upside?” asked one veteran Democratic strategist. “He’d make Democrats angry. The public wouldn’t like it. I think it makes more sense for the White House, for all of Washington, really, to get the economy back on track before addressing the debt.”
