The White House suggested on Thursday that the $831 billion stimulus bill passed in 2009 maybe have actually helped reduce the national debt as a percentage of GDP, by helping to keep the economy afloat.
The giant stimulus bill passed in President Obama’s first year is widely credited with exploding the annual budget deficit to more than $1 trillion a year for the first time in U.S. history.
According to White House figures, the budget deficit jumped to $1.4 trillion in 2009 when the stimulus was passed, and it stayed above $1 trillion through 2012.
But a White House fact sheet released Thursday said the stimulus bill helped stimulate growth. That growth, plus other efforts to reduce the deficit, “helped drive annual budget deficits down by nearly three-fourths, with the fastest pace of deficit reduction since the period following World War II.”
“Even in isolation, the Recovery Act had at most a minimal impact on the long-run debt, adding less than 0.1 percentage points to the 75-year fiscal gap,” it added. “Research from Harvard and the University of California-Berkeley, as well as from the [International Monetary Fund], suggests that it may have actually reduced debt as a share of the economy by restoring growth.”
Obama has boasted for months that his administration helped shrink the budget deficit. But White House numbers show that the deficit has been reduced roughly to the level seen under President George W. Bush.
In Bush’s last year, 2008, the deficit was $458 billion. After four years of deficits north of $1 trillion, the deficit fell back to $438 billion by 2015.
