Time's Brief History of the Deficit: Reagan Tax Cuts Bad, Clinton Tax Hikes Good
The September 7 edition of Time magazine features a brief article up front on "A Brief History of the U.S. Deficit." Writer Claire Suddath claims that the quadrupling of the deficit under Obama is somehow a good news/bad news story:
The good news is that the Obama Administration has scaled back its estimate of this year's budget deficit to an estimated $1.58 trillion (down from $1.84 trillion in May). The bad news is that this is by far the largest budget shortfall in U.S. history — nearly $900 billion more than last year's deficit — and it accounts for 11.2% of GDP, the largest percentage since 1945.
But the "brief history" really goes off the tracks when Suddath recycles every liberal Time magazine myth about fiscal policy in the last two decades of the 20th century:
President Ronald Reagan's economic and foreign policies — tax cuts combined with substantial increases in Cold War-era defense spending — led to a string of deficits that averaged $206 billion a year between 1983 and 1992. An economic boom and increased tax revenue under President Bill Clinton reversed the trend, and in 1998 the U.S. notched its first budget surplus in nearly 20 years.
In the Reagan-Bush years, liberal reporters constantly suggested a partisan spin over fiscal fact: they claimed deficits were caused solely by Republican tax cuts and defense hikes – and completely omitted out the large domestic-spending increases coming from the Democratic spenders in the House majority. When the budget goes into balance in the Clinton years, Time makes no mention of the Republican balanced-budget pushers in the House majority. Fiscal policy is caused by presidents alone in their history book.
The online version of the Suddath article sounds a little less partisan -- the print version is different -- but it still strains the facts:
The balanced-budget acts of 1990 and 1997 helped reverse this unprecedented level of peacetime spending, and in 1998 the U.S. recorded its first budget surplus in nearly 20 years.
But when Suddath claims deficits averaged $206 billion from 1983 to 1992, she neglects to mention that Reagan's last three budgets had lower deficit numbers ($149.8 billion in fiscal 1987, $155.2 in fiscal 1988, and $152.5 in fiscal 1989) than after the supposedly deficit-cutting Bush budget deal of 1990 (deficits went up to $269.5 in fiscal 1991, and $290.2 in fiscal 1992.) Federal outlays went up faster than tax revenues.
To put all that in perspective, Reagan's last three annual budgets had lower deficits than some of the monthly deficits in fiscal 2009.