In an interview with former Bill Clinton adviser George Stephanopoulos at ABC (transcript here), President Barack Obama claimed that “We don’t have an immediate crisis in terms of debt." Despite his claim, no one can know that for sure, but it's at least consistent with what he said during the 2012 presidential campaign ("we don't have to worry about it short term").
Obama's elaboration on the debt topic, however, was not consistent: "In fact, for the next ten years, it’s gonna be in a sustainable place." Ten years is long-term by any reasonable definition. His statement directoly contradicts what he said In October 2012: "... it is a problem long term and even medium term." Of course, ABC's subsequent coverage of that interview by Jonathan Karl didn't note the President's change of tune, and went further to assist Obama by presenting a misleading visual and by misstating the relative size of this year's officially projected deficit to that seen in fiscal 2009.
The visual is a debt clock which is almost a year out of date:
With all of the debt clocks on display in public and on the Internet, it takes a special brand of laziness, a desire to deceive, or both to deliberately show a clock displayed at the Republican National Convention on August 27, 2012 -- I guess to imply that it's only Republicans who care about the debt's size and continued growth. The national debt as of Wednesday was $16.71 trillion, an increase of over $720 billion in just 6-1/2 months.
Karl also stretched a crucial fact to nearly the breaking point when he wrote the following:
... the Congressional Budget Office projects a deficit of $845 billion — that’s lower than the $1 trillion-plus deficits we’ve seen over the past four years and, as a percentage of the total economy, half the annual deficit of 2009. But, CBO also warns that the deficit is projected to continue rising once again after 2015, adding a total of $7 trillion to the national debt over the next 10 years.
The White House's own hype contained in a graphic (warning: visit at your own risk; that graphic will sorely test readers' patience) reveals how far Karl had to stretch to make that claim. It shows the deficit as a percentage of gross domestic product coming in at 5.5% this year compared to 10.1% in 2009. That division works out to 54.455%. Karl creatively rounded that down to "half," without even telling readers that it's quite obviously "more than half."
The actual CBO report from early February (large PDF here) projects this year's deficit at 5.3% of GDP, which would still leave 2013's debt result at a clearly "more than half" 52.47%. But CBO's projected full-year collections have often been woefully wrong during the past several years.
For example, in February 2012, it projected $2.523 trillion (PDF) in collections. The final September 30 result: $2.449 trillion. A repeat of that $74 billion miss in the current year would increase the projected deficit to $919 billion ($845 billion noted earlier plus $74 billion), and increase the deficit as a percentage of GDP to 5.73% ($919 billion divided by estimated GDP of $16.034 trillion per CBO), or roughly 56.7% of the 2009 percentage (5.73% divided by 10.1%).
As to Obama's statement that our level of debt isn't a problem for the next 10 years, it assumes a whole lot of things, primarily that there won't be any other serious problems. To name just one, it wouldn't take much of a bump in intersest rates to increase the government's annual interest cost by well over $100 billion, or another $1 trillion over the next decade. This and other changes could easily make the situation unsustainable in the very short-term.
Cross-posted at BizzyBlog.com.
