Freedom Line Blog

The Congressional Budget Office (CBO) has done Americans a big favor by posting a crystal-clear graph illustrating the dramatic impact of Obama’s deficit on the nation’s economy.  What immediately stands out is that the nation’s budget deficit as a percentage of gross domestic product (GDP) during the past 45 years has essentially remained in the +/- 5% range.  Although politicians from both parties and political pundits from all perspectives have famously used the federal budget deficit as a bludgeon during that 45-year period, the CBO’s graph shows that it’s fluctuations have actually remained fairly moderate.  Those Bush deficits for which he was justifiably criticized?  They actually remained within post-World War II averages, and were headed on an improving trajectory.  In contrast, Obama’s deficit trajectory shows an new, alarming, dramatic deterioration.

Obama ran on a slogan of “change,” but who suspected that this is what he would deliver so soon?

This one is courtesy of Matthias Shapiro. Some of his videos have netted more than 1 million views.

There has been a lot of talk in the media (here, here and here) about how Herbert Hoover was a great miser and should have spent his way out of the economic downturn like Obama is attempting to do.  The myth might be as old as Hoover’s administration: Hoover was a free-market Republican who let Americans suffer instead of attempting government intervention.

False.  It’s hard to believe that a quick search through our own budget data proves that Hoover was more of Keynesian, someone who spent plenty and raised taxes in his vain attempt to “prime” the U.S. economy toward a resurgence.

Reviewing budget numbers from the White House’s own budget, we see that Hoover drastically increased the size and scope of government.  When Hoover arrived in the White House in 1929, he inherited a surplus of $734 million (back when that was real money).  After he left in 1933, the surplus turned into a $2.6 billion deficit.

Of course, some of this decline was due to lower revenues as a result of the depression, but looking at the outlays during his tenure and you’ll see a massive increase in the size of the federal budget, partly with the help of a Republican Congress as well.  From 1929 to 1933, Hoover increased federal outlays from $3.1 billion to approximately $4.6 billion, a 48% increase. From 1931 to 1932, outlays surged 30%.  Yes, Hoover was a real miser, a free-market fiend who hated spending the money of hard-working taxpayers.

To put Hoover’s 48% increase in perspective, progressives often assailed President Bush as a free-market disciple who refused to spend money on levies, the poor, or the uninsured.  During Bush’s tenure, estimated federal outlays surged 57%, even more than Hoover and LBJ’s Great Society (approximately 50%).

So, the next time you hear someone say that a runaway free-market caused the Great Depression and our current crisis, just remind them that Bush made LBJ look like Uncle Scrooge and Hoover drove federal expenditures faster than President Clinton.  Old rumors die slowly but this is one that needs to end now before we continue to perpetuate even more big-spending government boondoggles.

The White House’s Office of Management and Budget (OMB) today released its mid-year long term deficit projections.  While the  2009 deficit estimates came in at $262 billion less than predicted earlier in the year ($1.58 trillion total), OMB’s 10-year projection increased to a whopping $9 trillion, or $2 trillion more than previously estimated.

That’s a lot of money – so much, that it’s hard for the average person to even comprehend.

Fortunately, John Lott, economist and author of “Freedomonics,” has a great opinion piece today on FoxNews.com that helps put the figure in perspective.  For starters, Lott writes that the new OMB projection “likely underestimates the deficit by at least another $1 trillion,” which means the real 10-year deficit number is probably closer to $10 trillion.  Elaborating on what that means for you and your family, Lott writes:

Ten trillion dollars simply is a lot of money. Whether it is an individual going into debt or a country, spending the money now means that we have less to spend on other things. In the case of ten trillion dollars of national debt, it comes to over $33,000 per person– $130,000 for a family of four. The $130,000 is the amount of taxes that a family is going to have to pay back, somehow, and people have to ask what their family could have gotten for that much money. Is the benefit they get from the government spending all this money greater than what they could have gotten if they had spent that money themselves?