Grading PolitiFact: President Obama and what happened before he walked in the door

Obama's Jedi mind-trick ability comes to the fore nearly to the point of "Simon says."

The issue:

The fact checkers:

Catharine Richert:  writer, researcher
Greg Joyce:  editor

Analysis:

PolitiFact usually treats truth claims one of three ways.  One, rate the literal truth of a statement.  Two, rate the underlying argument.  Three, do a little of both.  But sometimes PolitiFact takes the fourth option.

To be sure, Catharine Richert's story sets out to rate the literal truth of this Obaman utterance.  As to whether she hit that mark, read on and judge for yourself.

As usual we emphasize the context of the statement in question. Curiously, in this case Richert failed to list a source.  I write that confidently, given that all save one of the referenced sources was dated in the year 2009, before President Obama gave his first State of the Union address.  The other one was written in 2001.

In any case, here is the version of Obama's speech from whitehouse.gov:

At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion.  (Applause.)  By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade.  Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program.  On top of that, the effects of the recession put a $3 trillion hole in our budget.  All this was before I walked in the door.  (Laughter and applause.)

Now -- just stating the facts.  Now, if we had taken office in ordinary times, I would have liked nothing more than to start bringing down the deficit.  But we took office amid a crisis.  And our efforts to prevent a second depression have added another $1 trillion to our national debt.
(yellow highlights added)

The president said quite a bit within the space of those two paragraphs, and it would be fair to summarize it as "to whatever degree the state of the union is a fiscal nightmare, it is the fault of Bush (or the Republicans)."  But this is another of those times where PolitiFact shows little interest in the underlying argument.
  The PolitiFact summary, occurring in the bottom portion of the image above, serves up a remarkably tame and minimally partisan paraphrase:  "Obama claims deficit went from surplus to deficit in 10 years."  Unfortunately, the deck summary is wildly inaccurate even if Obama's original statement is true in some wooden-literal fashion.

The U.S. budget was in the red by 2001.  That is just one year, not 10.  And it should have come as no surprise.  The .com bubble burst at the end of President Clinton's second term as president, leaving his successor, President Bush, with a virtually guaranteed deficit.  Throw in the steep stock market drop that occurred when one of America's financial centers was destroyed on Sept. 11 and Obama's predecessor arguably had an economic crisis on his hands.  That part of the story is somewhat absent in Obama's telling.

But we can't blame Obama for PolitiFact's failure to accurately paraphrase his literal argument.  Phrased more accurately, but carrying on the PolitiFact spirit of minimizing Obama's partisan tone, the president was saying that the deficit grew like gangbusters in the nine years following the vaunted surplus of 2000.  And he even offered some reasons for the deficit growth that PolitiFact might have assessed for veracity.  The fact-checking curiosity did not run that deeply in this case, however.  Without running too far off topic, I'll just note that Obama is duplicating the deficit spending of Bush for some of the same reasons: recession and war.  And if anyone remembers back that far, Obama's party preferred a more expensive drug benefit program than the one sought by Bush.

So what does PolitiFact have to say about Obama's claim?

We've checked several claims to this effect in the last year, most recently one by Obama adviser David Axelrod. Indeed, we found that the government was enjoying a surplus of about $236 billion circa 2001. Later, when Obama took office, the Congressional Budget Office reported the deficit was over $1.2 trillion. A good chunk of the deficits racked up by the Bush administration came from tax cuts, the war in Iraq and actions that Bush and a Democratic Congress took to prop up the economy right before he left office.

Though PolitiFact does not address the underlying argument directly, Richert offers a list of contributing factors different than the one Obama presented.  Richert does not trouble her readers with the differences between the lists, nor with the difference between the year 2000 (Obama) and the year 2001 (PolitiFact fact checking Axelrod).  More on the former discrepancy later on.

Richert:

In the same report, the CBO projected a 10-year deficit of about $3.1 trillion. But Obama said $8 trillion, based on budget numbers published by the White House Office of Management and Budget shortly after Obama took office.

Why the discrepancy? When we checked the similar claim by Axelrod, we spoke with Josh Gordon, policy director for the Concord Coalition. He said it has to do with how the two offices estimate the future. The CBO bases its projections on the assumption that the Bush tax cuts would expire in 2010 and that a patch to fix the alternative minimum tax would expire, among other things. The White House does not; instead, it assumes that nothing changes in current law.

Obama blames the budget deficit on Bush tax cuts set to expire in ten years when they were passed, but blames the projected budget deficit of $8 trillion on Bush under the assumption that the tax cuts will remain in effect?  That almost sounds misleading.  But at least Richert sniffed out the one discrepancy enough to drop The One all the way down to ... "Mostly True":

So, Obama's overall point is correct that the government was enjoying a substantial surplus when Bush took office and had a big deficit when he departed; he's spot on about the surplus Bush began with. He's also correct about the deficit at the end of Bush's presidency, but there are two different ways to measure the 10-year projection when Bush left office. The CBO's estimate is $5 trillion lower than the White House numbers, though economists don't quibble with the White House methodology. So given that discussion, we'll take Obama down a notch to Mostly True.

All that stuff in there to check and Richert doesn't even put in much effort on her main issue.

Again, assuming a curious reader or two, economists don't quibble with the White House methodology not because Bush is responsible for tax cuts beyond the legal lifespan of the bill he signed, but because the Obama administration is likely to renew most of the tax cuts.

Why would Obama do that?  Because cutting taxes is generally a good idea during a recession.  Raising taxes, on the other hand, helps prolong a recession.  Coincidentally, Bush's rationale for his two major tax cuts was to help relieve a recession caused by the bursting of the .com bubble and worsened by the World Trade Center attacks.  Not that Richert shows any interest in underlying arguments.

The grades:

Catharine Richert:  F
Greg Joyce:  F

Richert rates an "F" for her lack of curiosity as well as for poor execution.
Joyce shares responsibility for both failures.

Afters:

Unlike Richert, I am interested in the underlying argument from Obama.

Conservative economist Keith Hennessey reached my key conclusion before I did:

It is true that President Bush proposed, and in 2001 and 2003 the Congress passed and President Bush signed into law significant tax cuts, and that those tax cuts were not offset by spending cuts or tax increases.  If President Obama believes that enacting these tax cuts without offsetting their deficit impact was profligate, then why is he proposing to do the same thing?

Exactly!  Both presidents responded to a recession by running higher federal deficits.  Bush relied more on tax cuts than did Obama.  Be sure to read Hennessey's take and view the deficit graphs.

One thing Richert ignores and Hennessy forgives:  A big portion of Bush's share of the deficit is no longer part of the deficit.  Banks have repaid much of the TARP money doled out as loans by the Bush administration, about $350 billion of TARP B according to Hennessey.  About $95 billion was repaid as of Dec. 2009.  TARP monies originally allocated by the bill Bush signed but dispersed by the Obama administration, such as the GM/Chrysler bailouts, may not provide similar returns.  Obama, then, gets to blame Bush for what happens to money spent by the Obama administration.  To the tune of about $350 billion.

What's the truth?  TARP worked, to the extent that financial collapse failed to materialize, and it accounted for about 25 percent of the Bush deficit inherited by Obama.  The prescription drug benefit probably would have been more expensive if fashioned by Democrats.  And the tax cuts were a response to recession that Obama has copied to some extent.  The PolitiFact rating ("Mostly True") is close to a rubber stamp affirmation of a partisan swipe by Obama that should not pass the sniff test.  To whatever degree Obama's statement is correct, it should apply about equally to Obama's responsibility for the ongoing budget deficits.

Take responsibility, Mr. President.



Feb. 8, 2010:  Corrected mismatched title--I'll get to the tax cuts later this week.