Tuesday, September 27, 2011

PolitiFact's Pants on Fire. How PolitiFact Got it Wrong on Debt Increases under Bush vs. Obama

Pants on Fire? Yes. But PolitiFact's, not Pelosi's...
How PolitiFact Botched the Research for National Debt under Clinton, Bush, and Obama
The folks at PolitiFact used a faulty methodology to discredit a chart released by the office of Nancy Pelosi on the accumulation of national debt, from Ronald Reagan to Barack Obama. They graded Pelosi's chart, which can be found here. as a "Pants on Fire" rating (meaning, basically, the chart's authors are essentially lying). That's not what this post is about. This post is about how PolitiFact's methodology is actually incorrect because its basic assumption is incorrect. Therefore, their conclusion that conclusion that Obama is responsible for the largest debt increase is simply not true.  According to PolitiFact:

From the online calculator, we requested the daily debt totals since 1993 and picked out the ones closest to the inauguration dates* of those three presidents, as well as the end of the month of April 2011. Here’s what we came with for gross federal debt:
January 20, 1993 (end of George H.W. Bush and beginning of Clinton): $4.188 trillion
January 19, 2001 (end of Clinton and beginning of George W. Bush): $5.728 trillion
January 20, 2009 (end of George W. Bush and beginning of Obama): $10.627 trillion*
April 29, 2011 (closing date of the chart): $14.288 trillion

This allows us to determine how much the debt rose under each president:

Under Clinton: Increase of $1.54 trillion, or 37 percent
Under George W. Bush: Increase of $4.899 trillion, or 86 percent
Under Obama: Increase of $3.661 trillion, or 34 percent
(*emphasis added)

Debt ownership begins at inauguration? Um, yeah, right, I don't think so. Now, see, the basic premise of this "analysis" by PolitiFact is simply incorrect: Obama's "debt ownership" didn't start at $10.6 trillion, as the PolitiFact numbers above would have you believe--that's not how the real fiscal world works. New presidents inherit the previous administration's budget policies for the majority of their first year in office. Obama's fiscal policies didn't somehow magically take shape on January 20 of the year and month he took office, as PolitiFact implies. It's illogical.

If you believe PolitiFact's methodology, you would also have to  believe that a relief pitcher at the bottom of the 9th inning, with his team down 10 to 1,  is responsible for losing the game. It just ain't so.

PolitiFact's analysis is based on starting the "debt ownership clock" when a president (in this case, Obama) took office. But the debt clock should actually "start ticking" around 9 months into a new president's term. Why? Because the following fiscal year is what he can control, not the one he starts working in. This is an important methodological distinction.

The (real) National Debt under Clinton, Bush, and Obama. A more realistic assumption for national debt (which, simply put, is the accumulation of budgetary shortfalls each year, btw) assumes that fiscal spending priorities continue into the next year. That's because the federal government's fiscal year starts on October 1 from the previous year, and continues to September 30 of the following year.

When Obama took office in 2009, Bush's budget for 2009--and its associated accumulating debt--began on October 1 of 2008. This is important, because the accumulated debt that should have been ascribed to Bush, $1.3 trillion, is, according to PolitiFact, owned by Obama. This is illogical nonsense.

Obama wasn't responsible for the $1.3 trillion in accumulated debt from October 1, 2008 through September 30, 2009--George W. Bush was responsible for it. Here's how my methodology works:
  • Bush "inherited" a national debt from Clinton starting at about October 1, 2001, of $5.8 trillion. The national debt increased under Bush to $11.9 trillion--more than double the inherited debt.
  • Obama's "inherited" national debt from Bush--again, assuming the previous president's budget continued through September 30, 2009--was $11.9 trillion. The debt increased to $14.6 trillion by the end of August 2011, for a bit more than a 20% increase--not the 34% increase that PolitiFact determined.
PolitiFact's errant conclusion is a very important one, because that amount adds up to a HUGE difference between that date and the date that Bush's budgetary policies ceased: 

Bush fiscal policies (and associated debt) continued from January 20, 2009...
Source: Department of the Treasury
...through to October 1, 2009. During this time, Obama didn't "own" this debt, which was still driven by Bush's fiscal policies (below). The debt increase that PolitiFact ascribes to Obama amounts to $1.3 trillion bucks. That's a pretty big research error.
Source: Department of the Treasury
Here are the debt numbers from the end of Clinton, through Bush, and into Obama's administration--all from the Treasury Department's Web site:

    Source: Department of the Treasury Website

    To Sum Up, PolitiFact Got it Wrong. I really have nothing personal against PolitiFact--I think they have a great site, typically speaking, but in this case, they got it seriously wrong. And I have no idea why Pelosi's office didn't fight them on this,  because it's actually pretty important. Why? Well, it's silly season. Facts and fact checkers are critical to the ongoing debate. And frankly, this is something that no one seems to pay very much attention to, which is ironic, considering that a political movement known as the Tea Party arose as a result of "out of control government spending." Well, where the hell were they when Bush--and again, this is mostly his debt burden--was spending on two wars that we couldn't afford and the right wants to rebuild other countries, while refusing to rebuild our own?

    A Final Note. I'm not an economist, but I did work on Capitol Hill a lifetime ago, and once even did research on the "twin debts" of trade and the national debt (btw, if you're interested, the national debt reached its post-war high of $2.1 trillion when Carter was president, if memory serves). I may actually be off by a few billion here or there, but the overall analysis is, I think, pretty sound. If you think otherwise, please let me know. 

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