Advocate and Argue in Good Faith!

Resort Not to Simplifications and Strategic Omissions

Perhaps, in the context of the current debt ceiling standoff, your social media feed has presented to you a bar graph that depicts “U.S. Federal Deficit by President: What they inherited and how they finished.” The y-axis represents the federal budget deficit as a percentage of GDP (from 0% to 16%) and the x-axis gives each year of the presidencies of George H. W. Bush, Bill Clinton, George W. Bush, Barack Obama, and that of the 45th president. The final bar represents the initial year of Joe Biden’s presidency, 2021.

The indisputable pattern that the bars convey is that for Republican presidencies the deficit figure is higher for the final year than for the initial year and for Democratic presidencies the deficit figure is lower in the final year. The implication? Though Republicans may profess concern for the annual budget deficit and the cumulative national debt, it is the Democrats who truly are the “party of fiscal responsibility.”

I will not attempt to render a judgment on that question. The interplay of the different branches of government, often controlled in whole or part by opposing parties, makes analysis of responsibility for economic policy and outcomes extraordinarily messy. Consider, for example, the many episodes of budget policy conflict between the Democratic Obama administration and the Republican House of Representatives. The responsibility for policy usually being shared, the question “which party is better for the deficit” cannot be answered cleanly and probably should not be asked.

What one can do, though – what I will do here – is point out the folly of overinterpreting on the basis of such “before and after” data points. Policy certainly influences economic outcomes, but it does not control them. The business cycle and other exogenous factors play a big role. This was never more true than with respect to the economy and the deficit during the single term of the 45th president. 

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Look at the graph.

For each of the presidencies there is an arrow that runs through the bars of the graph and indicates the direction of the trend in the budget deficit as a percentage of GDP. In all but one case, a two-word phrase next to the color-coded bars indicates simply whether from the initial year to the final year of the presidency, the nation’s finances experienced “increased deficit” or “decreased deficit.” With respect to the 45th presidency, a three-word phrase indicates “hugely increased deficit.” 

The part of the graph for the 45th presidency is also distinguished by the phrase “Trump Tax Cut 2017” in large bold letters and an arrow pointing to the bar for the initial year of the presidency. Most striking of all, the final bar for the 45th president towers over the previous bars. From somewhat over 4 percent in 2019, the deficit as a percentage of GDP shot up to substantially over 16 percent in 2020.

What is one to make of this? Did the “Trump Tax Cut 2017” produce the “hugely increased deficit” in 2020, quadruple that of the previous year?

Of course not. 

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Say what one will about the 2017 tax cut (personally, I very much oppose it), in the two years following its December 2017 enactment and January 2018 implementation, the deficit increased relatively moderately. A fiscal year runs from October of the previous year through September. According to the U.S. Treasury, the deficit was $0.67 trillion in fiscal year 2017 (October 2016 through September 2017), $0.78 trillion in fiscal year 2018, and $0.98 trillion in fiscal year 2019. 

Fiscal year 2017 having concluded in September 2017, the deficit figure for that year was unaffected by the later passage and implementation of the 45th president’s tax cut. That $0.67 trillion is therefore a good baseline for the fiscal impact of the tax cut that went into effect three months later, in January 2018. Two fiscal years later, in September 2019, the deficit stood at $0.98 trillion – an increase of 46 percent.

The percentage increase in the deficit over the final two fiscal years in which the economic policies that obtained during Obama’s tenure were in effect is actually higher. The baseline for that increase would be fiscal year 2015, at the end of which in September 2015 the deficit was $0.44 trillion. Two fiscal years later, in September 2017 (to repeat, before the 45th president’s tax cut had gone into effect) it had risen to $0.67 trillion – an increase of 52 percent.

The huge fiscal year 2020 increase in the deficit – to $3.13 trillion! – obviously is the result of the pandemic, which spurred enormous spending, passed on a bipartisan basis. Had the pandemic arrived a year later, the deficit for the final year of the presidential term still would have shown an increase, but not an astronomical one.

It may seem nitpicky in the current context to raise this objection to the graph. In a world in which decency and sense prevailed, the Republican Party would use its control of the House of Representatives to engage in reasonable negotiations over next year’s budget, rather than leverage the prospect of global financial calamity to extort immediate radical cuts. Surely that dire reality is more significant than a misleading graph.

The point of principle remains, however.

As office holders and interested citizens, let’s engage in honest debate, basing our views and advocacy on careful, good faith analysis. Let’s not seek to manipulate with simplifications and strategic omissions.