Stan Collender notes that, for the first time in four years, the U.S. Treasury reported a surplus in the month of April. It isn’t just that there was a surplus in April of 2008, though. If you look back through Aprils (data here), the last time that month showed a deficit is 1983—the April less than six months after the last official “double-dip” of recessions.
Stan offers three reasons that the White House doesn’t want to point out this good news. I consider the first two somewhat silly—the GOP never hesitates to take about the deficit, except to deny its responsibility, and no politically-alert Democrat will see the April surplus as representative of “the wrong fiscal policy” so much as an indication that employment last year was better than it has been.
It’s his third reason that is most interesting:
While that’s likely to be $200 billion or more less than what was recorded for 2011, the deficit will still be close to $1 trillion and that would be hard to defend.
I’m assuming the phrase “close to $1 trillion” means that Stan assumes the actual FY2012 deficit will be lower than $1T. The original projection was just under $1.3T. Getting that down to $1T would be 23% better than the original projection, not to mention the psychological gain of being back down below thirteen digits again. Even $1.1T would be just about a 15% improvement over the original projections. If a 15%+ improvement in the deficit over your projections isn’t worth saluting, then what is?
This is a little-understood part of the federal budget debate. Even if the 2012 deficit was half of what it was in 2011, and even if that reduction were applauded by Wall Street and the economic community, it would still be a painfully difficult political issue. In fact, long after the deficit has fallen to the point where most economists are comfortable with it, the political advantage will still be with those who criticise it.
Far be it for me to argue, but…just for the sake of argument, I decided to compare President Obama’s record with that of the last sitting President running for re-election on The Two Issues that Abide, The Deficit and Jobs.
We don’t, of course, have the data for the deficit at the end of this year yet. (We have data for subsequent years of debt for the Previous Administration, of course, but nothing that would have been public knowledge by the voting in November of 2004.)
The story here is a clear one: the previous incumbent increased the deficit significantly; the current one has reduced it from the baseline he inherited. (If the current year ends up with around a $1T deficit, Year 3 will be around +$400,000.)
So the current Administration has been taking the deficit in the “right direction.” But, of course, that’s only good if you are in a growing economy (for the Democratic knowledgeable; see Stan’s second point) or because the Previous Administration was “priming the pump” for the Great Growth that would follow. (After all, what the 2001 tax regression didn’t solve, certainly the 2003 Hubbard-Mankiw version would.)
So let’s check how well that Growth Thing worked. I’ve already pointed out that the post-recession public-sector employment between the current and the previous Administrations was about 600,000 jobs almost nine months ago. So let’s be as nice as possible and compare Total Employment Gains since their respective Recessions, knowing that we’re spotting the Previous Administration when looking at total Non-Farm Payroll:
The Obama Administration got employment back to the end-of-recession level after sixteen (16) months; it took the previous Administration 20-eight (28) months. Counting from the end of the recession, the Previous Administration produced just under 1.4MM jobs in the 30-four (34) months to the next election (Dec 2001-Oct 2004).
The Obama Administration has produced more than twice that (2.825MM) in 30-three (33) months.
In summary, if we compare the current Administration to the previous one, it has (1) produced twice as many new jobs, (2) produced budgets that reduced the annual Federal deficit instead of making it greater, and (3) reduced our troop presence in wars started by the Previous Administration while finding and eliminating Public Enemy #1.
And the only thing it wants to talk about is the third.
As I said chez Collender, If this Administration is afraid to run on its gains because there is less “political advantage” in highlighting the improvements your Administration has produced than in getting bashed for something for which you will perpetually get bashed, then the country is truly lost.
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