Monday, September 22nd, 2014

Debating the deficit

President Barack Obama delivered an address on the economy at Knox College in Galesburg, Ill.
President Barack Obama delivered an address on the economy at Knox College in Galesburg, Ill.

When it comes to the deficit, things have a way of getting complicated quickly. We saw that again this week when we rated competing claims from President Barack Obama and House Majority Leader Eric Cantor.

Obama said, "Our deficits are falling at the fastest rate in 60 years." We rated that True. Cantor, on the other hand, described the deficit as "growing." We rated that Half True.

What’s up with that?

Keep in mind, the deficit is a snapshot of the country’s finances for a single year. Expenses (defense, Medicare, Social Security, everything we spend money on) minus income (tax revenues) equals the annual deficit.

Those fact-checks show that deficits are falling in the short term, and they’re falling from historic highs. In 2009, the economic recession and the economic stimulus drove the deficit higher than anytime since the World War II era. Lately, deficits have been dropping dramatically as the economy recovers, and that was the point Obama was making in his speech. That’s what prompted us to rate Obama’s claim True.

Nevertheless, deficits are rising over the long term. It’s not as if the federal budget is on its way to fiscal balance. That’s where Cantor’s claim comes in. We initially thought his claim was suspicious, but when we looked into it, we found that deficits start creeping up between 2016 and 2023, with that growth driven by entitlement programs like Medicare and Social Security, rising health care costs and interest on the debt.

Because deficits are projected to start growing again in just a few years, Cantor was partially accurate, though he left out the important point that recently the outlook on deficits has improved. Our fact-check includes a chart that shows both trends clearly.

We should note that liberal critics were quick to jump on our rating for Cantor’s claim. Steve Benen of the Rachel Maddow blog wrote, "I would have hoped for a ‘Pants on Fire’ rating, but would have settled for at least a ‘False’ conclusion." New York Times columnist Paul Krugman also said we were too easy on Cantor, adding that deficits are coming down too fast. Other left-leaning bloggers chimed in, too.

Krugman’s point gets to the heart of why our check made him mad: Krugman and others think Republican support for austerity is damaging the economy. Rather than worrying about deficits, they say we need more government spending, to get the economy going and bring down the unemployment rate.

Here at PolitiFact, we don’t take sides in policy debates or what’s best for the future. Even if Krugman is ultimately proved right, it doesn’t change the fact that deficits are projected to rise over the next 10 years. Those numbers come from the nonpartisan Congressional Budget Office, the federal government’s widely respected and independent budgeting forecaster.

Our Half True rating means the statement is partially accurate but leaves out important details or takes things out of context. That seem a good summary of Cantor’s statement, and it captures the complexity of the federal budget picture.