Defending his budget at a news conference on March 24, President Barack Obama repeated his claim that his plan would cut the deficit in half in five years.
"Both under our estimates and under the CBO estimates, both the most conservative estimates out there, we drive down the deficit over the first five years of our budget," Obama said. "The deficit is cut in half. And folks aren't disputing that."
Earlier in the news conference, Obama said he'd cut the deficit in half by the end of his first term. So we'll look at the picture from four and five years out.
According to projections in the Obama administration's proposed budget , released at the end of February, the yearly deficit would go from $1.75 trillion in 2009 to $533 billion in 2013 and $570 billion in 2014. So obviously, by the administration's estimation, the deficit would be cut well more than half whether you measure it until the end of Obama's first term (four years), or five years out.
The Congressional Budget Office projections — released a month later — were not as optimistic. The CBO, a nonpartisan arm of Congress, projected the 2009 deficit at $1.8 trillion, and forecast it would taper down to $672 billion in 2013, then to $749 billion in 2014. Still, even those numbers support Obama's assertion that he'd halve the deficit.
So technically, Obama is correct. But it's a bit misleading.
When Obama says he will halve the deficit, he's comparing it to a 2009 deficit that is massive and far, far above the norm. It's a deficit fueled by a major recession (translation: lost tax revenue) and boosted by costly recession-fixers like the bailouts last fall and the economic stimulus package passed in February. For comparison purposes, we note that the deficit in 2008 was $459 billion (and less than half that the year before). So the deficit is expected to nearly quadruple in 2009.
That's the number Obama promises to cut in half.
"It’s true, but it's very misleading," said Brian Riedl, a research fellow in federal budget policy at the conservative Heritage Foundation. "It's true because they quadrupled the deficit this year and then they'll cut that in half." Riedl notes that Obama's projected deficits in four and five years will be "significantly higher" than deficits before the recession.
"It's quite easy to cut that in half," echoed Jonathan DeWald, a spokesman for the Concord Coalition, a nonpartisan organization that specializes in analysis of budget deficits.
Obama was quick to point out that he inherited much of this year's goliath deficit. And he's mostly right. The deficit began skyrocketing before Obama ever took office. In January, the CBO projected the 2009 deficit would balloon to $1.2 trillion. A worsening economy, the burden of the economic stimulus package, and projected spending in Obama's budget led the CBO in late March to revise its 2009 deficit projection to $1.8 trillion. So Obama can't claim that he inherited the entire deficit. But suffice to say the huge jump in the 2009 deficit is not a result of Obama's proposed budget.
We note one other point. Although Obama's budget plan is expected to more than halve the 2009 projected deficit in four and five years out, after that, the CBO projects that deficits will begin to grow again, and significantly. The CBO's 10-year outlook predicts a deficit of $1.2 trillion in 2019. That's far more pessimistic than the Obama administration's projections, which Obama rightly attributed in the news conference to different assumptions about the future growth of the economy.
"Now, none of us know exactly what's going to happen six or eight or 10 years from now," Obama said. "Here's what I do know: If we don't tackle energy, if we don't improve our education system, if we don't drive down the costs of health care, if we're not making serious investments in science and technology and our infrastructure, then we won't grow 2.6 percent, we won't grow 2.2 percent. We won't grow."
And to be extra clear, deficits are one-year snapshots. They represent a revenue versus expenses picture for that year. In other words, Obama is not saying he will be cutting the national debt by half in four or five years. To the contrary, the CBO projects the running total of the country's national debt — which was around $7 trillion when Obama took office — will increase to nearly $12 trillion in four years.
In summary, Obama is correct when he says the CBO predicts that under Obama's budget plan, the deficit would be cut in half in five year. But he's comparing it to a year we all hope is a major anomaly, which makes the dramatic-sounding achievement much easier. So we rule his statement Mostly True.