Record Breaking, or Broken Record?
The Bush deficit is not the largest — not even close.


On average, Bill Clinton’s deficits were larger than George W. Bush’s. On average, the Clinton deficits over the first three years of that administration were much larger than Bush’s. The 2004 deficit, adjusted for inflation, is ranked 12th since 1940. The 2004 deficit, as a percent of GDP, is ranked 21st since 1940. The top five deficits run in this country happened while Democrats were in the White House.

The reason I mention all of this is because, this past Friday, the president released his economic report and proposed budget for fiscal year 2004. The document forecast a $304 billion deficit. This number, of course, was seized on by the media which trumpeted it as, “a record deficit.” In fact, I haven’t seen the word “record” thrown around by the media this often since the Grammy’s.

Last year I discussed the economic fallacy called “deficit attention disorder.” That is the tendency of the Washington media to focus on these deficits as an end in themselves, rather than as a symptom of a recession. The old nostrum goes this way: Deficit spending crowds out private investment; this crowding effect drives up interest rates; and these high interest rates are bad for economic growth. Supply-siders correctly reject this reasoning, pointing out that there is no correlation between deficit spending and high nominal interest rates, and in fact that high real interest rates tend to correlate with higher economic growth.

But that’s neither here nor there because the premise of the debate is wrong. Not only is the projected 2004 deficit not “a historical record” or “an explosion of red ink.” It’s not even close. The numbers that prove this are available from the Office of Management and Budget. They are charted below.

Assuming these numbers are accurate, and they are, from whence has arisen the myth of Clinton the deficit hawk and Bush the king of red ink? It has arisen entirely in the realm of forecasted rather than actual numbers. Forecasts are a necessary part of public budgeting but they are — especially when projected a decade or more into the future — fundamentally guesses.

The media has compared a forecast of surpluses that was calculated while Clinton was president to a forecast of deficits which is being calculated now that Bush is president. However, in the real world, we find that the Bush deficits, when compared in inflation-adjusted terms, are relatively mild. And more importantly, since these deficits are being criticized because of their alleged effect on the overall American economy, when the deficits are presented as a percentage of GDP they are very small. For instance, the projected 2004 deficit as a proportion of GDP is 90% lower than FDR’s deficit in the year 1943.

Nations at war borrow money. This has always been the case. Not only is it necessary, but it is probably smart. It was smart when FDR and Truman borrowed money to win WWII; it was smart when Ronald Reagan did so to win the Cold War; and it is smart when George W. Bush does it to today to wage and win the war against terrorism.

— Jerry Bowyer is the chairman of Bowyer Media, a company specializing in radio and television production, print and internet publishing and economic analysis.


Sign up for free NRO e-mails today:

NRO Polls on LockerDome

Subscribe to National Review