NPR’s Melissa Block recently had an interview with Treasury Secretary Jacob Lew and I’m amazed at how much the Treasury Secretary struggles with simple math.
Here is the main quote from that interview where Ms. Block was asking if he was worried about our $17+ trillion debt (emphasis mine):
BLOCK: Secretary Lew, if you look at the long-term prospects here, even though annual deficits are shrinking, the U.S. long-term debt is now over 17 trillion dollars. It’s about, I think, 73 percent of GDP. How big a problem do you consider that to be?
LEW: Look, I think if you look at the path that we’ve taken over the last five years, we’ve reduced the deficit, cut in half. We’ve stabilized the deficit as a percentage of GDP, kept it coming down and we’ve stabilized debt as a percentage of GDP. Obviously, there are longer-term issues that the president has spend much time looking at, negotiating with Congress about, but you don’t get to the long term if you don’t get through the short term in a successful way.
The short term, we’re doing very well. We’re bringing the deficit down and, frankly, we need to worry more about growing opportunities for Americans to find good middle-class jobs because that’s ultimately the path towards the strongest fiscal policy.
Wow, according to Mr. Lew, it sounds like the US is on very sound fiscal footing right now.
It’s true, Team Obama is bringing the deficit down but their starting point for this talking point is 2009 (when Obama took office) and you can see from the graphs below, something extraordinary happened during that year. (Note that the graphs below were generated from the Office of Management and Budget data)
First off, even starting with 2009 as our baseline, we haven’t cut the deficit in “half” as Mr. Lew stated. Our budget deficit as a percentage of GDP went from 10.1% in 2009 to 4.0% in 2013 and that is a 40.6% reduction (not a 50% reduction). I’ll give Mr. Lew the liberty of rounding up but still, after looking at the charts above, I doubt any fiscally responsible person would call that a success!
If I increased my credit card debt by 315% in 1 year (which is exactly what we did in the US in 2009), continued to spend more than I took in for the next 4 years but reduced my deficit over these 5 years by 50% I doubt my wife would be happy with my self-defined “austere” choices. In 2013, my budget deficit would still be 2 times as high as my deficit in 2008.
Sorry to interject some basic math into Mr. Lew’s talking points but tripling our budget deficit in one year (2009) and then gradually cutting that in “half” is NOT lowering our National Debt! A third grader could figure this out!