The Ten Biggest Tea Party Fabrications
[Note: this page is being updated so check back periodically for additions and editions.]
28 days after President Obama took office, the Tea Party was formed allegedly as a populist movement against what its founders, the Koch brothers, described as an out-of-control administration. I have always been curious what a president 28 days into his new term could do to make so many predominantly white men so mad, mad, mad! (11% when polled did admit that they didn't trust our first African American president because of his race, but the Tea Party claims to have purged its ranks of racists after firing Tea Party Express leader Mark Williams after he made one racist remark too many). I was hoping to get some insight into this antipathy toward President Obama, something that I must admit shocked me, seeming to come out of right field. The deafening silence of these white, angry crowds when many of the budget-busting programs were being put into place over the prior 8 years, including the Bush-Paulson $700 billion corporate bailout, seemed curious.
Well, since then we have had two budget cycles and a midterm election that seemed to validate frustration with incumbents and the status quo. A number of freshmen Tea Party congressmen defeated seasoned politicians, even Republicans who were seen as too willing to work with President Obama.
The Tea Party narrative goes something like this:
Everything was fine until 2009 when an out-of-control tax-and-spend Democrat who was a radical community organizer, a socialist, closet Muslim, and perhaps a Kenyan by birth, became President. As part of his radical socialist agenda, this president imposed "Obamacare", the "crown jewel of socialism", a "government takeover of healthcare" on an unwilling country. Doing so would increase government spending even more, which under Obama is already out of control, threatens to bankrupt our country. Unless we stop Obama and his radical agenda, our best days are behind us as a nation. Tax cuts and military spending have nothing to do with the deficits or debt, and the last thing a recovering economy needs is a greater tax burden. As Sarah Palin put it, what America needs is to "get big government off our backs." Mid-term elections have given us a mandate to abort healthcare reform and massively reduce government spending.
I think I managed to hit all the Tea Party talking points. It's hard not to know them, since the Republicans are nothing if not disciplined about being on message. There is just one problem with them: almost none are true. Each either misrepresents recent or historical events or is an outright fabrication. Let me address the 10 Biggest Tea Party Whoppers:
Claim: "Government debt has never been higher."
Reality: In nominal dollars (reported without taking inflation or the size of the economy into account), it is true that our government is facing a record debt, almost $15 trillion. This number sounds frightening and certainly requires corrective action, but it is not true that it has never been higher relative to the United States economy, which remains the world's largest. During World War II, debt surged to 117.5% of GDP. This is not to say that the debt is not too high - by any reasonable measure it is - but the United States during past periods of crisis has mounted and paid off even larger debt levels.
The United States began as a country in debt and the question was whether that debt should be floated to the public in the form of Treasury bills, notes, and bonds, or simply retired as rapidly as possible. Alexander Hamilton won that argument, and the world's most successful and secure investment instrument was born. Even as I write this, with the government borrowing $1 billion a day, lenders around the world (and many American citizens) are willing to lend money to the United States government for only 3.19% for 10 years versus 5.19% when Bush took office and 8.43% when Bush I took office in 1990. No borrower who is not credit-worthy could ever get such a free ride from bond vigilantes who have far more to do with setting interest rates than the Fed. If President Obama were such a disaster for fiscal discipline and the United States economy, why are bond investors willing to lend him money 39% lower than his predecessor and almost two-thirds lower than Bush's father.
Our 30% debt following the Revolutionary War was paid off, but climbed to 30% again during the Civil War, then again during World War I. It soared to a still-unprecedented 100%+ of GDP during World War II as the United States borrowed massively to defeat Hitler, and is approaching that level following the aftermath of the 2008 economic crisis.
Unless people believe that the wars in Iraq and Afghanistan will last forever or that the United States economy will never recover, history indicates that crisis-induced debts are always repaid without a catastrophic collapse in the economy or society. The difference now is that for the first time in the history of our country, perhaps of any country, the United States lowered taxes in a time of war, creating a disastrous, yawning deficit compounded over time into a massive debt. In a way, this is good news, however, since tax cuts can be rolled back or reversed. It is likely when all is said
Claim: "Obama created the debt."
Reality: This is the easiest Tea Party fabrication to disprove. Most of the debt we are facing was accumulated years before President Obama took office, two-thirds of it in the 8 years of his predecessor.
According to the Congressional Budget Office, the total debt was $5.62 trillion dollars when President Bush took office in 2000. By the time President Obama took office, this debt swelled to $9.64 trillion dollars, an increase of $4.02 trillion during Bush's two terms. Approximately two-thirds of our debt was accumulated before President Obama took office.
Claim: "Obama's reckless spending increases accelerated the debt build-up, even if they didn't create it in the first place."
Reality: For those of you with non-financial backgrounds, a few caveats about assigning causality in a field as murky as economics is in order. (Skip if you took a good Economics 101 course and remember what you were taught.)
What the Tea Party advocates would like us to believe, as would Marxists on the other extreme, is that because there are gaping holes in free market economic theory and disagreement over optimal rates of taxation, government intervention or regulation of the marketplace, or social security funding, we can just make our own economic laws. Such as "tax cuts always pay for themselves" (they clearly don't), deficits either don't matter (when created by Reagan or Bush) or do (when increased by a Democrat), or cuts to government programs helping the poor will always be offset by even greater increases in private charitable giving. The biggest pseudo-law, repeated so often its absence of empirical evidence is often forgotten, is that cuts to top marginal income tax rates will always grow the economy (and have no net effect on the deficit). There is some weak but contradictory evidence for the first idea, but none at all for the latter.
So with all those caveats, in mind, let's return to the Tea Party's claim that the deficit and debt were caused by a dramatic increase in spending by President Obama.
For the conclusion to be true, the premise (that Obama dramatically increased spending) must be also. Did he?
It depends by what you mean by dramatic and he.
President Bush spent $2.979 trillion dollars his last year in office. President Obama spent $3.107 trillion dollars his first year in office, an increase of 4.3%. This is hardly dramatic, but the Tea Party based its largely successful 2010 campaign on this claim. (Since then, spending has increased further, but at the time the Tea Party made this claim, it was not true.) (Source: CBO.)
FactCheck.org provided this informative graphic in the middle of an article slamming Obama's Treasury Secretary for falsely claiming his boss's spending would be lower as a % of GDP than under Bush and comparable to Reagan's. Note the surge in Bush's term, particularly his final year; the increase under Obama has bee modest and is projected to decline, albeit not to Clinton-level eras.
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Furthermore, what did the Tea Party mean by he, President Obama, triggered this spending? Brushing aside the observation that Congress, not the president, controls the purse strings, the president can at least communicate his priorities and of course proposes a budget but it's Congress that must create it. But how much of the budget does the president actually control?
Of the $3.1 trillion in the 2009 budget he signed into law, the $1.896 trillion, or 60%, was mandatory, meaning they were entitlements that had to be paid based on agreements made (and signed into law) decades before President Obama took office.
Of the other 40%, much of that was also relatively fixed, including continuation of bailout programs begun by his predecessor (but the bill for which arrived as President Obama took over the White House).
To be fair to Obama's critics (a favor they never return to the president), the year-over-year increase in discretionary spending he controlled was a bit faster than the year-over-year increase in the mandatory spending he did not, but even taking this into account over half of the increase in federal spending (54%) had nothing to do with who was in control of the White House or Congress. This money would have been spent even by a President McCain. Anyone who states that a Republican president would have been able to overhaul Social Security and Medicare after less than a year in office (and have these changes show up in the annual spending numbers for that year) is lying or perhaps unaware that Bush actually tried unsuccessfully to do some of these things for 4 years then abandoned the effort (although he did massively increase Medicare spending by expanding the benefit to include prescription drug coverage, something those trying to make the case that Republicans hate big government always forget).
Claim: "Obama's spending reflects a radical socialist agenda that weakens defense."
Reality: Republicans may be surprised to discover this, but some of the biggest increases in President Obama's 2009 budget (continued in 2010) were in defense and national security spending, even excluding the wars in Iraq and Afghanistan. $743 billion was spent on defense-related expenditures under President Obama in 2009 versus $700.3 billion under President Bush in 2008. Say what you will about President Obama, but weakness on defense, at least as measured by expenditures in that area, is not one of them.
And even here, the idea that President Obama was entirely responsible for these increases (if you are opposed to increases in any government spending, even military expenditures, something most Tea Party advocates claim not to be) is nonsensical, since the largest single military-related agency increase was the Department of Veterans Affairs, whose funding is a function both of demand (the wars Bush started generated a steady flow of traumatized and wounded veterans who now require a lifetime of care) and of response to Bush-era scandals such as those at Walter Reed showing returning veterans getting inadequate care and resources. 
It is intellectually and morally dishonest to blame the President who increases care of veterans wounded by wars started by his predecessor. Whether one agrees with those wars or not (I opposed the Iraq invasion which generated most of the increase in demand for VA services), hopefully even the most radical Tea Party government-hater will agree that we have a moral obligation to pay for those harmed by them.
So where else did this "radical socialist" President increase government spending? Compared to his massive military and defense spending, nothing else really comes close, but in order of increase in spending in discretionary programs, he pumped $56.1 billion more into the Department of Transportation, mainly through stimulus spending, and a relatively puny $3.3 billion more into "Department of State and other international programs", an equal increase into the Department of Housing and Urban Development, and $1.1 billion more into the Department of Health and Human Services. The Departments of Energy, Agriculture, and Treasury all received between 2.9% and 3.3% more than under Bush, and NASA's budget was increased by a not-so-whopping 1.7% (which after inflation means its budget was cut in real terms).
This radical socialist president cut funding on the Department of Labor by $100 million paid less on the interest on the national debt thanks to a drop in interest rates (saving taxpayers a billion dollars), and slashed $10.6 billion (an 18.9% reduction) from the Department of Education.
When you consider that the Bush deficit massively increased demand for everything from unemployment insurance to Medicaid (by allowing more Americans to become eligible by moving into poverty), it is hard to understand how or why we can honestly blame President Obama for the $36 billion increase in "Unemployment/Welfare/Other mandatory spending" or the $15 billion increase in "Medicaid and the State Children's Health Insurance Program (SCHIP)." Of course, honesty or pesky things like facts were never barriers to people such as Sarah "death panels" Palin.
Claim: "Tax cuts have nothing to do with our deficit or debt and should be ignored in favor of spending cuts only."
Reality: This is not quite as easy to slap down as most intelligent adults who understand that in the zero sum game of government budgeting, there is no difference between increasing a dollar of revenue (through taxes) or decreasing a dollar of spending (through cuts to existing programs). Where it gets complicated is that both the economy nor the government budget are dynamic, moving targets, and changes in one affect the other, sometimes in counterintuitive ways.
To their credit, there is some evidence that marginal reductions in taxes can boost economic activity, but very little to none that these increases in economic activity offset the loss of revenue the tax cuts actually stimulate. FactCheck.org perhaps put it best in a nice review of this topic in 2008 (since then Bush tax cuts have been extended by President Obama and that debt has surged even more):
Q: Have tax cuts always resulted in higher tax revenues and more economic growth as many tax cut proponents claim?A: No. In fact, economists say tax cuts do not spark enough growth to pay for themselves. - FactCheck.org
Now most of us love to make fun of economists (if you want my favorite economist jokes, email me), but what is the alternative to the historical economic record? However imperfect the intellectual track record of even the worst economists, I will take it over that of a Michelle Bachman, who apparently is confused about the definition of socialism, or Sarah Palin, who could name neither a single paper she reads regularly nor a single Supreme Court decision (besides Roe v. Wade) and seemed under the impression that Africa was a country rather than a continent. I am not sure why intellectual giants such as this, who took 5 years and as many colleges to get her degree in communications from the University of Idaho, and who apparently believed a Civil War general was running operations in Afghanistan, should be given any more credibility in understanding much less critiquing or (god forbid) forming monetary and fiscal policy than people who at least get the basic facts right. (We are free to disagree with their premises, but not to make up our own historical record.)
It is true that despite the tax cuts, revenue increased somewhat under President Bush from $1.991 trillion the year he took office to $2.524 billion the year he left. But this 26% increase in revenue was far less than the 42% increase in GDP that occurred over that time frame, meaning that had the rate of taxation of this expanding economy remained constant, we would have no deficit. Revenue as a percentage of GDP fell from 20.9% the last year of Clinton's administration to 17.6% the final year of Bush's office. Some very simple math would indicate that had this plunge not occurred, there would be virtually no budget deficit.
Using a 2010 GDP of $14.6 trillion, had the government collected a Clinton-level 20.9%, the total inflows to the government would have been $3.054 trillion instead of the $2.162 trillion actually collected. This additional $889 billion would not have eliminated almost two-thirds of the deficit. When you consider that $260 billion spent on interest on the debt would have been eliminated had the Clinton surpluses not been turned into deficits because of the Bush tax cuts, the total savings would have been $1.149 trillion, wiping out all but 17% of 2010 actual deficit of $1.390 trillion!
Now, Tea Party activists who have never heard of fungibility and Starve the Beast activists who have argued that creating a fiscal crisis is the only way to mobilize political support for the radical societal changes they envision argue that this assumes that the economy would have grown had the Bush tax cuts not been passed. In other words, it does you no good to take 20.9% of a pie if that pie shrinks or grows slower for want of those tax cuts. Fair enough, and most economists agree tax cuts can stimulate some growth at the margin, but there are several ways of pointing out the flaws of this counter-argument:
First, most economist do not agree that the increase in economic growth offsets the decrease in revenue from lowering tax rates.
Second, there is no empirical evidence that government spending is inversely correlated with economic growth; if anything, there is a very weak positive correlation between government spending and change in GDP over the next year from 1977 to 2010.
Third, the correlation between individual income taxes collected and subsequent economic growth is not only weak, but positive, meaning higher individual income tax collection rates are associated with stronger economic growth, as measured by year-over-year change in GDP. The same is true for aggregate tax collections - higher collection rates are associated with slightly higher rates in economic growth. Now it maybe that if income taxes are lowered dramatically below the record 5.7% low set by President Obama in 2010, something magical will happen that has not happened in the range of values experienced from 1977 to 2010, but when someone claims lowering taxes stimulates the economy and raising them slows economic growth, the burden of proof is on them to explain why this has not been the case over the past 35 years or so.
Claim: "President Obama is foreign-born (and therefore by implication not eligible to be president)."
Reality: This claim has been so thoroughly and repeatedly debunked it is not worth addressing seriously. Even before President Obama humiliated television personality and failed businessman Donal Trump by releasing his long-form birth certificate (something no white president was ever asked to do), this was an urban legend irresponsibly advanced by the Tea Party as a pseudo-controversy. Factcheck.org decisively shot it down long ago. It deserves no further comment.
To be continued....
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