Obama claims U.S. budget went from surplus to deficit in 10 years

A big part of President Barack Obama's first State of the Union speech on Jan. 27, 2010, focused on the economy.

To set the stage, he said his predecessor was largely responsible for the country's fiscal shape.

"At the beginning of the last decade ... America had a budget surplus of over $200 billion," Obama said. "By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program."

We've checked several claims to this effect in the last year, most recently one by Obama adviser David Axelrod. Indeed, we found that the government was enjoying a surplus of about $236 billion circa 2001. Later, when Obama took office, the Congressional Budget Office reported the deficit was over $1.2 trillion. A good chunk of the deficits racked up by the Bush administration came from tax cuts, the war in Iraq and actions that Bush and a Democratic Congress took to prop up the economy right before he left office.

In the same report, the CBO projected a 10-year deficit of about $3.1 trillion. But Obama said $8 trillion, based on budget numbers published by the White House Office of Management and Budget shortly after Obama took office.

Why the discrepancy? When we checked the similar claim by Axelrod, we spoke with Josh Gordon, policy director for the Concord Coalition. He said it has to do with how the two offices estimate the future. The CBO bases its projections on the assumption that the Bush tax cuts would expire in 2010 and that a patch to fix the alternative minimum tax would expire, among other things. The White House does not; instead, it assumes that nothing changes in current law.

So, Obama's overall point is correct that the government was enjoying a substantial surplus when Bush took office and had a big deficit when he departed; he's spot on about the surplus Bush began with. He's also correct about the deficit at the end of Bush's presidency, but there are two different ways to measure the 10-year projection when Bush left office. The CBO's estimate is $5 trillion lower than the White House numbers, though economists don't quibble with the White House methodology. So given that discussion, we'll take Obama down a notch to Mostly True.

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Sara Jacobs

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