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Are the markets making fun of those who attributed its fall to Obama? Or maybe it was never that simple?

A number of commentators have asserted a causal relationship between Obama's presidency and the stock market's decline in the past couple of months — that the market has plunged because of Obama's plans (see a short compilation here). But wait a minute — with today's gains, the markets are now about where they were when Obama was inaugurated (the S&P 500 is up 2% since then, the Dow is down 2% since then). For all those who were so sure that the market was down because of Obama, I'd be interested to know how they explain the upswing. I'm not holding out hope, though, that they will say either that the downswing and the upswing were caused by Obama or, more sensibly, that they were wrong to be so confident about the cause of the downswing. (Of course, the reverse could also be true — people who donwplayed the causal connection might now trumpet the upswing. But I hope they won't be so foolish.)

Fun note: since Michael Boskin's article "Obama's Radicalism Is Killing the Dow" appeared on March 6, 2009, the markets are up almost 20%. Time will tell (and I'm not holding my breath, given the unpredictability of the markets), but it may be that Boskin's pessimistic message was a perfect (reverse) signal — the exact time to buy.

John Jenkins (mail):
Isn't inauguration day the wrong time from which to begin measuring? It would seem that election day is the right start date, to the extent you believe that the market would move based on Obama's having been elected, since inauguration day is just a foregone conclusion at that point.
3.23.2009 6:19pm
ShelbyC:
It was down because of Obama, but up due to other factors.
3.23.2009 6:24pm
euphrosyne (mail):
I think Obama's policies were undoubtedly at the core of the (excessive) drop in the last few months. I think, however, that his policies were fanning the flames of irrational fear beyond a simple burndown of falsely inflated equity value.

Investors simply became exhausted of the continual decline and decided to jump, this time equally irrationally into buying, on news of Obama's plans that haven't changed substantially.

Wall street wants profit, and can only be dissuaded from it for so long.
3.23.2009 6:29pm
Thales (mail) (www):
"It was down because of Obama, but up due to other factors."

Oh, why didn't I think of that before? It's perfectly clear now.

As for the standard of measurement, why inauguration or election day and not the day when it became all but certain that Obama would sweep (i.e. sometime in early October after it became clear that McCain was bumbling through any discussion of domestic policy, Palin was revealed as an empty rhetorical bomb thrower and it became clear that Bill Ayers was not going to be the clinching issue the GOP thought he was).
3.23.2009 6:29pm
http://volokh.com/?exclude=davidb :
The market declined largely on fears (as it turned out, justified) that the Virginia men's team would not make the NCAA tourney. It has rallied with the Virginia women's victory over Marist.
3.23.2009 6:29pm
RPT (mail):
Mr. Jenkins' date is more appropriate is you wish to attribute bad results to Obama's mere presence.
3.23.2009 6:29pm
MarketPro (mail):
I look forward to reading the Nobel prize acceptance speech of the first person who can reliably predict the timing and magnitude of short-term market moves (or, for that matter, long-term ones).

Could it be down due Obama? Sure. Could it be up due to Obama? Why not? Could it be a million totally unrelated factors? Yes.
3.23.2009 6:31pm
xx:
John Jenkins: I think your post just highlights that there's no good measuring point for this sort of thing. Obama's odds of winning the election were well above 50-50 on election day, so most of the effect should have been built in even before then.

ShelbyC: I hope that was satire.
3.23.2009 6:31pm
Phelps (www):
Uh, the Dow was at 8,228 on Jan 21. It closed at 7,775 today. That looks like "down 6%" to me, not 2%.

And it was at 9,625 on election day. It was over 10K at the start of October.
3.23.2009 6:38pm
continuedfromtop:
if you can't figure out how markets would go up on the promise of a trillion dollars of other peoples' money, then i feel for your students.

of course, you do understand. you are just being smarmy.
3.23.2009 7:04pm
Le Messurier (mail):
"Uh, the Dow was at 8,228 on Jan 21. It closed at 7,775 today. That looks like "down 6%" to me, not 2%. "

I guess this is another confirmation of my belief that lawyers ought to stick with the law and leave math to the more educated.
3.23.2009 7:05pm
Mike S.:
Anyone who is as old as I am should remember hearing every conceivable bit of news given as the reason both for a market move up, and for a market move down. Thus, for example, the markets can move up because of good economic news; if the markets are down on a day where their is good economic news that is either because the markets had already discounted the news and were reacting to something else or because the markets feared that the fed would overreact to the good news. it is easy to "explain" market moves after the fact. But meaningless.
3.23.2009 7:08pm
Careless:
Today was a result of people learning over the weekend that the government was going to be incredibly generous with taxpayer money to get people buying bank assets again. The size of the jump is a result of investors being surprised by just how generous the government is going to be. The financial stocks involved opened the day 15-20% higher than they closed on Friday.

As Tyler Cowen wrote over on Marginal Revolution, "At first I thought these numbers were a typo."
3.23.2009 7:19pm
Careless:
Which is to say that the jump in the market today was 100% predictable. Other days, not so much.
3.23.2009 7:19pm
PersonFromPorlock:
What's the basis for presuming that investors can accurately predict future trends? I know what the basis is for presuming they can't.
3.23.2009 7:27pm
Le Messurier (mail):
The Markets certainly did tumble in large part because of Obama. He talked the markets down as part of a deliberate plan to panic the public into buying into his huge stimulus plan. He came close to over doing it and when he got what he wanted he started saying soothing words. All in all a horrible thing for a president to do. Thus it was a lack of confidence in the future exacerbated by BO that drove the markets lower. By the same token today's huge rally was driven by an administration's plan for toxic assets that brought some confidence to the markets. None of the ups and downs of the market are or were linear with what BO was doing or saying. There are obviously many other inputs, but his actions were certainly a driving force and made a bad situation unnecessarily worse.
3.23.2009 7:30pm
Ariel:
I did note that the AP headline on My Yahoo mentioned that the stock market was up today, thanks to Obama's new plan. The AP declined to have similar articles on the down end.

That said, while there may be something to both the up and the down being due to Obama, I expect that when Obama's gang decides to ex post facto tax the generous donation to investors that the current plan represents, the market will sink and stay low until we get someone less destructive at the helm. If he just lets it alone, the market will probably do reasonably well.
3.23.2009 7:30pm
Peanut Gallery (mail):

it may be that Boskin's pessimistic message was a perfect (reverse) signal — the exact time to buy.


You first.
3.23.2009 7:30pm
John Jenkins (mail):
"I guess this is another confirmation of my belief that lawyers ought to stick with the law and leave math to the more educated."

Inauguration day is January 20. See U.S. Const., Am. XX, § 1. Consequently, President Obama was inaugurated on January 20, 2009, and the the DJI closing value for January 21, 2009, is irrelevant to what Prof. Benjamin said.

The DJI closed at 7949.09 on January 20, 2009. The DJI closed at 7785.86 on March 23, 2009. The March 23, 2009, closing value is ~ %97.821 of the January 20, 2009 closing value, rendering "down 2%" as a roughly accurate approximation.

I suppose this is confirmation of my belief that when any non-lawyer refers to a legal concept, it is more probable than not that the non-lawyer made a mistake.

(NB: the DJI opened at 8,279.63 on 1/20/09, rose as high as 8,291.98, fell as low as 7,939.93 and closed at 7,949.09, to the extent you might believe any of that is relevant).

@XX: I was going to mention ECMH in my first post, but decided against it, but I agree that the price on election day had factored in the probability of Obama's election and that the price already factors in all publicly available information.
3.23.2009 7:32pm
trad and anon (mail):
This isn't that complicated folks.

When the markets are up, it shows that my team's policies have worked.

When the market is down, it shows that your team's policies have failed.
3.23.2009 7:34pm
Central Virginia:
Stuart: you might at least acknowledge that many of Obama's critics expressed the belief that O's predictions of looming economic "catastrophe" were a big factor in the fall in the equity markets. And that in the past couple of weeks, Obama has worked hard to appear more optimistic.
3.23.2009 7:41pm
Chico's Bail Bonds (mail):
It's simple. I don't even know why you are arguing about any of this.

If the market went down during the Bush administration, it was Clinton's fault.

If the market went up during the Bush administration, it was because of Bush.

If the market went down during the Obama administration, it was Obama's fault.

If the market went up during the Obama administration, it was because Bush made good decisions before he left office.

If you don't believe me, ask Bush's last press secretary, who recently said so.
3.23.2009 7:43pm
Charlie (Colorado) (mail):
It was Cramer tearing his hair (such as it is) out. That's like the ultimate signal of a capitulation.
3.23.2009 7:52pm
Syd Henderson (mail):
The stock market was declining for a year before people started panicking, and blaming Obama for the decline in October of last year just shows how desperate Republicans are to take any responsibility for their own mistakes.
3.23.2009 8:28pm
Siskiyou (mail):
This wasn't a thread. Rather, it was a fishing line. Looks like y'all took the bait don't it?
3.23.2009 8:45pm
Chico's Bail Bonds (mail):
Syd:

The decline a year before October was Clinton's fault.
3.23.2009 8:46pm
corneille1640 (mail):
post hoc ergo propter hoc
3.23.2009 8:58pm
Joseph Slater (mail):
The market declined largely on fears (as it turned out, justified) that the Virginia men's team would not make the NCAA tourney. It has rallied with the Virginia women's victory over Marist.

That wins the thread. But sincere thanks for posting this, Stuart, since this "Obama is killing the Dow!" meme was a thread on this very blog.
3.23.2009 9:11pm
A. Zarkov (mail):
I could say that Obama was responsible for the decline in the DOW because he gave gloom and doom speeches causing investors to become fearful that earnings would become depressed. Moreover it didn't help that he has failed to provide his Treasury secretary with a senior staff when it's critically needed. I could also say that the market has gone up because the Fed has decided to print an additional trillion raising specter of inflation and investors have decided to flee cash.

I could say all those things, but I can't because no one can really call short term changes in the market. But you can call long-term changes because stock prices are mean reverting, and Tobin's q is dropped to a value that indicates stocks are now under priced according to the historical value of q.
3.23.2009 9:42pm
Moneyrunner43 (www):
Before we get gleeful about a rising market proving that The One’s economic policies are working, let’s turn to another economy in which lots of money has been created: Zimbabwe.

The only way that people with money in Zimbabwe kept ahead of inflation (10,000% per day) was to invest in the market, gaining 50,000% per day.

I hope my reference to Zimbabwe is not considered racist. Jim Clyburn doesn’t read this site, does he?
3.23.2009 10:29pm
Moneyrunner43 (www):
By using the right statistics I guess we can prove pretty much anything. If we use the FDR administration as an example, we learn that from its beginning to its ending the market gained roughly 50%. Viola, we have statistically eliminated the Great Depression which was the hallmark of his administration until war broke out.
3.23.2009 10:42pm
ras (mail):
To quote Ben Graham (from memory, so I might be mildly off in the wording): in the short run the market is a voting machine, but in the long run it is a weighing machine.

Short run, people want to believe, need to believe, that financial disaster is not in the cards and they "vote" for that.

But those who like to weigh in early, so to speak, know better. The market's real (after inflation) value/weight will fall for as long as the govt pursues its current course. The weighing machine will win; it always does.

1/3 of the all bull markets are negative periods; 1/3 of all bear markets are positive periods. Two steps forward and one step back, the trendline will continue.
3.23.2009 10:46pm
Jonathan B. (mail):
While there's pretty much no way we'll ever be able to tease out the causes of the market's upturns and downturns (CNBC talking heads and some VC commenters aside), isn't it at least reasonable to think about these movements in the context of uncertainty?

I don't really think that Obama did much talking down of the economy (at least, no more than Bush did in 2000), but it seems like the markets are -- in part -- reacting to the level of public knowledge of the Administration's plans. The less investors and speculators know, the jitterier they get.

When Geithner first said he was going to announce the plan, and then offered no specifics, the market tanked. I'd guess that was because the people realized they had no clue what was going to happen. Market participants adjusted their expectations downward accordingly.

It seems plausible that the market continued lower and lower the longer that uncertainty and doubt persisted. More recently, the market moved up as it became clearer that the Administration was going to release a detailed plan. Today, when that actually came to fruition, the market rallied massively in relief.

Again, I don't know whether this is all true, but it seems to fit the data better than stories that try to explain the events as a commentary on the policies -- whether positive or negative.

I should probably add that, if this story is true, then it remains to be seen whether the market is over- or under-valued. In the longer run, market trends will depend more on whether the plan presented is economically advantageous and sound. I personally am extremely skeptical, and probably fall in the camp that believes the stimulus/bailouts/credit programs are disasterous, but only long-term market movements will reveal those views to be true or false.

So, I guess I would interpret the market over the last few months less as a reflection of expectations for Obama's programs, but (ceteris paribus) more as a reflection of relative certainty or uncertainty in the marketplace at the time.

Of course, this is all just my version of an ex post story, and just as likely to be as wrong as the next person's. I should add, though, that Bob Higgs's research on the topic of 'regime uncertainty' does lend a lot of credence to this explanation.
3.23.2009 11:04pm
Ricardo (mail):
Before we get gleeful about a rising market proving that The One’s economic policies are working, let’s turn to another economy in which lots of money has been created: Zimbabwe.

Yes, let's do that. The CPI in the U.S. increased 0.2% year-over-year in February. The U.S. $ has appreciated typically about 25% against most of the world's major currencies over the past year and the 30-year yield on government debt is at 3.69% -- the Fed funds rate hovers between 0% and 0.25%.

Take each of these numbers, multiply it by at least 1 billion, and you an idea of the relevant statistics for Zimbabwe (except for currency appreciation where in Zimbabwe you would see sharp depreciation). Other than that, the two economies are exactly the same.
3.24.2009 12:20am
jukeboxgrad (mail):
Here are some other numbers to throw into the mix. I'm not making any particular claim about what they mean.

During Clinton's term, the Dow more than tripled. During GWB's term, it dropped 25%. Let's say Obama serves two terms. If the Dow is above 6,000 on 1/20/17, when Obama leaves office, he will have done better than Bush. (Or at least will have been luckier, if you want to look at it that way.)
3.24.2009 1:06am
whit:

Fun note: since Michael Boskin's article "Obama's Radicalism Is Killing the Dow" appeared on March 6, 2009, the markets are up almost 20%. Time will tell (and I'm not holding my breath, given the unpredictability of the markets), but it may be that Boskin's pessimistic message was a perfect (reverse) signal — the exact time to buy.




i trade futures.

and currencies (and to a lesser extent stocks).

and the general rule holds true - contrarianism.

buy panic, sell euphoria.
3.24.2009 2:35am
CJColucci:
Considering how badly most investors actually do with their investments, why do we pay attention to short-term fluctuations in the sentiment of these not-very-bright investors? Except, perhaps, as a clue for buying opportunities.
3.24.2009 9:03am
Bart (mail):
This is not complex. The value of the stocks finally overcame politically induced panic.

Obama drove stock P/Es to the lowest point in recent memory. Most of the market was grossly undervalued at its trough.

In contrast, Obama's insane budget is still a theoretical future that Congress is increasingly balking about entering. However, if the massive spending financed by tax increases and borrowing becomes reality, the markets will dive again.

The Chinese are already foreseeing asset destroying inflation of the dollar and are making rather public noises about replacing the dollar as a reserve currency. If this even comes close to fruition, all bets are off.

Obama has no idea how dangerous are the games he is playing.
3.24.2009 10:03am
Andrew J. Lazarus (mail):

Obama has no idea how dangerous are the games he is playing.
As opposed to the dangers of off-budget trillion-dollar wars and wartime tax cuts benefiting only that top percentile. Not dangerous at all.
3.24.2009 10:21am
The Unbeliever:
Wait a second--attributing a 2 month trend (or 4 month, if you go back to election day) to a change in the Presidency is laughable, but attributing a one day jump to the man is credible?

What happens if massive profit taking happens in the next two days, are we supposed to ignore the "Obama time" numbers again until they approach positive territory?

All this crowing over a single day of upside. I'm sure there are some investment bankers and loan officers out there who can provide the relevant lessons about reading a single data point into a trend; they might even be desperate enough to accept some mortgage-backed securities as their consulting fee.
3.24.2009 10:22am
scattergood:
Like another poster here, I trade futures, indexes, and currencies for a living. I agree with his general statement of sell euphoria and buy panic.

However, there is a very simple reason to put a significant amount of the blam for the last bit of drop and the recent pop on Obama's plate. Simply, money is non-partisan and doesn't really care who is in power. It only cares about knowing what the rules of the game are. Obama and his crew have taken a painfully long time to explain what the new rules are for investing, banking, taxing, etc. When he came into office investors knew the rules would change, and took their money off the table. In doing so, the prices of pretty much everything fell. Once Obaman / Geithner put a reaonsably detailed plan in front of the investment world, they knew what the rules are going to be and started to put their money to work, raising the prices of things.

The market hates uncertainty and loves certainty. That is all that is going on.
3.24.2009 10:43am
Careless:

Yes, let's do that. The CPI in the U.S. increased 0.2% year-over-year in February. The U.S. $ has appreciated typically about 25% against most of the world's major currencies over the past year and the 30-year yield on government debt is at 3.69% -- the Fed funds rate hovers between 0% and 0.25%.

Take each of these numbers, multiply it by at least 1 billion, and you an idea of the relevant statistics for Zimbabwe (except for currency appreciation where in Zimbabwe you would see sharp depreciation). Other than that, the two economies are exactly the same.

The fact that we have been facing deflation before severe inflation makes this moot. Comparing the US in early 2009 to 2009 Zimbabwe isn't the point (not that I'm saying the two will be similar at any point in the future).
3.24.2009 10:57am
SG:
As opposed to the dangers of off-budget trillion-dollar wars and wartime tax cuts benefiting only that top percentile. Not dangerous at all.

You really need to look at some numbers. The stimulus bill alone was roughly the same cost as the entire "War on Terror" to date - including Iraq. Obama's best projected yearly budget deficit (using optimistic economic growth numbers) is greater than the worst Bush deficit. If things go according to plan, Obama will have incurred more debt over his administration than all previous administrations for have over the history of the US. This is overlooking unfunded boomer entitlements that are really going to be coming into play by 2017 or so. Massive inflation and loss of reserve currency status would be far, far worse than a 3% cut in the top marginal tax bracket. That you would even begin to equate the two says you're fundamentally not seriously thinking about the issue.

Of course, none of this means Bush that did a good job with the economy, only that Obama's plans and proposals are far, far worse.

Unless your only concern is how much money people who make more than you are allowed to keep. But envy makes a lousy star by which to steer the economy.
3.24.2009 11:28am
SG:
only that Obama's plans and proposals are far, far worse.

Strike that. Not necessarily worse, just riskier.
3.24.2009 12:14pm
jukeboxgrad (mail):
If things go according to plan, Obama will have incurred more debt over his administration than all previous administrations for have over the history of the US.


Can you document that claim? Because I think most people who are making claims similar to that are basing their statements on a CBO report (pdf). And certain projections in that report are covering a 10-year period (2010-2019, inclusive). For example, see Table 1-1 (page 14 via Adobe Reader).

Do you expect Obama to have a 10-year administration? If not, then the way you framed your statement ("over his administration") is dubious.

By the way, GWB increased the national debt by 86%, and Reagan tripled it. So I hope Obama ends up being more fiscally conservative than they were, but that wouldn't be saying much. If Obama does double the debt (in 8 years, not 10), that would merely put him in GWB territory, but not in Reagan territory (in percentage terms).

And since you mentioned "all previous administrations," it should be noted that 77% of our debt was accumulated during these three GOP administrations: Reagan, Bush and Bush.
3.24.2009 12:24pm
Harry Eagar (mail):
The only thing the movement of the averages is showing is that the market was broken down (by Reaganomics) and is not functioning. Except as a bucket shop.

The ups and downs are too sharp, they cannot be reflecting any real expectations of business outlook; the outlook hasn't been bad, good, bad, good, bad and then good again since October. It's been bad right along.

Whit may be right about trading, but trading is the problem, it isn't the solution.

Whether Obama's policies can retrieve the mistake of leaving a market unsupervised is uncertain, but nothing will ever change the cause of the collapse: It was the combination of antiregulation and mixing up safe money with hot money so that all money became hot money.
3.24.2009 1:33pm
SG:
jbg:

Thanks for the correction. I either misinterpreted the reports I had read, or I am propagating their error. In either case you're right: an 8-year horizon, not ten, should be used for the purposes of critiquing Obama.

But none of that changes the underlying issue. I don't have the time to go through the data, so I'll accept your numbers. Obama's in record territory in absolute terms and vying for the record on a percentage basis. The latter even though he's starting from a much higher baseline.

If you didn't like Bushs' deficits and you didn't like Reagan's, then there's no ground on which to defend the Obama plans. He's acting like them, only much (much) greater. And I don't recall grumblings about the dollar losing reserve currency status with either of them. That's the real elephant in the room.

It's not a defense of Republicans when I point out that Obama is being much worse (That Mao killed more people than Stalin doesn't mean Stalin was a good guy.) And you can feel free to continue to condemn recent Republican administrations' handling of the economy - just don't pretend that provides any defense for what Obama's planning now. It doesn't and if you were being fair you should be condemning Obama's plans too.
3.24.2009 1:49pm
Assistant Village Idiot (mail) (www):
Gradualism: A candidate begins affecting the economy as soon as it looks probable he will win. However it takes a long time to change the course of something as large as an economy. About a year from now, maybe 18 months, the economy will become more this president's and 111th Congress than the previous president and 110th Congress - just in time to elect the 112th on insufficient economic data. What we are seeing right this minute is primarily a Bush/110th phenomenon, with accents of increasing Obama/111 and decreasing B/109th.

If you make a long chart dating back to the 50's, 60's or 70's, noting the president and the congressional majorities, then superimposing that (approx) 18 month delay on what the economy (unemployment, inflation, GDP) did, realizations will jump out at you that you never saw before. It also provides some insulation against jumping to conclusions, as predictably, JBG does.

There are leading and lagging indicators, for which the 18 month figure is a middle ground. Political uncertainties certainly affect the stock market rapidly; technical advances, with slower effect, are less attributable to politics at all.
3.24.2009 1:50pm
Spitball:
SG —

You're being way too easy on Obama's proposed budgets. It is record-shattering and jaw-dropping, whether you look it at it in absolute or relative terms.

For the past 40 years, the federal deficit as a percentage of GDP has been about 2.3%. Under Bush 43, it's been about 2.5 percent or so — a little worse than the 40-year average, but not completely awful.

Under Obama's budgets, the federal deficit will be 13.1% of the GDP this year, 9.6% next year and will drop to 4.1% in 2013 before creeping back up to 5 percent and up territory. This is what worries economists — it is simply unsustainable to have such huge deficits (relative to the GDP) which are 2 to 5 times the 40-year average.

Or take a look at the public debt as percent of the GDP. It currently stands at 40.8 percent; it will rise inexorably every year until it hits 82.4 percent of the GDP in 2019 (it will be 79.9 percent in 2017, presumably the last year of the Obama administration).
3.24.2009 2:21pm
wfjag:

Under Obama's budgets, the federal deficit will be 13.1% of the GDP this year, 9.6% next year and will drop to 4.1% in 2013 before creeping back up to 5 percent and up territory. This is what worries economists — it is simply unsustainable to have such huge deficits (relative to the GDP) which are 2 to 5 times the 40-year average

And, that's assuming the rosy economic projections in Obama's budgets are accurate. If the much larger deficits predicted by the Congressional Budget Office occur, then the deficits will be closer to 10% of GDP throughout Obama's projected end of Presidency in 2017. Add to that the huge amounts of "money" that the Federal Reserve is dumping into the economy, before 2012 the US will have double digit annual inflation rates. It will be interesting to see what concessions China and Saudi Arabia will extract in return for buying US Treasury bonds to finance the deficits.
.
3.24.2009 3:43pm
Bart (mail):
Andrew J. Lazarus (mail):

BD: Obama has no idea how dangerous are the games he is playing.

As opposed to the dangers of off-budget trillion-dollar wars and wartime tax cuts benefiting only that top percentile. Not dangerous at all.

Mr. Obama spent more on his Porkulus in the first month of his Administration than the entire 6 year cost of the Iraq War (currently about $670 billion)

The Bush 2003 marginal tax rate cut covered all tax payers, gave a higher percentage cut to families than the wealthy and resulted in double digit annual growth in government revenues that more than paid for the entire Iraq War plus change.

The Obama 2009 deficit is projected to be four times the 2008 Bush deficit, his lowest deficits through 2019 will be double the Bush deficits and will make up the highest percentage of GDP in peacetime history (with WWII as the only higher period). This is the Peronist Argentina prescription for national bankruptcy and destruction of the currency.
3.24.2009 4:36pm
jukeboxgrad (mail):
sg:

Thanks for the correction. I either misinterpreted the reports I had read, or I am propagating their error. In either case you're right: an 8-year horizon, not ten, should be used for the purposes of critiquing Obama.


You're welcome. Thanks for being so gracious in your acknowledgement.

Obama's in record territory in absolute terms and vying for the record on a percentage basis.


I don't think the second part of that statement is correct. Under Reagan, the national debt tripled (and the debt is now 11 times higher than it was when Reagan took over). Obama would have to increase the national debt by $20 trillion to match the Reagan era, on a percentage basis. Even Obama's fiercest critics are not claiming he is going to add $20 trillion to the debt.

==============
spitball:

it will be 79.9 percent in 2017, presumably the last year of the Obama administration


If Obama wins in 2012, he will leave office on 1/20/17. So calling 2017 "the last year of the Obama administration" is problematic. It makes exactly as much sense as calling 2009 the last year of the Bush administration.

==============
wfjag:

Under Obama's budgets, the federal deficit will be 13.1% of the GDP this year, 9.6% next year and will drop to 4.1% in 2013 before creeping back up to 5 percent and up territory.


And, that's assuming the rosy economic projections in Obama's budgets are accurate. If the much larger deficits predicted by the Congressional Budget Office occur, then the deficits will be closer to 10% of GDP throughout Obama's projected end of Presidency in 2017.


I believe you are incorrect. You are further exaggerating a number that was already exaggerated. The CBO report is here (pdf). Ask Adobe Reader to take you to page 11:

CBO’s analysis of the President’s budget proposals indicates that:

As estimated by CBO and the Joint Committee on Taxation, the President’s proposals would add $4.8 trillion to the baseline deficits over the 2010–2019 period. CBO projects that if those proposals were enacted, the deficit would total $1.8 trillion (13.1 percent of GDP) in 2009 and $1.4 trillion (9.6 percent of GDP) in 2010. It would decline to about 4 percent of GDP by 2012 and remain between 4 percent and 6 percent of GDP through 2019.


(Emphasis added.) "5 percent and up territory" is not a particularly fair way to paraphrase what CBO actually said: "between 4 percent and 6 percent." And "closer to 10%" is an even more unfair way to paraphrase "between 4 percent and 6 percent."

==============
bart:

the entire 6 year cost of the Iraq War (currently about $670 billion)


The true "entire" cost of the war is probably closer to $3 trillion. It would have been cheaper to simply hand $106,000 to every single person in Iraq. I think that would have gained us a significant amount of influence and goodwill, and 35,362 Americans wouldn't be dead or injured.

And speaking of large numbers, the Bush tax cuts, which went disproportionately to the rich, had a price tag of $2 trillion.

his lowest deficits through 2019


I see you're someone else who doesn't realize that Obama is not going to have a 10-year term.
3.24.2009 8:27pm
jukeboxgrad (mail):
And I actually should have said that you're anticipating an 11-year term for Obama. Because if 2009 is the first year of his term, then 2019 would be the eleventh year.
3.24.2009 8:29pm
jukeboxgrad (mail):
And speaking of the cost of the war: an odd thing about the GOP is that it seems to have no problem with spending lots of money on nation-building, but only if the nation is someone else's. Maybe this has something to do with the fact that colossal contract shenanigans are much easier to hide when they happen on the other side of the planet and are obscured by the fog of war.
3.24.2009 8:37pm

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