Dick Morris, who Fox & Friends host Steve Doocy described as "know[ing] all about numbers," asserted on Fox & Friends and in a column for The Hill that Obama is being "disingenuous" when he claims to have inherited a $1.3 trillion deficit. The real number, Morris says, is $800 billion.
And here's how he gets to that figure: First, he says Bush's fiscal year 2008 deficit was $600 billion. Then he adds $200 billion for TARP, since "[t]he $700 billion was a short-term loan. $500 billion of it has already been repaid." $600 billion plus $200 billion equals $800 billion, "that was the real deficit Obama inherited." Done and done.
Morris' main problem is that he doesn't appear to grasp the concept of fiscal year deficits. When Obama refers to the $1 trillion-plus deficit he inherited, he's talking about fiscal year 2009, which began in October 2008 and ended September 2009, because deficits, unlike debt, reflect the annual budget. So right off the bat, Morris is lost when he factors in Bush's FY 2008 deficit:
In 2008, George W. Bush ran a deficit of $485 billion. By the time the fiscal year started, on Oct. 1, 2008, it had gone up by another $100 billion due to increased recession-related spending and depressed revenues. So it was about $600 billion at the start of the fiscal crisis. That was the real Bush deficit. [DickMorris.com, 2/3/2010]
Is he simply confused here? Morris says that Bush ran a deficit of "$485 billion" in FY 2008 but then says that the deficit was about $600 billion "by the time" FY 2009 "started." First of all, Morris appears to have misread the numbers. According to the Office of Management and Budget, the FY 2008 deficit was $458 billion, not $485. (CBO put it at $455 billion, $216 billion higher than Bush anticipated.) But that's really beside the point. Somehow, Morris claimed "recession-related spending and depressed revenues" caused the FY 2008 deficit to grow to "about $600 billion." But CBO's recorded $455 billion deficit includes all spending and revenues that took place up to the start of FY 2009. And even if the fiscal year deficit was $600 billion, it wouldn't be useful to compare that number to the $1.3 trillion deficit Obama says he inherited because, again, Obama is talking about FY 2009. Morris continues:
But when the fiscal crisis hit, Bush had to pass the Troubled Asset Relief Program (TARP) in the final months of his presidency, which cost $700 billion. Under the federal budget rules, a loan and a grant are treated the same. So the $700 billion pushed the deficit - officially - up to $1.3 trillion. But not really. The $700 billion was a short-term loan. $500 billion of it has already been repaid. [DickMorris.com, 2/3/2010]
Morris appears to believe we spent $700 billion in FY 2009 for the TARP program. In fact, "the Treasury recorded a cost of $151 billion for activities undertaken by the program (and $90 million for administrative costs)" in FY2009 according to CBO. Additionally, "the Treasury recorded $91 billion in net outlays for the housing GSEs Fannie Mae and Freddie Mac" in fiscal year 2009. As for Morris' claim that $500 billion of TARP loans "has already been repaid," the Treasury Department reported that as of January 6, 2010, it has received $165 billion in TARP repayments and "approximately $12.89 billion in dividends, interest and fees through December 2009." Morris' conclusion:
So what was the real deficit Obama inherited? The $600 billion deficit Bush was running plus the $200 billion of TARP money that probably won't be repaid (mainly AIG and Fannie Mae and Freddie Mac). That totals $800 billion. That was the real deficit Obama inherited.
Then ... he added $300 billion in his stimulus package, bringing the deficit to $1.1 trillion. This $300 billion was, of course, totally qualitatively different from the TARP money in that it was spending, not lending. It would never be paid back. Once it was out the door, it was gone. Other spending and falling revenues due to the recession pushed the final numbers for Obama's 2009 deficit up to $1.4 trillion. [DickMorris.com, 2/3/2010]
Actually, CBO estimated that Obama's stimulus package increased the deficit by $200 billion in FY 2009, not $300 billion. But ultimately, every point underlying Morris' comparison - he titled his column, "These are the true deficits: Bush $800B, Obama $1.4T" - is misguided and reveals a basic lack of budget literacy on Morris' part. Nothing he offered was responsive to Obama's statement that he inherited deficit of over a trillion dollars. If Morris is interested in addressing Obama's point, he should first recognize that Obama is referring to the FY 2009 deficit and that Obama's statement is likely based upon the fact that before he took office on January 20, 2009, CBO released an estimate of the FY 2009 deficit based on economic forecasts and current law, including the TARP and the Fannie/Freddie bailouts. At that point, before Obama moved into the White House or signed any bills, CBO projected that the 2009 deficit would be over a trillion dollars. As CNN recently noted:
Obama was essentially correct when he said he inherited a budget deficit of $1.3 trillion. Though the budget deficit for 2008 was a then-record $458.6 billion, the CBO issued a projection in January 2009, just days before Obama took office that the budget deficit would reach $1.2 trillion that year, before the cost of any new stimulus plan or other legislation was taken into account. [CNN Political Ticker, 1/30/10]
So to recap, Steve Doocy read Morris' column full o' nonsense, concluded that Morris "knows all about numbers," and brought him on to Fox & Friends to repeat his mistaken claims on television. Sure, the deficit is alarming, but frankly, I'm more disturbed by the number of dollars these guys are being paid by Fox News to, um, inform its trusting viewers.