Fox News contributor Karl Rove asserted, “Since President Obama came to office, the federal deficit has grown by $1.46 trillion,” falsely suggesting that Obama is responsible for the entirety of the increased deficit. In fact, the Congressional Budget Office, which calculated that the government recorded a $1.4 trillion deficit in fiscal 2009, projected before Obama took office that the deficit for fiscal 2009 would be $1.2 trillion.
From the December 9 edition of Fox News' Fox & Friends:
ROVE: You know, look. The purpose of this [the Troubled Asset Relief Program (TARP)] was to stabilize the financial sector, which it did. And then, the intention was that any unspent monies or any money that was returned to the taxpayers would go to deficit reduction. Since President Obama came to office, the federal deficit has grown by $1.46 trillion. That is 1,460 billions of dollars.
Fact: Before Obama even took office, CBO projected $1.2 trillion deficit for FY09
$1.2 trillion projection based on legislation passed under Bush before Obama's inauguration. The CBO projected on January 7 that, including spending authorized under the Bush administration for TARP and government takeovers of Fannie Mae and Freddie Mac, the deficit would total $1.2 trillion. From the CBO's January 2009 budget report, released on January 7:
The ongoing turmoil in the housing and financial markets has taken a major toll on the federal budget. CBO currently projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. That total, however, does not include the effects of any future legislation. Enactment of an economic stimulus package, for example, would add to the 2009 deficit. In any event, as a percentage of GDP, the deficit will most likely shatter the previous post-World War II record high of 6.0 percent posted in 1983.
A drop in tax revenues and increased federal spending (much of it related to the government's actions to address the crisis in the housing and financial markets) both contribute to the robust growth in this year's deficit. Compared with receipts last year, collections from corporate income taxes are anticipated to decline by 27 percent and individual income taxes by 8 percent; in normal economic conditions, they would both grow by several percentage points. In addition, the estimated deficit includes outlays of more than $180 billion to reflect the cost of transactions of the TARP.
The projected deficit for 2009 also incorporates CBO's estimate of the cost to the federal government of the recent takeover of Fannie Mae and Freddie Mac. Because those entities were created and chartered by the government, are responsible for implementing certain government policies, and are currently under the direct control of the federal government, CBO has concluded that their operations should be reflected in the federal budget. Recognizing the cost of the takeover adds about $200 billion (in discounted present-value terms) to the deficit this year, reflecting the long-term net cost of the more than $5 trillion in credit guarantees issued and loans held by those entities at the start of the fiscal year. In addition, the cost of Fannie Mae's and Freddie Mac's new credit activity in 2009 will total $38 billion, CBO estimates.
CBO: Total FY09 budget deficit was $1.4 trillion. In November, the CBO reported, “The federal government recorded a total budget deficit of $1.4 trillion in fiscal year 2009, about $960 billion more than the deficit incurred in 2008.”