Political  Calculations
In his 2013 State of the Union address, President Obama had the following to say about the "success" achieved during his tenure in office in reining in the federal government's spending:
Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion – mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans. As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.

Reducing the federal government's budget deficit by $2.5 trillion sounds pretty impressive, doesn't it? But what might not sound so impressive is that even with those minor spending cuts and large tax increases, the federal government will still run very large budget deficits throughout the rest of President Obama's term in office. On top of the massive trillion dollar plus budget deficits in each of his first four years in office - before the President's budget deficit reduction achievement. Deficits that will pile on top of a national debt whose size continues to swell.

Update 30 January 2014: It looks like we accidentally left a bit of this post on the editing room floor. Here's the deleted scene!...

Let's flash forward to 2014. Here's what President Obama had to say about that budget deficit reduction achievement in his2014 State of the Union Address:

Here are the results of your efforts: The lowest unemployment rate in over five years. A rebounding housing market. A manufacturing sector that’s adding jobs for the first time since the 1990s. More oil produced at home than we buy from the rest of the world – the first time that’s happened in nearly twenty years. Our deficits – cut by more than half. And for the first time in over a decade, business leaders around the world have declared that China is no longer the world’s number one place to invest; America is.

We see that reducing the government's budget deficit is something the President associates with good things - but the U.S. government is still running in the red by billions of dollars - all of which are inflating the national debt, which totals over $17 trillion now - larger than the nation's entire annual GDP.

Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

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