From the New York Times editorial board on how the deficit got this big. It's their explanation of the above chart:The second graph shows that under Mr. Bush, tax cuts and war spending were the biggest policy drivers of the swing from projected surpluses to deficits from 2002 to 2009. Budget estimates that didn’t foresee the recessions in 2001 and in 2008 and 2009 also contributed to deficits. Mr. Obama’s policies, taken out to 2017, add to deficits, but not by nearly as much.But instead, let's cut Social Security, Medicare, Unemployment Compensation, and let's make sure all those millionaires and billionaires keep those job creating tax cuts!
A few lessons can be drawn from the numbers. First, the Bush tax cuts have had a huge damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels. Second, a healthy budget requires a healthy economy; recessions wreak havoc by reducing tax revenue. Government has to spur demand and create jobs in a deep downturn, even though doing so worsens the deficit in the short run. Third, spending cuts alone will not close the gap. The chronic revenue shortfalls from serial tax cuts are simply too deep to fill with spending cuts alone. Taxes have to go up.
In future decades, when rising health costs with an aging population hit the budget in full force, deficits are projected to be far deeper than they are now. Effective health care reform, and a willingness to pay more taxes, will be the biggest factors in controlling those deficits.
Happy Sunday.
You know, there a lot things we need a reminder of. Starting in January 2007, the Republicans set records for filibusters (the new version, where Republicans just say "we filibuster") and Harry reid refused to scream about it from the capitol dome. So all legislation since January 2007 has had to be written to please Republicans.
ReplyDeleteI have been debating a fair number of conservatives here and there, and clearly the "purity test" factor is in full force these days. The conservative response to a chart like the one you posted on is to say of course dubya was a big spender, it's not only Democrats but also old time Republicans are big spenders; only Tea Party members are real patriots. Or some conservative may not claim to be Tea Party members, but still gleefully throw dubya (and of course Bush I) under the bus. The problem is that conservatives had only praise for Bush during his administration. Conservatives saw the money being wasted like a water through a burst levee, yet all they could do was blame Democrats when the Republicans were in control (if you're not unquestioningly opposed to the terrorists, you are with them). Now the purity test is to reject the idea that stimulus has ever helped the economy, the test is to agree to reduce taxes (for the rich, since conservatives say the poor pay *no* taxes)
A conservative commented to me yesterday that Keynes was wrong, and following Keynesian policies in the 1930's lengthened the Great Depression. Not one word about the cause of the Great Depression, but of course that's not what's important. He also said "modern" economists disagree with Keynes. I am sure some can be found, since the Koch Brothers have bought the economics depart at Florida State (and maybe political science at George Mason). But conservatives have to re-write history in order to find models where cutting taxes, spending and reducing regulations has both increased GNP growth and reduced deficits (let alone reducing debt). Although cutting taxes and regulations is a good way to make the rich richer (as if the income gap was not big enough already).
Krugman was on this week with Grover Nordquist today. Krugam was saying that we are likely to see nine percent unemployment next year, not mention slow GDP growth as far as the eye can see. Nordquist was declaring victory, that there was no tax increases and spending cutting. Obviously when the economy falls to shit Nordquist will blame the Democrats.