In master stroke of "A Decade Late, And $14 Trillion Dollars Short" journalism, The Washington Post finally dug a bit deeper into why we're in the hole we're in.
The nation’s unnerving descent into debt began a decade ago with a choice, not a crisis.I meant to talk about this last-last Sunday when the story actually dropped, but, well, there was obviously some slightly more important breaking news later that day.
In January 2001, with the budget balanced and clear sailing ahead, the Congressional Budget Office forecast ever-larger annual surpluses indefinitely. The outlook was so rosy, the CBO said, that Washington would have enough money by the end of the decade to pay off everything it owed.
Voices of caution were swept aside in the rush to take advantage of the apparent bounty. Political leaders chose to cut taxes, jack up spending and, for the first time in U.S. history, wage two wars solely with borrowed funds. “In the end, the floodgates opened,” said former senator Pete Domenici (R-N.M.), who chaired the Senate Budget Committee when the first tax-cut bill hit Capitol Hill in early 2001.
Now, instead of tending a nest egg of more than $2 trillion, the federal government expects to owe more than $10 trillion to outside investors by the end of this year. The national debt is larger, as a percentage of the economy, than at any time in U.S. history except for the period shortly after World War II.
Polls show that a large majority of Americans blame wasteful or unnecessary federal programs for the nation’s budget problems. But routine increases in defense and domestic spending account for only about 15 percent of the financial deterioration, according to a new analysis of CBO data.
The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3 trillion in anticipated revenue. That’s nearly half of the $12.7 trillion swing from projected surpluses to real debt. Federal tax collections now stand at their lowest level as a percentage of the economy in 60 years.
Big-ticket spending initiated by the Bush administration accounts for 12 percent of the shift. The Iraq and Afghanistan wars have added $1.3 trillion in new borrowing. A new prescription drug benefit for Medicare recipients contributed another $272 billion. The Troubled Assets Relief Program bank bailout, which infuriated voters and led to the defeat of several legislators in 2010, added just $16 billion — and TARP may eventually cost nothing as financial institutions repay the Treasury.
Obama’s 2009 economic stimulus, a favorite target of Republicans who blame Democrats for the mounting debt, has added $719 billion — 6 percent of the total shift, according to the new analysis of CBO data by the nonprofit Pew Fiscal Analysis Initiative. All told, Obama-era choices account for about $1.7 trillion in new debt, according to a separate Washington Post analysis of CBO data over the past decade. Bush-era policies, meanwhile, account for more than $7 trillion and are a major contributor to the trillion-dollar annual budget deficits that are dominating the political debate.
In the end, Bush cut taxes and spent more money. Good times masked the impact, as surging tax revenues reduced the size of year-to-year deficits during the first three years of his second term. But after the economy collapsed during Bush’s final year in office, deficits — and therefore the debt — began to explode as Obama sought to revive economic activity with more tax cuts and federal spending.
Anyways, this article is long, and chock full of details. I'm doing it a disservice by pulling out choice selections, so I'd suggest anyone who cares about this topic (and why wouldn't you?) take the 10-15 minutes to fully digest it. Seriously, your comments aren't going to make much sense if you don't.
My analysis is basically the same as it's always been: Raise taxes on everyone, not just the rich! I don't think this country would immediately go in the crapper if everyone was asked to carry a bit more of the burden for the lost revenue of years of tax cuts that haven't done much to stimulate the economy anyway. Roll everything back to the Clinton-era rates and that deficit would be gone before you know it.
Of course, no politician is ballsy enough to suggest such a thing. The GOP has been particularly clever at convincing Real Americans that their taxes are so oppressive we should all grab our muskets and storm the Capitol. The Democrats are so embarassingly cowardly that they punted on raising taxes on the rich (something most polls show overwhelming support for) when they still had control of the House. Instead, we'll probably get around to raiding Social Security, Medicare, and Medicaid, effectively crippling the very people who need help the most. Good luck to Grandma with getting that Walmart greeter job to pay for her meds. She'll need it.
I bring this back to Obama because here's where his professorial "take 8 minutes to answer an 8 word question" style of leadership really, really kills him. The GOP has been vey effective in fooling Real Americans into thinking their taxes are at all time highs when the opposite is actually the case. Real Americans also erroneously attribute the entire deficit to ObamaCare (which isn't even really on the books yet!), bank & auto bailouts (which have mostly been paid back with interest!)
, and the stimulus program (which was 1/3 tax cuts and 1/3 direct entitlements for those effected by the recession). The Obama White House's inability to control the narrative on these issues makes them seem far more responsible for the hole we're in than they actually are. It's an area the White House is woefully inept in, and might end up costing them re-election.
Unless, of course, Real Americans start reading newspapers again.
Question: Were you aware of the real reason for our massive deficits? What's the easiest solution for this cluster?!?