They say a picture is worth a thousand words. That’s why I wanted to share this very simple but powerful graphic with you from The New York Times. It lays out how we managed to turn record surpluses under President Bill Clinton into over $14 trillion in debt just a decade later—namely, through Bush-era tax cuts for the wealthy and two expensive wars.
Everyone in Washington agrees that we need to take action to pay down our debts responsibly. But apparently not everyone remembers how we got into this mess in the first place.
While the Dinosaur wing of the Republican Party demands cuts-only approach that would kill the jobs recovery, President Obama and Congressional Democrats have advocated for a more balanced approach that would allow us to pay down our debts and still make much-needed investments in jobs and future opportunity.
We cannot afford to slow the jobs recovery to satisfy a narrow right wing ideological agenda. It’s an agenda that is so out of touch it says we need not ask the most fortunate among us to share in the sacrifice—even though the breaks they received under a previous administration helped cause the problem.
Massive tax breaks for the wealthy helped get us into this mess. Why shouldn’t we ask the most fortunate individuals and large corporations to share in the sacrifice we’re asking right now of every American?
Jobs. Opportunity. Now.,
How the Deficit Got This Big
By TERESA TRITCH
With President Obama and Republican leaders calling for cutting the budget by trillions over the next 10 years, it is worth asking how we got here — from healthy surpluses at the end of the Clinton era, and the promise of future surpluses, to nine straight years of deficits, including the $1.3 trillion shortfall in 2010. The answer is largely the Bush-era tax cuts, war spending in Iraq and Afghanistan, and recessions.
Despite what antigovernment conservatives say, non-
defense discretionary spending on areas like foreign aid, education and food safety was not a driving factor in creating the deficits. In fact, such spending, accounting for only 15 percent of the budget, has been basically flat as a share of the economy for decades. Cutting it simply will not fill the deficit hole.
The first graph shows the difference between budget projections and budget reality. In 2001, President George W. Bush inherited a surplus, with projections by the Congressional Budget Office for ever-increasing surpluses, assuming continuation of the good economy and President Bill Clinton’s policies. But every year starting in 2002, the budget fell into deficit. In January 2009, just before President Obama took office, the budget office projected a $1.2 trillion deficit for 2009 and deficits in subsequent years, based on continuing Mr. Bush’s policies and the effects of recession. Mr. Obama’s policies in 2009 and 2010, including the stimulus package, added to the deficits in those years but are largely temporary.
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.
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.