Posted by AzBlueMeanie:
Federal deficits and debt have risen under President Obama, but the evidence continues to show that the Bush Great Recession, President Bush’s tax cuts, and the wars in Afghanistan and Iraq explain most of the deficits that have occurred on Obama’s watch — based on the latest Congressional Budget Office projections. Excerpts from a new report by the Center for Budget and Policy Priorities:
Though some lawmakers and pundits continue to blame record deficits on
the President’s policies in general — and his actions to boost the
economy and stabilize the financial system in particular — these
policies increase budget deficits only briefly; they will have no
significant impact on the long-term problem of large deficits and rising
debt.
* * *
Although longer-term pressures on spending stem chiefly from an aging population and rising health-care costs, those pressures are not new. Policymakers knew about them when they enacted the Bush-era tax cuts and assented to fighting two wars on borrowed money. (These pressures also were taken into account in the Congressional Budget Office projections issued at the start of 2001, which showed budget surpluses for the next several decades.)
The goal of reining in long-term deficits and debt would be much easier to achieve if it were not for the policies set in motion during the Bush years. That era’s tax cuts — most of which policymakers extended in this year’s American Taxpayer Relief Act, with President Obama’s support — and the wars in Iraq and Afghanistan will account for almost half of the debt that we will owe, under current policies, by 2019. By contrast, the economic recovery measures and financial rescues will account for just over 10 percent of the debt at that time.
Some commentators blame major legislation adopted since 2008 — the stimulus bill and other recovery measures and the financial rescues — for today’s record deficits. Yet those costs pale next to other policies enacted since 2001 that have swollen the deficit and that have lasting effects.
Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for nearly $6 trillion in deficits in 2009 through 2019 (including associated debt-service costs of $1.4 trillion). By 2019, we estimate that these two policies will account for almost half — over $8 trillion — of the $17 trillion in debt that will be owed under current policies. (See Figure 2.) These impacts easily dwarf the stimulus and financial rescues, which will account for less than $2 trillion (just over 10 percent) of the debt at that time. Furthermore, unlike those temporary costs, these inherited policies do not fade away as the economy recovers.
Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance in this decade. Even if we regard the economic downturn as unavoidable, we would have entered it with a much smaller debt — allowing us to absorb the recession’s damage to the budget and the cost of economic recovery measures, while keeping debt comfortably below 50 percent of GDP, as Figure 2 suggests. That would have put the nation on a much sounder footing to address the demographic challenges and the cost pressures in health care that darken the long-run fiscal outlook.
Note: "This represents the final update of an analysis that we first produced in 2009 and have updated once or twice annually since."
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