The Sources Of Surplus Elimination And Deficit

Great NYT article, "America’s Sea of Red Ink Was Years in the Making", explaining the current deficit. How we went from the Clinton-era surpluses, to the Bush-era credit card-style spending sprees, to Obama left picking up the damaged pieces.

"The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years."

How do you go through all that money? Well, two Bush recessions [2001 and 2007/8] lost a lot of forecasted tax revenue. Then two Bush wars cost a lot of money. Cutting taxes during this time meant more borrowing which has higher costs and interest. That accounts for about 37% of the swing.

"About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt."

Then you have 20% that are Bush policies that Obama has to deal with: the continuing Iraq war and the Wall St. bailout that Bush signed, but Obama supported.

Then you get to what Obama is actually accountable for:

"About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas."

Matthew Yglesias, who noted, "In other words, the very high deficits are not Obama’s fault according to any normal way of assessing political blame", made a chart:



90% of our deficit is Bush: tax cuts for wealthy people [top 1%], borrowing with interest to cover money spent on a ridiculously outsized military and prescription drugs. Pretty much money spent on wealthy people, pharmaceutical companies and countries Bush invaded.

10% is Obama: Stimulus package spent on Americans, paying for education, putting people back to work and giving the biggest tax cuts in history. Which unlike Bush, target those who make less than $250,000 or roughly 96% of the population.

Source: NYT