What’s Driving Projected Deficits?
http://www.offthechartsblog.org/what%e2%80%99s-driving-projected-deficits/
Posted by: CBPP
Posted in: 2001/2003 Tax Cuts, Deficits and Projections, Economic Recovery Watch, Federal Budget, Federal Tax, Recession and Recovery, Taxes and the Economy
Kathy Ruffing and Jim Horney have just issued an update of their 2010 analysis on what contributes to the large budget deficits that are projected for the rest of this decade.
This updated analysis examines the sources of projected deficits from 2009-2019 – a period that spans the beginning of the Obama Administration and extends past the economy’s anticipated recovery — to show the lasting harm done by policies that President Obama inherited. It should provide much-needed and relevant context to the coming budget debates.
“Some lawmakers, pundits, and others continue to say that President George W. Bush’s policies did not drive the projected federal deficits of the coming decade — that, instead, it was the policies of President Obama and Congress in 2009 and 2010. But, the fact remains: the economic downturn, President Bush’s tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years.”
View the full updated analysis:
http://www.cbpp.org/cms/index.cfm?fa=view&id=3490
http://www.cbpp.org/files/5-10-11bud.pdf (10pp.)
Thanks very much for your reply. I want to use your data and arguments when I’m discussing things and I worried I’d have no reply if this question came up. Thanks, again.
I love the clear-headed depiction of the deficit that the figure in this study offers and it’s ability to convey to the reader the relative importance of the economic issues that are clearly confused in the public mind. But I’m having a conceptual problem. I know I’m going to embarrass myself with this question, but I can not seem to figure out how failure to take in revenues (as with the Bush tax cuts) adds positively to the deficit in the same way that an obviously actual costly operation like the unfunded Bush wars. If it would take little effort, would someone be so gracious to explain that? If so, I would be greatly appreciative.
We addressed this question in a follow-up post, rebutting a criticism from the Heritage Foundation. Both the war costs and the tax cuts reflect deliberate policy decisions that policymakers made after 2001. We could have kept taxes at Clinton-era rates, and we could have paid for the wars by cutting other spending (or raising taxes further). We did neither. Both choices swelled the deficit, which is simply the difference between revenues collected and dollars spent.