As President Obama prepares to address the nation on ways in which we can reduce the deficit, there's one thing that's absolutely obvious: the deficit has not been driven by programs for the poor, instead the budget exploded due to staggering handouts to the extremely rich. Even a cursory examination of the deficit makes it clear that the drivers of the debt from 2011 on are the cost of the wars in Iraq and Afghanistan, the economic downturn, and the Bush tax cuts.
Of these factors, the economic instability that brought on inevitable job destruction was already a fait accompli well before Obama took office. The nation was already running a record deficit, already experiencing economic chaos, already seeing the greatest disparity of wealth in almost a century, already stagggering under the reckless economic policy of the Bush years.
Whoever won the presidency in 2008 was going to face a grim fiscal situation, a fact already well known as the presidential campaign got underway. ... Using CBO’s August 2008 projections as a benchmark, we calculate that the changed economic outlook accounts for over $400 billion of the deficit each year in 2009 through 2011 and slightly smaller amounts in subsequent years.
The lingering costs of the Bush bust will be with us for some time to come, but prudent policy (with, let's hope, direct investment in the creation of jobs) can reduce that cost significantly.
On the military issue, President Obama was saddled with two ongoing, expensive conflicts. He may not have acted as swiftly as some of us would hope, but he has moved to reduce the nature and scope of US deployment. Like the Bush bust, the Bush wars will continue to cost us in both blood and dollars, but we can expect a reduction in both.
However, there is one factor in the deficit that will only grow bigger with time. The Bush era tax cuts will soon be the biggest single factor in the decit, and within a few years they will dominate all other factors.
Some commentators blame recent legislation — the stimulus bill 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. ... 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 almost $7 trillion in deficits in 2009 through 2019.
The stimulus funding is already greatly reduced, the bailouts are behind us. No matter how many times fingers are wagged at the size of Social Security, it is not
driving the deficit.
The real driver of the deficit—the reason the ink was red well before President Obama took office—is the neo-gilded-age economic policies of Bush. Too much of which is sadly still with us. Not only are billionaires already piling up ever larger heaps of cash under the shelter of the Bush cuts, the deregulation that drove the economy into instability only accelerated the disparity in wealth. Bailed-out Wall Street is again handing out record bonuses, while Main Street is dealing with the effects of budget cuts. The cost of belt-tightening is being borne by the poor and middle class, while the ultra-wealthy increase their dominance.
The nation had a record surplus in 2000. What's happened since then is not an increase in social programs, EPA funding, or any of the other things on the chopping block in the current budget deal. What's happened is a massive funneling of cash to the top. Unless that's reversed, it will be impossible to staunch the flow of red ink.
Any serious fiscal policy will be one that, at a minimum, rolls back the Bush cuts. Any policy that hopes to put the nation on the road to long-term stability must look to repair the damage that's been done by four decades of fruitless handouts to the wealthy.
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