The Economist graphs what has contributed to the U.S. federal deficit (wars, TARP...)

[yllus]

Deficits past and future: A tale of two charts

This is something Barack Obama has been at pains to point out, as Republicans have attacked him as a profligate spender and runner of deficits. Most of today's borrowing, he has said, is attributable to factors beyond his control. He is essentially pointing people to charts like the one at right.

That's a damning chart. It implicates a lot of people, including some of the same Congressional Democrats who are now joining Republicans in assailing the president for budgeted deficits, but who voted for the Bush tax cuts and the wars in Iraq and Afghanistan. Politically, this is a pretty important chart.

If the populist movement of the "Tea Party" is dedicated to restoring fiscal discipline upon the U.S. government, should this logically dictate that they push/support the cancellation of the Bush-era tax cuts?

In any case, apparently this is all irrelevant because of the next graph - if you don't get it, see the explanation of it below:

That massive increase there at the end is due to two things: growth in spending on Medicare and Medicaid, and growth in interest payments on the debt. But the real problem is Medicare and Medicaid. By about 2070, spending on Social Security, Medicare, and Medicaid alone will outstrip revenues.

I guess the simplification of the above is with or without the war in Afghanistan and Iraq, with or without TARP, with or without the Bush tax cuts: Social Security, Medicare, and Medicaid will need modification in the near future.

 

[sandorski]

Yup. When asked repeatedly, not one person would even attempt to answer the question: What Programs has Obama initiated that has contributed to the Deficit?

It was simply ignored or whined about. They all know the Truth of it, just trying to score cheap Political points for some reason that only makes sense to them.

 

[Robor]

The first graph makes me :awe: @ neocons and tea baggers. The second makes me at our future.

 

[Cuda1447]

I gather two things from those graphs.


1. The Bush tax-cuts are hardly contributing to our deficit. That is OUR money that we are simply keeping. Seems silly to call that contributing to deficit. That's like saying if we don't tax everyone another 20% that contributes to our deficit.

2. Medicare/Medicaid needs to be fixed. We need to find solutions that are teh most fiscally conservative.

 

[ebaycj]

I see a lot of blue and gold on that graph.

 

[sandorski]

I gather two things from those graphs.


1. The Bush tax-cuts are hardly contributing to our deficit. That is OUR money that we are simply keeping. Seems silly to call that contributing to deficit. That's like saying if we don't tax everyone another 20% that contributes to our deficit.

2. Medicare/Medicaid needs to be fixed. We need to find solutions that are teh most fiscally conservative.

1) Wrong. Like it or not, Debt/Deficit is an Obligation of the Tax Payers.
2) Somewhat wrong. "Fiscally Conservative" will not work. What will work is using those Programs to Buy Bulk Pricing. Something the "Fiscal Conservatives" refused to do.

 

[Robor]

I gather two things from those graphs.


1. The Bush tax-cuts are hardly contributing to our deficit. That is OUR money that we are simply keeping. Seems silly to call that contributing to deficit. That's like saying if we don't tax everyone another 20% that contributes to our deficit.

2. Medicare/Medicaid needs to be fixed. We need to find solutions that are teh most fiscally conservative.

LOL @ your reasoning on #1. By your logic eliminating all taxes shouldn't count toward the deficit either. After all, it's OUR money.

 

[Robor]

I see a lot of blue and gold on that graph.

Nonsense. This is all Barack HUSSEIN Obama's fault. You are not allowed to fault previous administrations. Well, unless they are Clinton, Carter, or FDR. Then it's ok. :awe:

 

[ebaycj]

I gather two things from those graphs.


1. The Bush tax-cuts are hardly contributing to our deficit. That is OUR money that we are simply keeping. Seems silly to call that contributing to deficit. That's like saying if we don't tax everyone another 20% that contributes to our deficit.

2. Medicare/Medicaid needs to be fixed. We need to find solutions that are teh most fiscally conservative.

in response to #1,

That may be YOUR MONEY that you are simply keeping, but the fact is that someone has to pay our government's debts. And guess what, that "someone" is me, you, and everyone else (yes, even the large and growing percentage that don't pay income tax, but still pay sales taxes/medicare/etc..). Unless, of course, you want America to default completely on its debt. I'm pretty sure you don't want that, though.

So yes, it is YOUR MONEY that you are simply keeping. But you also have debt that you are responsible for. If you choose to keep your money without paying on your debt (on which interest is being charged), it is "adding to your financial deficit". Whether or not you choose to admit that fact to yourself, makes no difference.

Your position is very similar to a naive college kid with his first high-limit credit card. Here's a hint for you: Debt is not free money.

 

[ebaycj]

Nonsense. This is all Barack HUSSEIN Obama's fault. You are not allowed to fault previous administrations. Well, unless they are Clinton, Carter, or FDR. Then it's ok. :awe:

It certainly is HUSSEIN SOTERO's fault. 100%.

 

[Red Dawn]

I gather two things from those graphs.


1. The Bush tax-cuts are hardly contributing to our deficit. That is OUR money that we are simply keeping. Seems silly to call that contributing to deficit. That's like saying if we don't tax everyone another 20% that contributes to our deficit.

Well if you are going to cut taxes you need to cut spending,instead we engaged in two costly wars, one totally unecessary.

 

[soccerballtux]

Those tax cuts are expiring so no story there; Obama is not renewing them.

Tax cuts or not the ultimate problem is fat government. When there are fewer people working for the government, there are more employed producing for a private company.

 

[Babbles]

Here is my two cents, and I am a self-described Libertarian with leanings toward the Republican side of things.

Historical precedent demonstrates that during a recession the best course of action is for the government to go into deficit spending. It's just how it is. Therefore the Bush tax cuts, and government spending in general, was absolutely needed. Frankly to think otherwise is to ignore historical precedent on how to manage a recession. If the tax cuts were not passed, we could have been in a far worse place.

However to get the country out of this debt, government spending will either have to significantly go down (likely to unacceptable levels), taxes are going to have to go way up (again probably to some unacceptable levels), or a combination of the two. So I wanted to note that even though I would normally consider myself fiscally conservative, I think the objective prudent course of action is to increase taxes while also reducing spending. It's politically dangerous to talk about increasing taxes, and the pure conservatives don't want to hear it, but that's just how the math works out, like it or not.

The real problem is that this is a sort of "perfect storm" with the deficit growing to be a significant part of GDP as well as a recession going on. If it was just one of those issues we were dealing with, then it would be somewhat "easy" to figure out.

So basically Obama is in a crazy tough spot and I don't envy him. Either he increases government spending and/or reduces taxes so as to best handle the recession or he decreases government spending and/or increase taxes to reduce the deficit.

 

[Robor]

Those tax cuts are expiring so no story there; Obama is not renewing them.

Tax cuts or not the ultimate problem is fat government. When there are fewer people working for the government, there are more employed producing for a private company.

Remember that when they talk about defense spending cuts, mkay?

 

[Jhhnn]

It's what happens when the populace lets the lootocracy tell them how to think- asset stripping and creative bankruptcy applied on a national and international level.

Leaving the victims deep in debt is a natural consequence of what Warren Buffet correctly describes as class warfare, waged from the top down. It's essential to the necessary deception.

A fools' paradise was built under the Reagan Admin, and we've been living in it ever since.

 

[stateofbeasley]

So basically Obama is in a crazy tough spot and I don't envy him. Either he increases government spending and/or reduces taxes so as to best handle the recession or he decreases government spending and/or increase taxes to reduce the deficit.

Yep. Obama faces a Catch-22.

This whole situation is a result of the failure of Conservatism over the past decade. The whole "deficits don't matter" mentality was a cancer on conservative values, and the result was an imperialistic war in Iraq funded by deficit spending, vastly expanded medicare entitlements funded by deficit spending, and tax cuts to the wealthiest Americans funded by deficit spending.

And the disease continues to spread, with Republican senator Richard Shelby holding governmental nominations hostage in order to secure billions in pork barrel for Alabama. This disgrace of a politician is a tumor growing in our government.

 

[ebaycj]

...
However to get the country out of this debt, government spending will either have to significantly go down (likely to unacceptable levels), taxes are going to have to go way up (again probably to some unacceptable levels), or a combination of the two. So I wanted to note that even though I would normally consider myself fiscally conservative, I think the objective prudent course of action is to increase taxes while also reducing spending. It's politically dangerous to talk about increasing taxes, and the pure conservatives don't want to hear it, but that's just how the math works out, like it or not.

The real problem is that this is a sort of "perfect storm" with the deficit growing to be a significant part of GDP as well as a recession going on. If it was just one of those issues we were dealing with, then it would be somewhat "easy" to figure out.

So basically Obama is in a crazy tough spot and I don't envy him. Either he increases government spending and/or reduces taxes so as to best handle the recession or he decreases government spending and/or increase taxes to reduce the deficit.

With you 100% on this. Spot on.

 

[ebaycj]

Yep. Obama faces a Catch-22.

This whole situation is a result of the failure of Conservatism over the past decade. The whole "deficits don't matter" mentality was a cancer on conservative values, and the result was an imperialistic war in Iraq funded by deficit spending, vastly expanded medicare entitlements funded by deficit spending, and tax cuts to the wealthiest Americans funded by deficit spending.

And the disease continues to spread, with Republican senator Richard Shelby holding governmental nominations hostage in order to secure billions in pork barrel for Alabama. This disgrace of a politician is a tumor growing in our government.

With you on this, too, 100%.

 

[Robor]

Here is my two cents, and I am a self-described Libertarian with leanings toward the Republican side of things.

Historical precedent demonstrates that during a recession the best course of action is for the government to go into deficit spending. It's just how it is. Therefore the Bush tax cuts, and government spending in general, was absolutely needed. Frankly to think otherwise is to ignore historical precedent on how to manage a recession. If the tax cuts were not passed, we could have been in a far worse place.

However to get the country out of this debt, government spending will either have to significantly go down (likely to unacceptable levels), taxes are going to have to go way up (again probably to some unacceptable levels), or a combination of the two. So I wanted to note that even though I would normally consider myself fiscally conservative, I think the objective prudent course of action is to increase taxes while also reducing spending. It's politically dangerous to talk about increasing taxes, and the pure conservatives don't want to hear it, but that's just how the math works out, like it or not.

The real problem is that this is a sort of "perfect storm" with the deficit growing to be a significant part of GDP as well as a recession going on. If it was just one of those issues we were dealing with, then it would be somewhat "easy" to figure out.

So basically Obama is in a crazy tough spot and I don't envy him. Either he increases government spending and/or reduces taxes so as to best handle the recession or he decreases government spending and/or increase taxes to reduce the deficit.

If (in your opinion) the best course of action for Obama is reduced govt spending and increased taxes why wouldn't that have been a better course of action for GWB as well? After all, the deficit and debt were smaller and more manageable then. Why does GWB get the easy (and popular) way out while Obama has to take the tough (and unpopular) route?

 

[Babbles]

If (in your opinion) the best course of action for Obama is reduced govt spending and increased taxes why wouldn't that have been a better course of action for GWB as well? After all, the deficit and debt were smaller and more manageable then. Why does GWB get the easy (and popular) way out while Obama has to take the tough (and unpopular) route?

Did you not read a thing in my post about recession spending? I will repeat this one more time, so pay attention. The historical precedence is that the best way of handling a recession (by the way we are in one, if you didn't catch that) is for government spending to increase and/or taxes to decrease. So, even though I am sure people on the left side of of the aisle do not want to admit it, what Bush did was exactly what the economy needed - further evidenced by Obama doing similar measures.

Furthermore if you want to solve the deficit issue then yes, Obama must reduce government spending and increase taxes. However if he wants to best manage the recession, then no he cannot. In fact from how the budget is looking it appears to be that he is favoring a course of action that manages the recession, not the deficit.

Other people seemed to have understood this and made the allusion to the Catch-22 Obama is in. Please try to understand this problem instead of playing silly immature political finger-pointing games.

 

[ProfJohn]

Three things...

1. Most of the Bush tax cuts end this year.

2. The CBO has a horrible record at figuring out the true 'cost' of tax cuts because it doesn't do a good job of taking into account the added economic activity that tax cuts create.

3. Ten year CBO forecasts are meaningless. For example: in 1994 Clinton estimated that our 2000 revenues would be $1.7 trillion, the actual revenue for that year was $2 trillion a miss of over 10% and that is only a 6 year forecast.

Let's make it 4

4. Compare the 1996 budget below to what actually happened and notice that revenue grow faster than spending. All we have to do to end these doom and gloom scenarios is to repeat that magical formula. And we don't even have to cut spending to do so, just manage the growth of spending like we did in the 90s, it is not that hard. Just say 'no' to budgets that grow spending by 10%.

1996 budget
http://www.gpoaccess.gov/usbudget/fy96/pdf/bud96h.pdf
2009 budget to compare forecast to reality
http://www.whitehouse.gov/omb/budget/fy2009/pdf/hist.pdf

 

[JoshGuru7]

If (in your opinion) the best course of action for Obama is reduced govt spending and increased taxes why wouldn't that have been a better course of action for GWB as well? After all, the deficit and debt were smaller and more manageable then. Why does GWB get the easy (and popular) way out while Obama has to take the tough (and unpopular) route?

The point is that if you subscribe to a Keynesian viewpoint then you believe that the government is responsible for managing the country through recessions. Reducing taxes (republican) and increasing government spending (democrat) are essentially two sides of the same coin and both increase the deficit. The resulting size of government is different, but the impact on both the economy and the deficit is similar with some fierce debating on each side.

There is another viewpoint out there (Austrian school) that doesn't get much discussion outside of libertarians because it is largely politically infeasible.

Here's an amusing take on the differences: http://www.youtube.com/watch?v=d0nERTFo-Sk

 

[Robor]

Did you not read a thing in my post about recession spending? I will repeat this one more time, so pay attention. The historical precedence is that the best way of handling a recession (by the way we are in one, if you didn't catch that) is for government spending to increase and/or taxes to decrease. So, even though I am sure people on the left side of of the aisle do not want to admit it, what Bush did was exactly what the economy needed - further evidenced by Obama doing similar measures.

Furthermore if you want to solve the deficit issue then yes, Obama must reduce government spending and increase taxes. However if he wants to best manage the recession, then no he cannot. In fact from how the budget is looking it appears to be that he is favoring a course of action that manages the recession, not the deficit.

Other people seemed to have understood this and made the allusion to the Catch-22 Obama is in. Please try to understand this problem instead of playing silly immature political finger-pointing games.

I read your entire post. I'm well aware we're in a recession. The catch22 he's in was in your post so it's hard to miss. None of that changes the fact that you agree with GWB for using tax cuts and deficit spending to handle his recession but suggest Obama to use tax hikes and spending cuts to handle his. Or did I read this wrong...

Therefore the Bush tax cuts, and government spending in general, was absolutely needed. Frankly to think otherwise is to ignore historical precedent on how to manage a recession. If the tax cuts were not passed, we could have been in a far worse place.

I think the objective prudent course of action is to increase taxes while also reducing spending. It's politically dangerous to talk about increasing taxes, and the pure conservatives don't want to hear it, but that's just how the math works out, like it or not.

Both are in similar situations. The only difference is the scale. Right now Obama is clearly working on the recession rather than the deficit. He has cut taxes (slightly) and he is deficit spending yet he's being railed on by those on the right for essentially doing the same thing GWB did.

 

[Robor]

The point is that if you subscribe to a Keynesian viewpoint then you believe that the government is responsible for managing the country through recessions. Reducing taxes (republican) and increasing government spending (democrat) are essentially two sides of the same coin and both increase the deficit. The resulting size of government is different, but the impact on both the economy and the deficit is similar with some fierce debating on each side.

There is another viewpoint out there (Austrian school) that doesn't get much discussion outside of libertarians because it is largely politically infeasible.

Here's an amusing take on the differences: http://www.youtube.com/watch?v=d0nERTFo-Sk

LOL... That video was funny. Sadly, it's better than most cRap music.

 

[JS80]

What's the assumption made by the deficit created by the Bush tax cuts in the data that drives that graph? I bet they are incorrectly assuming that the economy grows and tax revenues increase, where most likely if the Bush tax cuts were not enacted, revenues would have gone DOWN along with the economy.

Regardless, Obama had the power to be fiscally responsible, but that isn't in his interest to do.