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Good article. I don't think it will change anyone's mind though. The truth makes too much sense for them to comprehend. It doesn't track with their "blame Bush" mentality.
The Bush Tax Cuts and the Deficit Myth
Runaway government spending, not declining tax revenues, is the reason the U.S. faces dramatic budget shortfalls for years to come.
By BRIAN RIEDL
President Obama and congressional Democrats are blaming their trillion-dollar budget deficits on the Bush tax cuts of 2001 and 2003. Letting these tax cuts expire is their answer. Yet the data flatly contradict this "tax cuts caused the deficits" narrative. Consider the three most persistent myths:• The Bush tax cuts wiped out last decade's budget surpluses. Sen. John Kerry (D., Mass.), for example, has long blamed the tax cuts for having "taken a $5.6 trillion surplus and turned it into deficits as far as the eye can see." That $5.6 trillion surplus never existed. It was a projection by the Congressional Budget Office (CBO) in January 2001 to cover the next decade. It assumed that late-1990s economic growth and the stock-market bubble (which had already peaked) would continue forever and generate record-high tax revenues. It assumed no recessions, no terrorist attacks, no wars, no natural disasters, and that all discretionary spending would fall to 1930s levels.
The projected $5.6 trillion surplus between 2002 and 2011 will more likely be a $6.1 trillion deficit through September 2011. So what was the cause of this dizzying, $11.7 trillion swing? I've analyzed CBO's 28 subsequent budget baseline updates since January 2001. These updates reveal that the much-maligned Bush tax cuts, at $1.7 trillion, caused just 14% of the swing from projected surpluses to actual deficits (and that is according to a "static" analysis, excluding any revenues recovered from faster economic growth induced by the cuts).
The bulk of the swing resulted from economic and technical revisions (33%), other new spending (32%), net interest on the debt (12%), the 2009 stimulus (6%) and other tax cuts (3%). Specifically, the tax cuts for those earning more than $250,000 are responsible for just 4% of the swing. If there were no Bush tax cuts, runaway spending and economic factors would have guaranteed more than $4 trillion in deficits over the decade and kept the budget in deficit every year except 2007.Mr. Riedl is a research fellow at the Heritage Foundation.• The next decade's deficits are the result of the previous administration's profligacy. Mr. Obama asserted in his January State of the Union Address that by the time he took office, "we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program."
In short, it's all President Bush's fault. But Mr. Obama's assertion fails on three grounds.
First, the wars, tax cuts and the prescription drug program were implemented in the early 2000s, yet by 2007 the deficit stood at only $161 billion. How could these stable policies have suddenly caused trillion-dollar deficits beginning in 2009? (Obviously what happened was collapsing revenues from the recession along with stimulus spending.)
Under this realistic baseline, the 10-year cost of extending the Bush tax cuts ($3.2 trillion), the Medicare drug en lement ($1 trillion), and Iraq and Afghanistan spending ($515 billion) add up to $4.7 trillion. That's approximately one-third of the $13 trillion in baseline deficits—far from the majority the president claims.
Third and most importantly, the White House methodology is arbitrary. With Washington set to tax $33 trillion and spend $46 trillion over the next decade, how does one determine which policies "caused" the $13 trillion deficit? Mr. Obama could have just as easily singled out Social Security ($9.2 trillion over 10 years), antipoverty programs ($7 trillion), other Medicare spending ($5.4 trillion), net interest on the debt ($6.1 trillion), or nondefense discretionary spending ($7.5 trillion).
There's no legitimate reason to single out the $4.7 trillion in tax cuts, war funding and the Medicare drug en lement. A better methodology would focus on which programs are expanding and pushing the next decade's deficit up.
• Declining revenues are driving future deficits. The fact is that rapidly increasing spending will cause 100% of rising long-term deficits. Over the past 50 years, tax revenues have deviated little from their 18% of gross domestic product (GDP) average. Despite a temporary recession-induced dip, CBO projects that even if all Bush tax cuts are extended and the AMT is patched, tax revenues will rebound to 18.2% of GDP by 2020—slightly above the historical average. They will continue growing afterwards.
Spending—which has averaged 20.3% of GDP over the past 50 years—won't remain as stable. Using the budget baseline deficit of $13 trillion for the next decade as described above, CBO figures show spending surging to a peacetime record 26.5% of GDP by 2020 and also rising steeply thereafter.
Putting this together, the budget deficit, historically 2.3% of GDP, is projected to leap to 8.3% of GDP by 2020 under current policies. This will result from Washington taxing at 0.2% of GDP above the historical average but spending 6.2% above its historical average.
En lements and other obligations are driving the deficits. Specifically, Social Security, Medicare, Medicaid and net interest costs are projected to rise by 5.4% of GDP between 2008 and 2020. The Bush tax cuts are a convenient scapegoat for past and future budget woes. But it is the dramatic upward arc of federal spending that is the root of the problem.
Good article. I don't think it will change anyone's mind though. The truth makes too much sense for them to comprehend. It doesn't track with their "blame Bush" mentality.
Damn Bush...
14% of the deficit is a significant amount.
There's nothing conservative at all about deficit financed tax cuts.
http://www.cbpp.org/cms/index.cfm?fa=view&id=3036
Of course the WALL ST Journal would defend the govt-crippling dubya tax-cuts because they enriched the WSJ readers by 100s of $Bs.
Even if detractors have overstated the case, the kernel of the narrative is true: the Bush tax cuts contributed to deficits, and a Republican Congress did not balance the tax cuts with corresponding cuts in spending.
(and that is according to a "static" analysis, excluding any revenues recovered from faster economic growth induced by the cuts)
The CBPP response to Heritage
http://www.cbpp.org/cms/index.cfm?fa=view&id=3036o Heritage ignores the fact that rapidly-rising interest costs — one of its "culprits" behind rising outlays — result in significant part from the tax cuts and other fiscal policies of the Bush era.
o Heritage ignores the fact that the share of deficits accounted for by the Bush-era tax cuts will grow in future years as the impact of the economic downturn on deficits diminishes.
o In constructing its baseline, Heritage partly assumes its own conclusion.
o It was not a sudden spurt of growth in Social Security, Medicare, and Medicaid that turned projected budget surpluses into deficits.
The most significant myth about the Bush Tax Cuts is that they were responsible for any real growth in GDP.
Rachel Maddow trashed AZ azzhole Kyl last night for saying tax cuts NEVER need to be paid for by raising taxes and aren't causing the deficit. Hilarious.
When dubya passed out $180B to taxpayers, did the Repugs pay for it with cuts elsewhere?
Right wing economist Arthur Laffer’s stimulus plan: Suspend all federal taxes
http://thinkprogress.org/2010/07/08/laffer-taxes/
I don't like second had assumed quotes. I couldn't find a link of him saying any such thing. Care to back up your accusation?
---nevermind---
I found the link, but he talks about a time limit with it. A tax holiday. Love how Think progress misrepresents things, don't you?
Seems to me a $2.4 trillion direct stimulus to the productive is far more fair than the trillions we are giving to friends of Obama.
http://online.wsj.com/article/SB1000...pinion_LEADTop
"Suspend" means for a limited time.
You aren't as smart as you think you are.
You should read the whole Laffer article for perspective and context:
Unemployment Benefits Aren't Stimulus
No Sherlock.
I found it and changed my posting before you posted that one.
Now you are trying to tell us where the link is.
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