Public Debt: Bush Tax Cuts

[lakhota]

Bush-Era Tax Cuts Projected As Largest Contributor To Public Debt [CHART]

If the Bush-era tax cuts are renewed next year, that policy will by 2019 be the single largest contributor to the nation's public debt -- "the sum of annual budget deficits, minus annual surpluses" -- according to new analysis from the non-partisan Center for Budget and Policy Priorities.

These tax breaks for the nation's top earners, combined with the cost of fighting wars in Iraq and Afghanistan, will account for nearly half the public debt in 2019, measured as a percentage of economic output, the CBPP's analysis shows. Even the cost of the economic downturn, combined with the cost of the legislation passed to stem the damage, won't be as burdensome as the weight of the Bush-era tax cuts, the chart below suggests. See if you can find the debt associated with the Trouble Asset Relief Program and the rescue of Fannie and Freddie:



Tax cuts for the highest earners were renewed late last year, as part of a deal that extended tax breaks for middle earners and reauthorized unemployment insurance. In an April speech, President Barack Obama laid out a plan to reduce the nation's deficit and debt, suggesting that he would strive to make sure the Bush-era tax cuts expire naturally in 2012.

If tax cuts do expire as scheduled, that would win significant debt relief for the government, CBPP says:

imply letting the Bush tax cuts expire on schedule (or paying for any portions that policymakers decide to extend) would stabilize the debt-to-GDP ratio for the next decade. While we'd have to do much more to keep the debt stable over the longer run, that would be a huge accomplishment.

www.huffingtonpost.com/2011/05/20/bush-tax-cuts-debt_n_864812.html

[ladylove]

Of course this is a fallacy. Tax cuts aren't a "cost" to be accounted for. The reason.we have debt is because we spend more than we "make" and borrow to fund the difference.

[lakhota]

May 21, 2011 19:46:26 GMT -5 @ladylove said:

Of course this is a fallacy. Tax cuts aren't a "cost" to be accounted for. The reason.we have debt is because we spend more than we "make" and borrow to fund the difference.

I assume you don't do much NPV analysis...

[Deleted]

that policy will by 2019 be the single largest contributor to the nation's public debt

Oh come on. Now I could believe that they could be the 2nd single contributor to the nations public debt but not the first. Democrats will always be the number one contributor to public debt!

[lakhota]

Democrats will always be the number one contributor to public debt!

Oh, you mean like Bill Clinton was?

[pappyjohn99]

Bush-Era Tax Cuts ( Extended and approved by Barrack Hussein Obama) Projected As Largest Contributor To Public Debt.

You mean the Obama-Reid-Bohner- Tax rates? Didn't they have something to with it?

[pappyjohn99]

I don't know Dem. Seems to me that if the current administration signed off on them after having the majority for two years ( and failing to pass any budget) then they own it. Can't pass it off as Bush tax rates anymore.

[pappyjohn99]

Fair enough. My concern is what is Washington doing to fix things. We can point fingers at past administrations 'til we're blue in the face but we need to address these pressing issues now. People are wanting to throw Paul Ryan under the bus but at least he is attempting to open a dialog. Obama, Geitner, and Bernake seem to be asking us to just move along, everything is fine. I don't happen to think that that is the case.

[ladylove]

May 21, 2011 22:41:37 GMT -5 @lakhota said:

Democrats will always be the number one contributor to public debt!

Oh, you mean like Bill Clinton was?

Debt actually rose under Clinton there was NO SURPLUS under Clinton. Clinton borrowed from ourself to make it look like there was a surplus. Spending was reduced thanks to a repubican congress. Those are the facts but dems insist upon promoting the LIE of a surplus because libs are liars and they're evil. Its that simple.

[ladylove]

May 23, 2011 7:29:17 GMT -5 deminmaine said:

I agree there.
Social Security can be "fixed", but it needs tinkering- and the sooner the better. The longer we just cruise down the path of insolvency, the harder the fix will ultimately have to be.
Medicare should lose the drug component that was added.
The wars in Afghanistan and Iraq should be wound down, and military spending re-assessed.
Taxes should be raised.
Only by doing all of these painful things can we expect to get debt to a manageable level.

The dems wont fix it. They have made it clearnthey will demagogue the issue and use it and medicare to retain power. Libs don't care about the country or what's right they are evil and only care about power. The dems must be defeated if we are to remain free!!!

[Politically_Incorrect12]

The number one contributor to a growing deficit is overspending. Telling the people that they don't pay enough and should raise taxes is kind of like an employee telling their boss that they don't make enough to live their lifestyle and are demanding a raise.

[ladylove]

True... the Bush prescription benefit wasn't paid for and shouldn't have been passed. I blame Bush's big spending policies for getting the socialist Obama elected.

[Politically_Incorrect12]

May 23, 2011 8:09:14 GMT -5 deminmaine said:

They have made it clearnthey will demagogue the issue and use it and medicare to retain power.
Well the Medicare drug benefit that I am suggesting we eliminate was proposed by GW Bush and passed by a Republican Congress, but blame the "evil libs" if you want, I guess?

I disagreed with the Medicare Part D when it was passed....seems like it got a big boost from this last catastrophe waiting to happen under the guise of the healthcare reform bill.

[ugonow]

Of course this is a fallacy. Tax cuts aren't a "cost" to be accounted for.

When Reagan lowered income tax rates,the deficit rose quickly.He then took back a lot of the cuts by his TERFA, raising gas taxes,the Deficit Reduction Act,and a host of other taxes. Was it from him spending too much or because of his income tax cuts?

[Politically_Incorrect12]

May 23, 2011 8:29:17 GMT -5 ugonow said:

When Reagan lowered income tax rates,the deficit rose quickly.He then took back a lot of the cuts by his TERFA, raising gas taxes,the Deficit Reduction Act,and a host of other taxes. Was it from him spending too much or because of his income tax cuts?

I don't particularly put Reagan on a pedestal and I think he overspent too. Although I'd be open to a "Deficit Reduction Tax" that is a separate tax applied to everybody. My only real issue is that I have a feeling that the government will play shell games with it. If they are currently paying $1000 toward the deficit and a new "Deficit Reduction Tax" also brought in $1000, I'd want $2000 to go toward the debt. However, what would most likely happen is that the same $1000 will go toward the debt and the other $1000 would go toward some other pet project, in which case we'd only end up with higher taxes and nothing extra actually be applied to pay down the debt.

I'd also be ok with some sort of "war tax" when there are wars going on in order to help pay for them. We should never run a long term deficit.

[ladylove]

May 23, 2011 8:29:17 GMT -5 ugonow said:

Of course this is a fallacy. Tax cuts aren't a "cost" to be accounted for.

When Reagan lowered income tax rates,the deficit rose quickly.He then took back a lot of the cuts by his TERFA, raising gas taxes,the Deficit Reduction Act,and a host of other taxes. Was it from him spending too much or because of his income tax cuts?

Deficits are NOT the result of tax cuts. Regan couldn't get all the spending cuts he wanted through a democrat congress. Deficits are a direct result of spending greater than the revenue collected. Of course you can argue that collecting MORE revenue would be a solution to that problem and you can justify raising taxes to obtain that revenue but historically we only collect about 20% of GDP regardless of tax rates so any spending beyond that amount is irresponsible.

[Savoir Faire-Demogague in NJ]

Regan couldn't get all the spending cuts he wanted through a democrat congress

Reagan never made any real cuts to spending. He was only successful at reducing the rate of growth in spending.

Just recently we experienced a major, drag out, knock down brawl that resulted in $38 billion in spending cuts. Laughable at best. We are hemoragging $1 trillion plus in borrowing per year. $38 billion is child's play.

[jkapp]

May 21, 2011 22:41:37 GMT -5 @lakhota said:

Democrats will always be the number one contributor to public debt!

Oh, you mean like Bill Clinton was?

Yes...he stole nearly a a trillion dollars from Social Security to create his bogus "balanced budgets" and rode the tech boom wave until it burst, leaving us an economic mess AND leaving us all those IOUs to the Social Security "trust" fund. He is a very major player in our current and (because of the SS theft) future budget/debt problems.

[Deleted]

That has everything to do with the Republican majority in the House. Otherwise the cuts would have expired. However the Republicans did the bidding of their real base- the elite.

Actually Deminmaine I don't agree it's for "the elite". Republicans believe that lower taxes leaves more people with more money to spend & that stimulates the economy. Democrats seem (at least from what I see) to believe that the government can do a better job spending our money. Big difference. It really has nothing to do with the elite except of course that I think most Republicans feel that it's unfair to tax a class of people so much that it's obvious that it's unfair. Democrats don't seem to mind doing that (kind of a they've got it so we should be able to take it mentality).

Now I don't know but I think it would be interesting to find out: How much was given to charities in any given year? From that amount subtract the large contributions (from those bastard rich people) of say everything over $100,000 per donation. Then take what's left & divide it by the number of democrats (excluding those on welfare). My "guess" is that the average democrat gives a lot less than what they would say is every bodies "fair share" or for that matter what our taxes would go up to make up for the social programs they want. In other words they talk a good game but haven't been "playing" the game all along. What they want is to play the game with someone else's money (& that someone doesn't want to play). Sure I could be wrong but I doubt it.

[ed1066]

May 23, 2011 6:16:47 GMT -5 pappyjohn99 said:

I don't know Dem. Seems to me that if the current administration signed off on them after having the majority for two years ( and failing to pass any budget) then they own it. Can't pass it off as Bush tax rates anymore.

Damn straight, the Obama Tax Cuts for the Rich(TM)...

[lakhota]

Yes...he stole nearly a a trillion dollars from Social Security to create his bogus "balanced budgets" and rode the tech boom wave until it burst, leaving us an economic mess AND leaving us all those IOUs to the Social Security "trust" fund. He is a very major player in our current and (because of the SS theft) future budget/debt problems.

During the Clinton administration was the federal budget balanced? Was the federal deficit erased?

Yes to both questions, whether you count Social Security or not.

This chart, based on historical figures from the nonpartisan Congressional Budget Office, shows the total deficit or surplus for each fiscal year from 1990 through 2006. Keep in mind that fiscal years begin Oct. 1, so the first year that can be counted as a Clinton year is fiscal 1994. The appropriations bills for fiscal years 1990 through 1993 were signed by Bill Clinton's predecessor, George H.W. Bush. Fiscal 2002 is the first for which President George W. Bush signed the appropriations bills, and the first to show the effect of his tax cuts.

The Clinton years showed the effects of a large tax increase that Clinton pushed through in his first year, and that Republicans incorrectly claim is the "largest tax increase in history." It fell almost exclusively on upper-income taxpayers. Clinton's fiscal 1994 budget also contained some spending restraints. An equally if not more powerful influence was the booming economy and huge gains in the stock markets, the so-called dot-com bubble, which brought in hundreds of millions in unanticipated tax revenue from taxes on capital gains and rising salaries.

Clinton's large budget surpluses also owe much to the Social Security tax on payrolls. Social Security taxes now bring in more than the cost of current benefits, and the "Social Security surplus" makes the total deficit or surplus figures look better than they would if Social Security wasn't counted. But even if we remove Social Security from the equation, there was a surplus of $1.9 billion in fiscal 1999 and $86.4 billion in fiscal 2000. So any way you count it, the federal budget was balanced and the deficit was erased, if only for a while.

Update, Feb. 11: Some readers wrote to us saying we should have made clear the difference between the federal deficit and the federal debt. A deficit occurs when the government takes in less money than it spends in a given year. The debt is the total amount the government owes at any given time. So the debt goes up in any given year by the amount of the deficit, or it decreases by the amount of any surplus. The debt the government owes to the public decreased for a while under Clinton, but the debt was by no means erased.

Other readers have noted a USA Today story stating that, under an alternative type of accounting, the final four years of the Clinton administration taken together would have shown a deficit. This is based on an annual document called the "Financial Report of the U.S. Government," which reports what the governments books would look like if kept on an accrual basis like those of most corporations, rather than the cash basis that the government has always used. The principal difference is that under accrual accounting the government would book immediately the costs of promises made to pay future benefits to government workers and Social Security and Medicare beneficiaries. But even under accrual accounting, the annual reports showed surpluses of $69.2 billion in fiscal 1998, $76.9 billion in fiscal 1999, and $46 billion for fiscal year 2000. So even if the government had been using that form of accounting the deficit would have been erased for those three years.

www.factcheck.org/askfactcheck/during_the_clinton_administration_was_the_federal.html

HISTORICAL CHARTS: www.cbo.gov/ftpdocs/108xx/doc10871/HistoricalTables.pdf

[EVT1]

There you go throwing facts into things again. Man I thought that horse was dead.

I remember the Clinton era- things were on track- I think I was paying .93 a gallon too. Way to go pubs- what a colossal failure you engineered.

[ed1066]

May 23, 2011 17:51:53 GMT -5 EVT1 said:

I think I was paying .93 a gallon too. Way to go pubs- what a colossal failure you engineered.

LOL!

Nov. 3, 2008 - U.S. gas price average $1.72 a gallon

May 2, 2011 - U.S gas price average $3.96 a gallon

Stop lying to yourself!!

news.consumerreports.org/cars/2011/05/average-gas-prices--may-2-2011.html

[Deleted]

If I'm not mistaken during President Clintons time the shortfalls were projected out for payment in the future. Much like if I were to spend $100,000 this year & project out paying $10,000 per year. Then you could say that I make more than I spend. Not true but you could say it. BTW those payments hurt the next guy that takes office. It's just the SPIN you put on it (if you don't look close).

[lakhota]

Huh...?

[formerexpat]

That has everything to do with the Republican majority in the House. Otherwise the cuts would have expired. However the Republicans did the bidding of their real base- the elite.

Then the effect on the budget in the late 90's is also attributable to a Republican majority and not Clinton.

The "Bush tax cuts" helped the middle and low classes much more than the rich. Rich people - $700bn over the next decade, middle class & poor - $3 trillion.

www.govtrackinsider.com/articles/2010-10-18/expiring-bush

[fairlycrazy23]

I don't see where total debt has dropped in the past 20 years. Be it under Bush, Clinton or Obama. Total debt seems to always be higher at the end of each fiscal year. Of course it explodes recently.

www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

[lakhota]

Republicans seem to hold one of two basic opinions about the Clinton balanced budget(s):

1. Never happened, or...

2. They give credit to a Republican-controlled Congress.

NOTE: Why did Newt Gingrich try to take credit for the balanced budgets - if they never happened?