Hint: As you see in this new chart from CBPP, it's not the Recovery Act.
Read their update of the factors responsible for the budget deficit for the rest of this decade. Here are my key takeaways:
- Things that get into and out of the system, like the Recover Act and even the TARP, are not the things that drive the deficits;
- Things that stay in the system and remain unpaid for, like the Bush tax cuts, do drive the deficits;
- The downturn itself played a large role, by triggering automatic stabilizers and reducing tax revenues;
- Absent all of this stuff (see the black line at the bottom) there's virtually no budget deficit;
QED:
This post originally appeared at Jared Bernstein's On The Economy blog.
Follow Jared Bernstein on Twitter: www.twitter.com/@econjared
Nice try though.
For every dollar Bush cut, JFK/LBJ had cut five.
So the deficit must be the fault of the LFK/JFK tax cuts.
Do you remember before bush was "elected", we had a budget surplus?
Do you understand what happens when you reduce revenue (tax cuts)? deficit grows.
we borrowed trillions to finance those HANDOUTS for the rich
The JFK/LBJ tax cuts for the same rich were 5 times larger than the Bush cuts for the same rich.
Since then we have borrowed $ Trillions to finance the JFK/LBJ tax cuts for the rich.
that is current policy, nothing more.
You'll have to forgive me if I don't buy into 10 year projections.
I find the comments perplexing (but not surprising). Our citizenry has become less-interested in problem-fixing than in reality-twisting to fit some preconceived idea.
Here's my perspective. I don't care whether tax cuts for the rich grow the economy and reduce the deficit, or whether increasing those taxes and government spending worked. I would like to live a better life, and I want that for my fellow citizens as well.
To those taking pot-shots at your analysis, a few words. When taxes are cut, they "go into the economy" in the form of spending or saving. Some don't--like if you ship them offshore into a tax haven. But, there is an excellent 50 year study just published that shows that a) tax cuts never pay for themselves (Paul Ryan's attempted invocation of JFK notwithstanding, his cut DOWN to 70% only recouped about 1/3 of the lost revenues, and Reagan's "bipartisan" agreement TRIPLED the debt); and b) tax cuts have no impact on economic growth.
Everyone would wish it otherwise. Cut taxes, give me more money, and everyone benefits is great--if only it were true. As untrue, it diminishes our income, reduces jobs, reduces opportunities for young people, and makes our obligations to the elderly more difficult to pay. Reality-twisting has a big cost associated with it,,,,it may feel good, but it hurts everyone.
Correlation does not equal causation.
So of course your home spun humor solution ignores the other side of the equation, if one is short of money perhaps one asks the happy check provider/employer for a raise, or go find another employer or get a member of the house hold to find work. Nope, of course the only answer is to slash spending, which let me know how that works when you stop paying the mortgage or the electric bill because since you've decided bringing in more income is never an option you will at some point discover you cannot cover those bills either.
I'll start with two points! I've got $50 that says you have ZERO idea how the US Government "borrows" money from China. I've got another $50 that says you don't even know that "borrowing" is a misnomer and that the US has ZERO obligation to make good on the "borrowing." You don't know because you have zero idea of the "borrowing" mechanism.
NEXT!
A significant part of the Defense Department IS spent for Defense. Much of it however belongs more properly to the old name -- the Department of War.
Money spent on the citezens, goes directly into the economy.
Money spent on wars, off shoring, and bankster gambling leaves the economy.
The deficit is driven by a failure of consumerism. Focusing on tax cuts helps, on unnecessary war spending helps...but it fails to address the systemic problem that is shutting us down:
We have a mismatch of consumers to productivity. Got it?
Consumers drive the economy...but not if they are locked out of profit sharing.
We have 20% OVER-capacity to produce which is the same as saying workers are paid 20% less than they should be.
We are paying US workers too little, Jared. Capitalism demands the lowest pay necessary but a capitalist economy requires consumption equivalent to production. We have tipped into a death spiral with wage cutting acting like a computer virus in our mainframe.
The result of the wage cutting of the past 3 decades is this current wealth disparity problem. We have grossly underpaid workers with insufficient resources to cover the day to day consumerism we need...forget about these workers having retirement savings (what a joke!).
Our bonus-culture to executives, our winner-take-all misallocations, our focus on rewarding the "job creators" with no regard to the general economy/consumer...this is poisoning our capitalist system.
War, off shoring and bankster gambling chips all hurt the economy.
High personal income and gains taxes, with a great citizens safety net will restore our economy.
Free education, healthcare and modest room and board for all who need it.
Strong, healthy educated citizens will make the USA a great country again.
We need to unionize the entire workforce and renegotiate the balance of fund between the owners, executives and producers.
This is the failed results of Obama trying to be bipartisan. And the GOTP comes back to criticize him for trying to get along with them.
Yes Bush enacted tax breaks for people earning less than $250k but most of these people just don't have long term capital assets that they can sell to take advantage of the low tax rates.
I am not against low tax rates but the long term capital gains tax rate is unfair to the lower middle class who don't have extra money to divert into that tax scheme. The fact that 47% of Americans don't pay any federal tax is another can of worms.
This article is nothing more than a defence of the current administrations strategy during a time in which the budget deficit has ballooned to $1.4 trillion. Don't blame us. It was the Bush tax cuts and the recession.