By George E. Curry
How did we get into this budget mess?
Republican lawmakers want you to believe it was because of the two years President Barack Obama has been in office? But it was Republicans – the professed party of fiscal responsibility – who have presided over the largest splash of red ink.
According to Investment Watch blog:
- The deficit was raised 18 times under Ronald Reagan – three times in 1981, twice in 1982, twice in 1983, three times in 1984, twice in 1985, twice in 1986 and four times in 1987 – or once every five months;
- Under Clinton, the debt was raised only four times – twice in 1993 and once each in 1996 and 1997 – an average of once every 24 months;
- George W. Bush presided over seven increases in the deficit – once each in 2002, 2003, 2004, 2006 and twice in 2008 – or once every 13 months;
- Under Obama, the deficit was raised twice – in 2009 and 2010 – or once every 15 months.
The New York Times observed in an editorial: “In 2001, President George W. Bush inherited a surplus, with projections by the Congressional Budget Office for everincreasing surpluses, assuming continuation of the good economy and President Bill Clinton’s policies. But every year starting in 2002, the budget fell into deficit. In January 2009, just before President Obama took office, the budget office projected a $1.2 trillion deficit for 2009 and deficits in subsequent years, based on continuing Mr. Bush’s policies and the effects of recession. Mr. Obama’s policies in 2009 and 2010, including the stimulus package, added to the deficits in those years but are largely temporary.”
The editorial noted that Republican policies, two wars and economic downturns are responsible for our economic quagmire.
“Under Mr. Bush, tax cuts and war spending were the biggest policy drivers of the swing from projected surpluses to deficits from 2002 to 2009. Budget estimates that didn’t foresee the recessions in 2001 and in 2008 and 2009 also contributed to deficits. Mr. Obama’s policies, taken out to 2017, add to deficits, but not by nearly as much,” the Times article stated. “… The Bush tax cuts have had a huge damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels.”
Republicans are featuring deficit reduction as their central political campaign yet refuse to let the Bush tax cuts expire. And though Democrats don’t agree, they can’t muster the backbone to stand up to the GOP.
Republican leaders have adopted the mantra: We have a spending problem, not an income problem.
According to FactCheck. org, we have both.
“Federal spending is expected to equal 24.1 percent of the nation’s gross domestic product in the current fiscal year, which ends Sept. 30,” the Web site notes. “The figure was 25 percent in fiscal year 2009, highest since 1945.
“On the other hand, federal revenues are expected to drop to 14.8 percent of GDP this year, lower than the 14.9 percent attained in both 2009 and 2010. There has been only one year since World War II when revenues have been as low as any of these years: 1950, when the figure was 14.4 percent.”
In fiscal 2000, the year before the first of two Bush tax cuts took effect, receipts from federal income tax on individuals represented 10.2 percent of GDP. Last year, that figure had dropped to 6.2 percent of GDP. Corporate taxes have also been steadily lowered, now making up only 8.9 percent of the federal budget.
David Stockman told talkingpointsmemo. com: “I think the biggest problem is revenues. It is simply unrealistic to say that raising revenue isn’t part of the solution. It’s a measure of how far off the deep end Republicans have gone with this religious catechism about taxes.”
Rather than dealing with a combination of tax increases and spending cuts, GOP leaders are proposing drastic spending cuts in what is called domestic discretionary or non-security discretionary spending. The Economic Policy Institute (EPI) says that portion of the budget “provides vital services to people in need, protects Americans from corporate abuses and environmental degradation, and keeps the government itself operating.”
EPI stated, “Despite its important functions, the domestic discretionary budget represents only 15 percent of the total budget, and accounts for only 14 percent of the inflation-adjusted increase in federal outlays over the last decade.”
A chart created by EPI shows that the non-security discretionary share of the federal budget averaged 3.3 percent from 1962 to 2008. Under Reagan, it averaged 3.4 percent, 3 percent under Clinton, and 3.5 percent in fiscal 2011. The proposed Obama budget proposed a drop to 2.2 percent. A GOP plan would slice domestic spending to 1.5 percent.
Clearly, domestic spending isn’t out of control, as Republicans argue. And the aging of Americans will only add to the problem.
“Frankly, if you want to blame our looming deficits on policy changes, you would look not to spending but, rather, taxes – specifically, to President Bush’s huge tax cuts of 2001 and 2003 that Congress recently extended until 2012 and will likely extend either wholly or in large measure again after that,” Lawrence Haas wrote in Fiscal Times. “Simply letting the Bush tax cuts expire would reduce annual deficits to about 3 percent of GDP (which is considered economically sustainable) over the next decade, though they would start rising again later on due to soaring health care costs.”
George E. Curry, former editor-in-chief of Emerge magazine and the NNPA News Service, is a keynote speaker, moderator, and media coach. He can be reached through his Web site, www.georgecurry.com You can also follow him at www.twitter.com/currygeorge.