Green Room

Intellectual honesty on the national debt, Part II

posted at 9:45 am on July 30, 2012 by

Senate Majority Leader Harry Reid (D-Nev.) recently decided — for the fourth* year in a row — not to pass a budget, meaning uncontrolled spending can continue apace.

Federal spending will have gone up by nearly 60 percent in 2010 dollars from 2000 to estimated 2013 spending. Yet to exclusively blame one political party smacks of intellectual dishonesty because both have failed in the past decade to balance the budget.

Additionally, Presidents Barack Obama and George W. Bush had to deal with budgetary fallout from their predecessors and other factors for which they were not responsible. Let’s review some history.

During Bush’s tenure from 2001 through 2009, liberals cite the doubling of the national debt as proof of his profligacy. The debt did indeed double, but not all of it can be attributed to Bush policies. For example, Bush’s first year in office was plagued by an inherited recession and 9/11, which, coupled with other technical and economic revisions, Heritage Foundation’s Brian Riedl calculated cost $3.8 trillion through 2011. Surely he can’t be held responsible for those unforeseen events.

Yet Bush can and should be held accountable for his policies. According to Riedl, the prescription drug bill passed in 2006 is projected to add nearly $400 billion in its first decade. The 2001 and 2003 tax cuts cost $1.7 trillion during the past 10 years. Add on the cost of the war on terror, which sums to about $1.3 trillion since its inception, the 2008 stimulus and the Troubled Asset Relief Program, and there is plenty of fiscal responsibility for the former president.

2009 is where things get sticky because Bush passed a budget that lasted through Obama’s assumption of the presidency. Disentangling who takes responsibility for what is difficult. Factcheck.org’s attempt to do so concluded that Bush deserves most of the culpability for the staggering deficit: “The truth is that the nearly 18 percent spike in spending in fiscal 2009 — for which the president [Obama] is sometimes blamed entirely — was mostly due to appropriations and policies that were already in place when Obama took office.”

Yet Factcheck.org maintains that about 14.5 percent of the 2009 deficit is attributable to Obama, which is no small contribution. Factcheck.org also notes that “spending under Obama remains at a level that is quite high by historical standards. Measured as a percentage of the nation’s economic production, it reached the highest level since World War II in fiscal 2009 and has declined only slightly since.”

This means that while Obama escapes much of the blame for 2009, he doubled down and swelled spending, maintaining trillion-dollar deficits ever since. Indeed, he won enactment of an $860 billion stimulus bill and increased some of the spending in a $410 billion omnibus bill that year, and of course in 2010 signed the health care law, which is projected to massively skyrocket spending in years to come. In fact, “costs will total nearly $1.3 trillion through the year 2022,” Factcheck.org writes.

Of course, part of the current deficits can be blamed on depressed revenue resulting from the recession, which according to liberal blogger Ezra Klein accounted for 19 percent of the 2009 deficit. But it’s undeniable that spending, and not lack of revenue, is the main source of our current deficits. Revenue is projected to return to its historical average of 18 percent of the gross domestic product by 2016; meanwhile, spending is projected to stay well above the 20 percent of GDP historical average, swallowing nearly 25 percent as far as projections show.

Worse are entitlements such as Social Security, Medicare and Medicaid. They grow automatically every year and did so relentlessly under Bush and Obama. Entitlement spending grew from 10 percent of GDP in 2001 to 11.2 percent in 2008. If left unaddressed, they’re projected to eat up 14.1 percent by 2020. Next year, they will cost $1.6 trillion.

So where does all this leave us?

If we average spending as a percentage of GDP under Bush from 2001 to 2009, it sums to just over 20 percent, about the historical average.

If we do the same for Obama from 2010 to 2012, we get about 24 percent, quite a bit higher than the historical average.

Was Bush too big a spender? Virtually every conservative — even those who failed to admit it during his time in office — will say so. What’s worse is that Obama not only continued Bush’s final and worst year of spending, but he added on even more.

And still more troubling is the fact that while the financial health of Social Security, Medicare and Medicaid has been worsened by both these presidents, demographic and other changes instituted by presidents before each man’s time in office have created the core long-term budgetary problems we face.

So we, members of the Debt-Paying Generation, implore politicians, pundits and voters alike to focus not just on lessening spending in the short term, but to remember that the long-term effects of entitlement spending will outweigh even the worst of the policies of Obama and Bush.

*The original version of this op-ed inaccurately stated Reid failed to pass a budget for the third year in a row. It is in fact the fourth.

[Originally published in Roll Call with David Weinberger, a Minnesota-based blogger who worked in communications at The Heritage Foundation.]

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Comments

The 2001 and 2003 tax cuts cost $1.7 trillion during the past 10 years.

So you’ve decided to adopt the leftist talking point about tax cuts raising the debt? I thought you were brighter than that.

Bitter Clinger on July 30, 2012 at 10:21 AM

Bitter,

We are citing Riedl, who pointed out in his citation on this point in his report that there is uncertainty regarding these tax cuts. CBO says they “cost” $3.8 trillion; this number is far smaller.

From Riedl:

“One could argue this methodology understates the cost of the tax cuts by excluding their impact on rising net interest costs. On the other hand, the original CBO scores of tax cuts have been underestimates because they excluded all supply-side feedback effects and overestimated the GDP between 2008 and 2011, which made all revenue and tax cut projections appear larger.”

Dustin Siggins on July 30, 2012 at 10:32 AM

Dustin Siggins on July 30, 2012 at 10:32 AM

Fair point. I took it that your were accepting this as a valid argument.

Bitter Clinger on July 30, 2012 at 10:42 AM

I think it is valid that some tax cuts do add to the deficit and debt (see the payroll tax holiday), and that there is a necessary balance. The Bush tax cuts are a bit more muddled, since it took two years for them to really have an impact (based upon one set of calculations I looked at) though I do believe they were beneficial overall, contra the liberal view.

Dustin Siggins on July 30, 2012 at 10:51 AM

Tax cuts actually increase revenues by encouraging citizens to produce more, so unless you really believe that all our money is the government’s and they graciously spend it on us by letting us keep some, your entire argument is wrong at the foundation.

SDN on July 30, 2012 at 2:14 PM

SDN, I agree with what you’re saying. Let me put it this way: If we had a simple flat personal income tax of one percent, we’d bring in somewhere around $100 billion to $110 billion annually. Even if we cut every dollar from the federal budget except for half of current defense spending and all interest payments, we’d have an annual deficit of around $600 billion.

Admittedly, this is an extreme example, and doesn’t account for the explosive economic growth that would take place. But I hope that explains what I meant.

Regarding ownership of money, I support a national sales tax and elimination of the income tax, because government does not belong to government.

Dustin Siggins on July 30, 2012 at 2:39 PM

This post has been promoted to HotAir.com.

Comments have been closed on this post but the discussion continues here.

Allahpundit on July 31, 2012 at 1:00 AM


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