Bushonomics still holding back the economy

Posted by AzBlueMeanie:

Federal deficits and debt have risen under President Obama, but
the evidence continues to show that the Bush Great Recession, President
Bush’s tax cuts, and the wars in Afghanistan and Iraq explain most of
the deficits that have occurred on Obama’s watch — based on the latest
Congressional Budget Office projections. Excerpts from a new report by the Center for Budget and Policy Priorities:

10-10-12bud_rev2-28-13-f2Though some lawmakers and pundits continue to blame record deficits on
the President’s policies in general — and his actions to boost the
economy and stabilize the financial system in particular — these
policies increase budget deficits only briefly; they will have no
significant impact on the long-term problem of large deficits and rising
debt.

* * *

Although longer-term pressures on spending stem chiefly from
an aging population and rising health-care costs, those pressures are
not new.  Policymakers knew about them when they enacted the Bush-era
tax cuts and assented to fighting two wars on borrowed money.  (These
pressures also were taken into account in the Congressional Budget
Office projections issued at the start of 2001, which showed budget surpluses for the next several decades.)

The
goal of reining in long-term deficits and debt would be much easier to
achieve if it were not for the policies set in motion during the Bush
years
.  That era’s tax cuts — most of which policymakers extended in
this year’s American Taxpayer Relief Act, with President Obama’s support
— and the wars in Iraq and Afghanistan will account for almost half of the debt that we will owe, under current policies, by 2019. 
By contrast, the economic recovery measures and financial rescues will
account for just over 10 percent of the debt at that time.

Some commentators blame major legislation adopted since 2008 — the
stimulus bill and other recovery measures and the financial rescues —
for today’s record deficits.  Yet those costs pale next to other
policies enacted since 2001 that have swollen the deficit and that have
lasting effects.

Just two policies dating from the Bush
Administration — tax cuts and the wars in Iraq and Afghanistan —
accounted for over $500 billion of the deficit in 2009 and will account
for nearly $6 trillion in deficits in 2009 through 2019
(including associated debt-service costs of $1.4 trillion)
By 2019, we
estimate that these two policies will account for almost half — over $8 trillion — of the $17 trillion in debt that will be owed under current policies
.
(See Figure 2.)  These impacts easily dwarf the stimulus and financial
rescues, which will account for less than $2 trillion (just over 10
percent) of the debt at that time.  Furthermore, unlike those temporary
costs, these inherited policies do not fade away as the economy
recovers.

Without
the economic downturn and the fiscal policies of the previous
Administration, the budget would be roughly in balance in this decade

Even if we regard the economic downturn as unavoidable, we would have
entered it with a much smaller debt — allowing us to absorb the
recession’s damage to the budget and the cost of economic recovery
measures, while keeping debt comfortably below 50 percent of GDP, as
Figure 2 suggests.  That would have put the nation on a much sounder
footing to address the demographic challenges and the cost pressures in
health care that darken the long-run fiscal outlook.

Note: "This represents the final update of an analysis that we first produced in 2009 and have updated once or twice annually since."

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