Charts to explain the budget deficit debate

Posted by AzBlueMeanie:

The deficit peacocks are all squacking that we need to cut discretionary social spending and entitlement programs (social security and Medicare), while simultaneously saying that defense budget cuts are off the table and tax increases are off the table.

These deficit peacocks are not serious about deficit reduction. They only have an ideological desire to "drown government in the bath tub."

Ezra Klein has posted some charts to help illustrate this point. First, How our debt happened:

Are you a fan of the Center on Budget and Policy Priorities’ deficit chart, but you wish it focused on public debt instead? Well, wish no more. The Washington-based holding tank for superwonks has remade its deficit chart into a debt chart.

The takeaway hasn’t changed. “The Bush-era tax cuts and the Iraq and Afghanistan wars — including their associated interest costs — account for almost half of the projected public debt in 2019.” If you’ve been reading this blog, you knew that already. What you might not have known is this: After you add the financial crisis and associated rescue packages to the total, “public debt due to all other factors fell from over 30 percent of GDP in 2001 to 20 percent of GDP in 2019.”

In other words, cut the financial crisis and the major initiatives from the Bush-era out of the picture, and we’d be in pretty good shape. In fact, we’d be in great shape. “Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance over the next decade. 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.”

So what now? CBPP recommends letting the Bush tax cuts expire or paying for their extension. This step alone would arrest the rise in debt over the next decade.

And when it comes to funding the Bush tax cuts for the "two percenters" versus funding social security, Social Security has a taxing problem, not a spending problem:

Chart it, CBPP:

“The revenue loss over the next 75 years from making all of those tax cuts permanent would be two and one-half times the entire Social Security shortfall over that period. Indeed, the revenue loss just from extending the tax cuts for people making over $250,000 — the top 2 percent of Americans — would itself be almost as large as the Social Security shortfall over the 75-year period. (See Figure 1.) Members of Congress cannot simultaneously claim that the tax cuts are affordable while the Social Security shortfall constitutes a dire fiscal threat.”

It's the greed of the über-rich "two percenters" versus The Other 98% of us.