The Truth hurts

[tarsi]

..Where did the mammoth US budget deficits come from?

Let's go back about a decade, when budget surpluses were predicted for the foreseeable future. Somehow, the math went terribly wrong, by trillions of dollars. Here's an accounting of what happened.

By Peter Grier | Christian Science Monitor – 5 hrs ago....Email

Share3Print......More From .

..Activists: Now, yes now, is the time for US to push for MidEast peace

US, Mexico in food fight over tomatoes: How messy will it get?

A rare apology in the Middle East. Cherish it

Note to tweeting #Romney, #Obama campaigns and #journalists: Chill

.....What’s the cause of the federal government’s huge budget deficits? That’s a question that is harder to answer in the particular than you might think. The general problem is obvious: Uncle Sam has been spending more money than he takes in. The specific reasons as to why this state of affairs exists are a mix of human decisions, economic circumstance, and the cumulative effect of time.

Context is important here. So let’s start with 2001. That year, the Congressional Budget Office looked out over the decade to come and saw ahead nothing but blue skies and black ink. It predicted that between 2001 and 2011 the US would run budget surpluses totaling $5.6 trillion.

That didn’t happen. Instead, the US racked up $6.1 trillion in deficits over that period. CBO’s prediction was a whopping $11.7 trillion off the mark. How did things go so wrong?

CBO has gone back and studied that, as it happens. In a paper published earlier this year, the group’s economists tried to pull out and compare the reasons for the multitrillion swing.

RECOMMENDED: Obama vs. Romney 101: 5 ways they differ on debt and deficits

One big problem was that CBO isn’t magical. Unblessed with the ability to predict the future, it didn’t accurately foresee the economic troubles of coming years, including the crash of the Great Recession. This meant that less tax money came in than anticipated. Overall, CBO says that about $3.3 trillion of its $11.7 prediction error can be attributed to “economic and technical changes” to projected revenues.

Then there were the tax cuts. President George W. Bush instigated most of these, but President Obama also pushed through Congress a payroll tax cut intended to pump money into a moribund economy. Tax cuts accounted for a further $2.8 trillion of the $11.7 trillion discrepancy. (Yes, the big kahuna here is Mr. Bush’s 2001 reduction in income-tax rates, which alone accounts for about $1.2 trillion in revenue foregone over the decade.)

Finally, there are the increases in outflows unpredicted by CBO. Between 2001 and 2011, increased discretionary spending amounted to about $3 trillion. This category includes defense spending related to the wars in Iraq and Afghanistan, homeland security upgrades in the US, spending on food stamps and other hard-times safety net programs, and other general budget categories that are supposed to be approved annually by Congress.

Mandatory spending – a category that includes the Medicare prescription-drug program approved under Bush, the TARP bank bailout, and Mr. Obama’s economic stimulus package – went up by about $1.4 trillion during the period in question. (This type of outflow is called “mandatory” not because we had to do it, but because it results from formulas established by Congress instead of appropriated dollar totals.)

Charles Blahous, a former economic official in the Bush White House who is currently a Hoover Institution research fellow, has rolled all these numbers together into a simple pie chart. His answer to the question “where did the $11.7 trillion go?” is this: 27 percent went away due to projection inaccuracy; 24 percent went to tax cuts; and 49 percent can be accounted for by various forms of increased spending.

Yes, yes, but who’s to blame? It’s election season, after all, and accusations as to which party is responsible for most of this damage are as thick on the ground as October leaves after a windstorm. Asked why the debt has increased during his four years in office during a “60 Minutes” interview last week, Mr. Obama pointed a finger at his predecessor:

“Over the last four years, the deficit has gone up, but 90 percent of that is as a consequence of two wars that weren’t paid for, as a consequence of tax cuts that weren’t paid for, a prescription-drug plan that was not paid for, and then the worst economic crisis since the Great Depression.”

That answer is not accurate. Obama appeared to be talking about numbers that reflect the cumulative debt since 2001, not just his term. According to a White House-produced chart on the national debt, if you take the 10-year period of 2001 to 2011, Bush policies accounted for 55 percent of that figure. Obama-initiated policies such as the stimulus accounted for 11 percent, while the recession took care of the rest.

(The White House chart puts the total debt at $12.7 trillion, not $11.7 trillion, as does the CBO. The White House uses different underlying economic assumptions.)

But even that chart is something of an apples-to-mangoes comparison. Bush was president for eight years, and Obama for three. This is where the passage of time comes in – Bush’s tax cuts in particular had more time to accumulate and thus appear as a bigger part of the overall picture than the later-arriving Obama stimulus package.

Washington Post fact checker Glenn Kessler has looked at this in depth, and made his attempt at adding up who is responsible for the $1.3 trillion 2011 deficit alone. His rough estimate is that economic factors accounted for about 46 percent of this single-year shortfall, while Obama policies accounted for 44 percent, and Bush-era policies for about 10 percent.

Splitting up deficit causes by administration may be politically interesting. It’s possible, though, that it’s effectively pointless, in that it doesn’t lead to a better understanding of the choices that will confront US policymakers in years to come.

A more useful way of looking at things could be to reslice deficit numbers into cyclical and structural figures. The cyclical deficit is caused by stuff that varies from year to year, like food stamp spending, which is driven by unemployment. The structural deficit is welded into the structure of the federal budget like steel beams. It reflects chronic problems that only worsen, such as the rising cost of health care.

According to CBO, about $367 billion of the $1.3 trillion 2011 deficit was caused by cyclical stuff. Some $928 billion was structural. This is the part we really need to worry about, according to such budget watchdog groups as the Concord Coalition.

The most important of these structural factors should come as no surprise. They are the aging of the baby boom population, which will drive up the number of people enrolled in Social Security and Medicare; and the continued increase in health-care costs, which makes Medicare, Medicaid, and other government health-care programs more expensive on a per-person basis.

Population aging accounts for 64 percent of the cost growth of Social Security, Medicare, and Medicaid through 2035, according to a Concord Coalition analysis published earlier this year. Thirty-six percent is due to rising health-care costs.

“Borrowing our way through this is not a viable option because the rising cost of Social Security, Medicare and Medicaid is not a temporary blip. It gets bigger with time. Incurring permanently rising debt would result in staggering interest costs and ultimately a total debt burden that would crush the economy,” concludes the Concord Coalition analysis.

[markb57]

WOW....and its still Bush's fault....

Dont wait for November. Impeach this fraud in Washington now!

[jaman]

bump

[jonjon]

This title is either misleading or the author wants us to know he has never experienced any pain.

The liberals excuse for their unchecked spending is

It's all Bushes fault

It's all Bushes fault

It's all Bushes fault

[DiveDeepSix]

Yes the truth does hurt doesn't it!

The day the democrats took over was not January 22nd 2009, it was actually January 3rd 2007 the day the Democrats took over the House of Representatives and the Senate, at the very start of the 110th Congress.

The Democrat Party controlled a majority in both chambers for the first time since the end of the 103rd Congress in 1995.

For those who are listening to the liberals propagating the fallacy that everything is "Bush's Fault", think about this:

January 3rd, 2007 was the day the Democrats took over the Senate and the Congress.

At the time:

The DOW Jones closed at 12,621.77

The GDP for the previous quarter was 3.5%

The Unemployment rate was 4.6%

George Bush's Economic policies SET A RECORD of 52 STRAIGHT MONTHS of JOB GROWTH!

Remember the day...

January 3rd, 2007 was the day that Barney Frank took over the House Financial Services Committee and Chris Dodd took over the Senate Banking Committee.

The economic meltdown that happened 15 months later was in what part of the economy?

BANKING AND FINANCIAL SERVICES!

Unemployment... to this CRISIS by (among MANY other things) dumping 5-6 TRILLION Dollars of toxic loans on the economy from YOUR Fannie Mae and Freddie Mac FIASCOES!

Bush asked Congress 17 TIMES to stop Fannie & Freddie - starting in 2001 because it was financially risky for the US economy.

And who took the THIRD highest pay-off from Fannie Mae AND Freddie Mac?OBAMA

And who fought against reform of Fannie and Freddie? OBAMA and the Democrat Congress

So when someone tries to blame Bush.

REMEMBER JANUARY 3rd, 2007.... THE DAY THE DEMOCRATS TOOK OVER!"

Budgets do not come from the White House. They come from Congress and the party that controlled Congress since January 2007 is the Democrat Party.

Furthermore, the Democrats controlled the budget process for 2008 & 2009 as well as 2010 & 2011.

In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.

For 2009 though, Nancy Pelosi & Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Barack Obamacould take office. At that time, they passed a massive omnibus spending bill to complete the 2009 budgets.

And where was Barack Obama during this time? He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete 2009.

If the Democrats inherited any deficit, it was the 2007 deficit, the last of the Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets.

If Obama inherited anything, he inherited it from himself!!!

In a nutshell, what Obama is saying is I inherited a deficit that I voted for and then I voted to expand that deficit four-fold since January 20th.

[SgtFuryUSCZ]

***///

Why isn't Barney Frank in jail...?

[DiveDeepSix]

***///

Why isn't Barney Frank in jail...?

No doubt, along with a bunch more of these current clowns. Nothing like having a tax cheat in charge of our tax dollars, yet it seems the liberals get a free pass with the press and feel they are above the law. Time to clean house in November!

[Bandit795]

The truth hurts... Yeah. It's the fault of all republican and democrat administrations and congresses in at least the last 40 years. And PRIMARILY the Federal Reserve with it's printing money out of thin air, causing every economic crisis since 1913.

Not one of the political parties want to get rid of the Fed.

Get rid of the Fed, you solve at least 90% of the problems.

http://www.sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf

http://www.dailykos.com/story/2011/11/29/1040969/-The-Fed-Audit-16-Trillion-in-secret-bail-outs-Thanks-Bernie

http://www.dailypaul.com/188540/audit-teh-federal-reserve-reveals-16-trillion-in-secret-bailouts

http://bolingbrook.patch.com/blog_posts/have-you-heard-about-the-16-trillion-secret-bailout-by-fed-reserve-bank

http://blog.alexanderhiggins.com/2012/06/14/fed-members-gave-banks-4-trillion-secret-bailouts-146821/

http://www.democraticunderground.com/101618676

http://www.sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

http://www.huffingtonpost.com/rep-alan-grayson/the-fed-bailouts-money-fo_b_1129988.html

Edited September 30, 2012 by Bandit795

[SevyShasha]

I'm totally republican now loving Romney but in 2008 I actually wanted Obama to win 100%. Cool 1st black guy who promised really great things. If he lived up to his promises, he really would be a great president. He made arguments the left and right liked. He said for example he'd half the deficit. So for fiscal conservatives / independents he won them over and healthcare wins the lefties. He was the hero for all people. But then he came into office and did not deliver. So its time we let him go.

[divemaster5734]

What really hurts is that even after several failed presidents, from both "sides", there are still people out there incapable of taking off their blinders or able to quit settling for finger pointing and excuses.

Why I wonder, must some folks refuse to open their tiny minds and realize it's BOTH parties fault, because they WANT us to be in this situation.

It's all about divide and conquer, as long as people demand to live in denial, refuse to take any personal responsibility whatsoever, and expect the government to cure everything we will NEVER have a chance to live free.

We are NOT fee today, not even close.

Until everyone breaks the brainwashing they received in school, and refuses to accept the propaganda they hear on TV, all we do on "election" day is promise to submit our freedoms to one tyrant or another.

What hurts is when I read crap like this I understand the corrupt politicians may just be right, and we as a peoples just might be too freaking stupid, or lazy, to ever be able to stand on our own, and then we would deserve to be raped, murdered, and subjugated to servitude forever.

Why I wonder, are some people so afraid to stand up for themselves?