The New York Times has an excellent, concise and easy-to-understand article about the federal deficit by David Leonhardt in today’s edition. I recommend it for anyone trying to figure out just how we got to where we are from the surpluses of the early 1990s. It’s also an even-handed examination of the causes with respect to how Congress, and the policies of Presidents George W. Bush and Barack Obama are contributing to the anticipated $1.2 trillion deficit. In other words, the article does a good job of quashing the simplistic arguments of those who want to point fingers at Bush or Obama, or Republicans or Democrats, and pin all the blame for this financial mess on one party or person. And – surprise, surprise – health care reform will play a key role in getting the budget back to some semblance of order. From the story:
The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.
You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.
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The solution, though, is no mystery. It will involve some combination of tax increases and spending cuts. And it won’t be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.
That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade.