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Who is to Blame for the Tremendous Increase in the U.S. Deficit?

July 27, 2011 Comments off

I have heard a lot of folks (including my own father – bless his Republican soul) blaming our current President as the cause of the huge increase in the deficit.  And yes, the deficit has grown tremendously since Obama took office – but there is a reason.  For right or wrong, the current administration passed a very large stimulus package to attempt to keep our economy from going over the cliff.  Obama also passed an extension of the Bush tax cuts to prevent all of the middle class tax cuts to expire while we were in the deepest recession since the Great Depression.  I don’t think this should be considered profligate spending – because it was very reasoned, purposeful spending.  Now some economists disagree with whether this was the right thing to do, but that does not mean that the spending was done without thought or intention. 

In any event, I found out quite a lot about the cause of the $8.5T increase in the deficit from approximately $5.8T in 2001 to approximately $14.3T today. An article in this morning’s Chicago Sun-Times (http://www.suntimes.com/news/6706593-418/how-did-we-get-here-a-debt-crisis-qa.html ) outlines specific causes of $6T out of the $8.5T increase.  I have broken that $6T down between George W Bush and Obama as follows:

Bush
1. 2001 & 2003 tax cuts: $1.6T
2. Additional interest over that period $1.4T (so let’s give W at least $1T of this)
3. Wars in Iraq and Afghanistan $1.3T
4. Medicare prescription drug program $300B
5. 2008 financial corporation bailout $200B
6. Lower tax revenues due to the great recession which began in 2007 to date: hundreds of billions

Obama
1. Economic stimulus package 2008: $800B
2. Balance of additional interest per above $400B
3. 2010 tax cut compromise with the Republicans that extended unemployment & payroll tax temp reduction $400B

So let’s do the math on the dollars they identified:
George W – $4.4T
Obama – $1.6T

Even if every single unlisted dollar was due to the current administration (which is an unrealistic assumption), it would still show that more of the deficit was caused by George W.  So, if you hear anyone say “the damage was done by nancy(sic), Harry and Obama” – as someone commented in the WSJ today – make them “show you the money”.  Er, at least, show you the figures.  It is great to hear people run down the current administration as ‘tax and spend’.  Unfortunately, the previous administration was just ‘spend’.

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