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The Fiscal Legacy of George W. Bush

 
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enemigo



Joined: 19 Mar 2003
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PostPosted: Tue Jun 12, 2012 11:36 am    Post subject: The Fiscal Legacy of George W. Bush Reply with quote

The Fiscal Legacy of George W. Bush
By BRUCE BARTLETT

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.


Republicans assert that Barack Obama assumed sole responsibility for the budget on Jan. 20, 2009. From that date, all increases in the debt or deficit are his responsibility and no one else’s, they say.

This is, of course, nonsense – and the American people know it. As I documented in a previous post, even today 43 percent of them hold George W. Bush responsible for the current budget deficit versus only 14 percent who blame Mr. Obama.

The American people are right; Mr. Bush is more responsible, as a new report from the Congressional Budget Office documents.

In January 2001, the office projected that the federal government would run a total budget surplus of $3.5 trillion through 2008 if policy was unchanged and the economy continued according to forecast. In fact, there was a deficit of $5.5 trillion.

The projected surplus was primarily the result of two factors. First was a big tax increase in 1993 that every Republican in Congress voted against, saying that it would tank the economy. This belief was wrong. The economy boomed in 1994, growing 4.1 percent that year and strongly throughout the Clinton administration.

The second major contributor to budget surpluses that emerged in 1998 was tough budget controls that were part of the 1990 and 1993 budget deals. The main one was a requirement that spending could not be increased or taxes cut unless offset by spending cuts or tax increases. This was known as Paygo, for pay as you go.

During the 2000 campaign, Mr. Bush warned that budget surpluses were dangerous because Congress might spend them, even though Paygo rules prevented this from happening. His Feb. 28, 2001, budget message reiterated this point and asserted that future surpluses were likely to be even larger than projected due principally to anticipated strong revenue growth.

This was the primary justification for a big tax cut. Subsequently, as it became clear that the economy was slowing – a recession began in March 2001 – that became a further justification.

The 2001 tax cut did nothing to stimulate the economy, yet Republicans pushed for additional tax cuts in 2002, 2003, 2004, 2006 and 2008. The economy continued to languish even as the Treasury hemorrhaged revenue, which fell to 17.5 percent of the gross domestic product in 2008 from 20.6 percent in 2000. Republicans abolished Paygo in 2002, and spending rose to 20.7 percent of G.D.P. in 2008 from 18.2 percent in 2001.

According to the C.B.O., by the end of the Bush administration, legislated tax cuts reduced revenues and increased the national debt by $1.6 trillion. Slower-than-expected growth further reduced revenues by $1.4 trillion.

However, the Bush tax cuts continued through 2010, well into the Obama administration. These reduced revenues by another $369 billion, adding that much to the debt. Legislated tax cuts enacted by President Obama and Democrats in Congress reduced revenues by an additional $407 billion in 2009 and 2010. Slower growth reduced revenues by a further $1.3 trillion. Contrary to Republican assertions, there were no additional revenues from legislated tax increases.

In late 2010, Mr. Obama agreed to extend all the Bush tax cuts for another two years. In 2011, this reduced revenues by $105 billion.

On the spending side, legislated increases during the Bush administration added $2.4 trillion to deficits and the debt through 2008. This includes $121 billion for Medicare Part D, a new entitlement program enacted by Republicans in 2003.

Economic factors added almost nothing to increased spending – just $27 billion in total. This is mainly because interest rates were much lower than C.B.O. had anticipated, leading to lower spending for interest on the debt.

After 2008, it becomes harder to separate spending that was initiated under Mr. Bush from that under Mr. Obama. We do know that spending for Part D has risen rapidly – Republicans phased in the program to disguise its budgetary cost – adding $150 billion to the debt during 2009-11.

According to a recent report from the Center for Strategic and International Studies, the unfunded wars in Iraq and Afghanistan increased the debt by $795 billion through the end of fiscal 2008. The continuation of these wars by Mr. Obama added another $488 billion through the end of 2011.

Putting all the numbers in the C.B.O. report together, we see that continuation of tax and budget policies and economic conditions in place at the end of the Clinton administration would have led to a cumulative budget surplus of $5.6 trillion through 2011 – enough to pay off the $5.6 trillion national debt at the end of 2000.

Tax cuts and slower-than-expected growth reduced revenues by $6.1 trillion and spending was $5.6 trillion higher, a turnaround of $11.7 trillion. Of this total, the C.B.O. attributes 72 percent to legislated tax cuts and spending increases, 27 percent to economic and technical factors. Of the latter, 56 percent occurred from 2009 to 2011.

Republicans would have us believe that somehow we could have avoided the recession and balanced the budget since 2009 if only they had been in charge. This would be a neat trick considering that the recession began in December 2007, according to the National Bureau of Economic Research.

They would also have us believe that all of the increase in debt resulted solely from higher spending, nothing from lower revenues caused by tax cuts. And they continually imply that one of the least popular spending increases of recent years, the Troubled Asset Relief Program, was an Obama administration program, when in fact it was a Bush administration initiative proposed by the Treasury Department that was signed into law by Mr. Bush on Oct. 3, 2008.

Lastly, Republicans continue to insist that tax cuts are highly stimulative, often saying that they add nothing to the debt, when this is obviously ridiculous.

Conversely, they are adamant that tax increases must not be part of any deficit-reduction package because they never reduce deficits and instead are spent. This is also ridiculous, as the experience of the Clinton administration clearly shows. The new C.B.O. data confirm these facts.
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jkfunkee___



Joined: 17 Dec 2004
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PostPosted: Tue Jun 12, 2012 11:42 am    Post subject: Reply with quote

obama is bush 2.9
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enemigo



Joined: 19 Mar 2003
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PostPosted: Wed Jun 13, 2012 4:16 pm    Post subject: Reply with quote

way to keep that streak alive of never having anything worthwhile to say!
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transponder



Joined: 18 Mar 2003
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PostPosted: Fri Jun 15, 2012 2:44 pm    Post subject: Re: The Fiscal Legacy of George W. Bush Reply with quote

I generally agree with the spirit of this article that if tax cuts are the biggest solution, we never should have experienced two recessions in less than 10 years.

quote wrote:
They would also have us believe that all of the increase in debt resulted solely from higher spending, nothing from lower revenues caused by tax cuts.


Shouldn't that be lower revenues caused by a crash in the financial system due to overthrowing the most fiscally responsible Presidential administration this generation has EVER SEEN in order to change the banking and finance laws to institute reckless deregulation of financial markets, and participate in gross over-leveraging? Yep.

Quote:
And they continually imply that one of the least popular spending increases of recent years, the Troubled Asset Relief Program, was an Obama administration program, when in fact it was a Bush administration initiative proposed by the Treasury Department that was signed into law by Mr. Bush on Oct. 3, 2008.


A program that most people including the dumb ass occupiers don't even realize is generating OMG --- POSITIVE RETURNS FOR UNCLE SAM!

Who knew?? 3 years ago you would have thought the sky was falling but turns out these pseudo magicians behind the curtain actually do have a few tricks up their sleeve. Makes it easy when you get limited disclosure from Uncle Sam's bank by law and the best military in the world so nobody calls your bluff.
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transponder



Joined: 18 Mar 2003
Posts: 5890
Location: Erotic City

PostPosted: Fri Jun 15, 2012 2:52 pm    Post subject: Reply with quote

Marks my words from the other thread.

transponder wrote:
This is the best part of that whole article. Romney can run on W's old campaign of being "fiscally conservative" and if he's lucky enough to get in, he will INCREASE the rate of spending again while his constituents applaud him for it.



Romney could turn Uncle Sam into corporate America's biggest customer once again, just like Reagan did, and the deficits will SOAR. But with potentially lower unemployment people will look the other way and pass the buck just like they did when we were in grammar school.
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jkfunkee___



Joined: 17 Dec 2004
Posts: 5788

PostPosted: Wed Jun 20, 2012 11:37 am    Post subject: Reply with quote

enemigo wrote:
way to keep that streak alive of never having anything worthwhile to say!


oh, if we we're as all as clever as you...continue to rule P&P, the world is not rite unless you do.
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