In January 2001, as President Clinton was leaving office, the Congressional Budget Office projected that the U.S. Government would run an $800 Billion annual surplus in the years 2009-2012. Instead, the CBO now projects that the Government will run an annual deficit of $1.2 Trillion during that time frame. What accounts for this $2 Trillion dollar swing?
In an excellent article, the New York Times breaks it down. 37% of the swing, comes from the downturn in the economy itself. The current recession, plus the one earlier this decade, has reduced government tax revenue while simultaneously requiring more spending on safety net programs like unemployment.
33% of the swing, according to the NYT, can be pined on the policies of George W. Bush. Specifically, his massive tax cuts for the wealthy, creation of Medicare Part D, the wars in Iraq and Afganhistan, together with the interest payments needed on the debt he ran up with these policies during his term in office, account for 33% of swing.
President Obama's main contribution to the deficit is in his continuation of certain Bush policies: specifically, the war in Iraq and Afghanistan, not calling for the immediate repeal of the Bush tax cuts, etc. NYT figures the continuation of these Bush policies accounts for 20% of the swing.
In case you are bad at math, that means that now 90% of the swing from an $800 billion surplus to a $1.2 Trillion deficit has been accounted for, and President Obama's only contribution is to continue George W. Bush's policies. The stimulus bill, for the record, counts for a mere 7% of the swing, and President Obama's other policy proposals account for a mere 3%.
The article goes on to say that while President Obama has contributed little to this deficit, he does not yet have a credible plan for putting the budget back in balance. Then again, neither does the GOP. The article quotes the libertarian Cato Institute saying that the GOP is not credible when it comes to cutting spending.
Here's my deficit reduction plan: repeal all the Bush tax cuts. Go back to the Clinton tax plan that produced the only balanced budget since Eisenhower. Immediately end the wars in Iraq and Afghanistan. By immediately, I mean freaking tomorrow.
Next, immediately end all agricultural subsidies, including ethanol subsidies. These guys were supposed to have been weaned off the public teat 15 years ago. Next, start looking at some of the wasteful spending in the Pentagon. Why does the Marine Corps require two recruit training depots when the much larger Army only has one? Require all federal agencies to pass an audit of their books.
I figure this will get us halfway there, and then, once the economy comes back, it should cover the rest.