A new report says that the deficit is created by several factors (see link here) , primarily the wars and the Bush-era tax cuts. From Jared Bernstein's blog entry:
I think this is an interesting article, especially in light of last night's debates. As we saw, both potential VP's illustrated (some of) their plans for stabilizing the budget, then proceeded to tear apart their oppostion's. In the case of Biden, he questioned the lack of detail and transparency within the Romney/Ryan plan specifically related to their crutch of 'loopholes and deductions' for financial stabilization. For Paul Ryan, he highlighted the Obama office's failure to lower any of the budget deficit in four years of power. However this link above sheds some interesting light upon the specific context of which the Obama administration was placed into office. They inherited a Bush tax-cut ridden economy, with a recession awaiting as well as soon as he entered office. The fact that Obama has had to cope with these two incredibly devastating blows to our economy is something the Republican party would rather brush aside in the weeks leading up to the election. They complain about 'slow growth' despite an overwhelming obstacle that faced the President from the first day of his rule. Joe Biden nailed it on the head last night when he said: "They talk about this great recession that fell out of the sky, like, 'Oh my goodness, where did it come from?' It came from this man voting to put two wars on a credit card." These were the 'zingers' that President Obama lacked in his own argumentation the past week. That quote could not be any more reflective of this article!
This is really not a shock to me, defense and tax cuts were practically the only major net spending increases during the period where we actually developed a deficit. The real question that this article raises is how the Democrats have been so unsuccessful in showing the country that their political adversaries were responsible for our deficit mess. All they should have to do is point to this graph (http://upload.wikimedia.org/wikipedia/en/e/ea/CBO_-_Revenues_and_Outlays_as_percent_GDP.png).
This article gives a great depiction of what has actually caused such a large deficit. The article explains that projects requiring years of spending or long lasting policies that affect tax gains heavily affect our deficit. “Things that stay in the system and remain unpaid for, like the Bush tax cuts, do drive the deficits” (Bernstein, 2012). Though economic down turn does cause some of the deficit, the chart shows both the Bush-era tax cuts and wars in Iraq and Afghanistan are high contributors to our nation’s debt. What I am really interested in knowing is what does it mean to have a high deficit? As politicians promise to lower the deficit, I would like to know the benefits Americans will see from eliminating our debt. Will citizens be able to see a difference in a world of deficit versus a world of surplus?
I am not surprised the Bush tax cuts are are huge part of our deficit. But also that economic downturn is also a major contributor. I am starting to slowly see that there are so many more factors in being President, and that when Obama was elected, he had a lot on his plate. I wonder, if the economy starts to turn around and have positive growth, will this lower the deficit?
I am more interested in what will be the government policies to overcome the deficit in coming years. Do they have a plan to cut the deficit or are they going to let it grow as indicated in the figure?
The role of government supported organization like tarp and fannie mae has gone down since the recession started and if the deficit has to be overturned, then these organization has to play a bigger role. So, what kind of policy does government have to support these organization so that they can reduce the deficit?
I think this is an interesting article, especially in light of last night's debates. As we saw, both potential VP's illustrated (some of) their plans for stabilizing the budget, then proceeded to tear apart their oppostion's. In the case of Biden, he questioned the lack of detail and transparency within the Romney/Ryan plan specifically related to their crutch of 'loopholes and deductions' for financial stabilization. For Paul Ryan, he highlighted the Obama office's failure to lower any of the budget deficit in four years of power.
ReplyDeleteHowever this link above sheds some interesting light upon the specific context of which the Obama administration was placed into office. They inherited a Bush tax-cut ridden economy, with a recession awaiting as well as soon as he entered office. The fact that Obama has had to cope with these two incredibly devastating blows to our economy is something the Republican party would rather brush aside in the weeks leading up to the election. They complain about 'slow growth' despite an overwhelming obstacle that faced the President from the first day of his rule. Joe Biden nailed it on the head last night when he said:
"They talk about this great recession that fell out of the sky, like, 'Oh my goodness, where did it come from?' It came from this man voting to put two wars on a credit card." These were the 'zingers' that President Obama lacked in his own argumentation the past week. That quote could not be any more reflective of this article!
This is really not a shock to me, defense and tax cuts were practically the only major net spending increases during the period where we actually developed a deficit. The real question that this article raises is how the Democrats have been so unsuccessful in showing the country that their political adversaries were responsible for our deficit mess. All they should have to do is point to this graph (http://upload.wikimedia.org/wikipedia/en/e/ea/CBO_-_Revenues_and_Outlays_as_percent_GDP.png).
ReplyDeleteThis article gives a great depiction of what has actually caused such a large deficit. The article explains that projects requiring years of spending or long lasting policies that affect tax gains heavily affect our deficit. “Things that stay in the system and remain unpaid for, like the Bush tax cuts, do drive the deficits” (Bernstein, 2012). Though economic down turn does cause some of the deficit, the chart shows both the Bush-era tax cuts and wars in Iraq and Afghanistan are high contributors to our nation’s debt.
ReplyDeleteWhat I am really interested in knowing is what does it mean to have a high deficit? As politicians promise to lower the deficit, I would like to know the benefits Americans will see from eliminating our debt. Will citizens be able to see a difference in a world of deficit versus a world of surplus?
I am not surprised the Bush tax cuts are are huge part of our deficit. But also that economic downturn is also a major contributor. I am starting to slowly see that there are so many more factors in being President, and that when Obama was elected, he had a lot on his plate. I wonder, if the economy starts to turn around and have positive growth, will this lower the deficit?
ReplyDeleteI am more interested in what will be the government policies to overcome the deficit in coming years. Do they have a plan to cut the deficit or are they going to let it grow as indicated in the figure?
ReplyDeleteThe role of government supported organization like tarp and fannie mae has gone down since the recession started and if the deficit has to be overturned, then these organization has to play a bigger role. So, what kind of policy does government have to support these organization so that they can reduce the deficit?