Obama Vs. Bush: A Debt Illustration
I’m not trying to lay blame, but context about who has added more to this problem is important. Because Republicans voted to raise the debt ceiling every single time it came up under Bush 2.0 and now they’re not so cooperative.
A few lessons can be drawn from the numbers. First, the Bush tax cuts have had a huge damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels. Second, a healthy budget requires a healthy economy; recessions wreak havoc by reducing tax revenue. Government has to spur demand and create jobs in a deep downturn, even though doing so worsens the deficit in the short run. Third, spending cuts alone will not close the gap. The chronic revenue shortfalls from serial tax cuts are simply too deep to fill with spending cuts alone. Taxes have to go up.
Yes, we have a new class of Repubs in the Congress, but that doesn’t mean that simple logic should be thrown out the window. After all, Warren Buffett suggests that the debt ceiling should be removed entirely.
Listen, default or downgrade isn’t an option. Somehow they’ll get this figured out. But as far as my opinion goes…I’m for the Gang of Six’s plan.
How about you?