How our debt happened
By Ezra Klein,
Are you a fan of the Center on Budget and Policy Priorities’ deficit chart, but you wish it focused on public debt instead? Well, wish no more. The Washington-based holding tank for superwonks has remade its deficit chart into a debt chart.
The takeaway hasn’t changed. “The Bush-era tax cuts and the Iraq and Afghanistan wars — including their associated interest costs — account for almost half of the projected public debt in 2019.” If you’ve been reading this blog, you knew that already. What you might not have known is this: After you add the financial crisis and associated rescue packages to the total, “public debt due to all other factors fell from over 30 percent of GDP in 2001 to 20 percent of GDP in 2019.”
In other words, cut the financial crisis and the major initiatives from the Bush-era out of the picture, and we’d be in pretty good shape. In fact, we’d be in great shape. “Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance over the next decade. That would have put the nation on a much sounder footing to address the demographic challenges and the cost pressures in health care that darken the long-run fiscal outlook.”
But if wishes were fishes, the seas would be full. So what now? CBPP recommends letting the Bush tax cuts expire or paying for their extension. This step alone would arrest the rise in debt over the next decade. But neither the Republicans nor the Obama administration have shown any interest in paying for further tax cuts. Republicans, in fact, replaced a House rule saying that both new spending and new tax cuts had to be paid for with a rule saying new spending had to be paid for, but new tax cuts didn’t. So that’s that.
Further wonkery: If you want to examine the recent contributors to our fiscal deterioration in more detail than the above chart allows, CBPP also included a table with the underlying numbers. If the version I’ve embedded is too small to read, a larger image can be found here. Enjoy!