In Wonkbook this morning, I pointed out that the $4+ trillion in Bush tax cuts that John Boehner wants extended easily swamps the $2 trillion in spending cuts he wants as ransom to lift the debt ceiling. The math on this is very simple: Cutting one dollar of spending does not reduce the deficit if it’s matched by cutting two dollars of taxes. But that’s now how Boehner sees it. Under his budgetary regime, tax cuts are free.
When Boehner took control of the House, he replaced “PAYGO,” where you have to pay for every new dollar of spending or tax cuts, with “CUTGO,” where new spending needs to be offset but tax cuts are free. This would’ve been troubling policy at any time. But it’s shocking at this moment, when we’ve spent the past decade getting a tutorial on how tax cuts blow up the deficit.
Let’s go to the charts. The first is from the Pew Fiscal Analysis Initiative’s report on “The Great Debt Shift” (pdf), and it breaks down how we went from surpluses at the turn of the century to deficits today. The financial crisis and ensuing recession get a lot of the blame, but insofar as legislation passed by Congress and signed by the president goes, the tax cuts are far and away the lead culprit:
As this report from the Center on Budget and Policy Priorities shows, the story is much the same going forward. The hangover from thew financial crisis remains with us, but the single largest policy contributor to projected deficits is the extension of the Bush tax cuts.
Insofar as policy has gotten us into this fiscal mess, the Bush tax cuts deserve the bulk of the blame. In their absence, deficits would be much smaller today. If they’re allowed to expire in 2012, deficits will be much smaller going forward. So if you’re saying that tax increases are off the table in any and all budget deals, then you’re proposing to leave in place the very policies that have led to our current deficits and threaten to explode our future deficits. You can call people who’ve adopted that approach a lot of things. Tax cutters. Republicans. But you can’t call them deficit hawks.