Since Obama took office, the GOP has been relentlessly using the national debt as a justification for their proposed policies of severe spending cuts. But how did we get a debt crisis in the first place? By spending money like a coke fiend, George W. Bush squandered our national surplus on Iraq, Medicare Part D, and, most importantly, his fabled tax cuts; the debt GOP hates so much is entirely the consequence of their own economic policies.
In 2000, the Congressional Budget Office forecasted that there would be a six trillion dollar surplus accumulated by the end of the decade. This was based on the surplus in 2001, the result of the Dot Com bubble and Clinton’s tax raises. (Funny how Clinton presided over a growing economy and increasing taxes. Does tax guru Grover Norquist have a rebuttal?)
Rubbing his hands together at that forecast, Bush Jr. decided to snatch the money away from the wasteful government and give it back to the people. One problem: the CBO’s projection was based upon a bubble. When the Dot Com bubble collapsed in 2002, most of that surplus evaporated, but the money had already been spent by the American people buying houses they couldn’t afford. (Well, actually most of the cuts went to the top 10% of wage-holders. So I guess that the money was spent on Apple products. See: Tech Bubble 2.0)
| Related: Prepare Yourself for the Extension of the Bush Tax Cuts |
Today, we're $15 trillion dollars in debt. What would have happened if Bush had continued Clinton’s policies? Bruce Bartlett, a Reagan and Bush Sr. budget staffer, lucidly explained the CBO report in today’s New York Times:
Putting all the numbers in the C.B.O. report together, we see that continuation of tax and budget policies and economic conditions in place at the end of the Clinton administration would have led to a cumulative budget surplus of $5.6 trillion through 2011 – enough to pay off the $5.6 trillion national debt at the end of 2000.
By spending our cash with abandon, Bush robbed us of the most invaluable tools we have to end this recession. Without Bush, there would be no debt. There would be no argument about whether we’d be able to pay for more fiscal stimulus. Ben Polak and Peter Schott, Economist at the New York Times, ran the numbers and determined that
if state and local governments had followed the pattern of the previous two recessions, they would have added 1.4 million to 1.9 million jobs and overall unemployment would be 7.0 to 7.3 percent instead of 8.2 percent.
So when you hear Republican Congressional leaders complain about Obama’s profligacy, remember where it started. Bush was depleting our resources when the private sector was truly doing just fine. If he had merely followed Clinton’s trajectory, the debt would have been eliminated. Yet the Democrats are being tarnished as fiscally irresponsible? GOP orthodoxy connects slashing taxes rates with paying down the debt. Those two concepts are incongruent. As Taxmaggedon approaches it bears reiterating: government spending is not only sustainable, it’s necessary.
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Related: The GOP’s Policies Have Way More To Do With Unemployment Than They Would Like to Admit
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