Just 10 years ago the Congressional Budget Office estimated the federal government would be completely out of debt and have a $2.3 trillion bank account. Crazy, huh? Consider we now have hit our debt limit and have the largest debt in terms of GDP since the end of WWII.
This assumption was based on a few things. One, the Clinton-era tax rate was left alone. Two, no 9/11 and two endless wars. Three, amongst other things, no Great Recession circa 2007-2009.
Of course it's very difficult to predict the future and CBO estimates are by no means a predictor of future events. It's merely saying if we continue on the path we are on, which was running budget surpluses and paying down our debt, in ten years time it's very possible we will look like this. Easier said than done, yes. But compare that to the most recent CBO 10 year outlook and I'll take the 2001 edition any day.
So what in the world happened? How did we get to the $11 trillion in public debt we now have today?
Pew Fiscal Analysis Initiative set out to explain how it all happened. Here's what they discovered, and trust me it doesn't take a rocket scientist to understand it. It's pretty basic stuff.
In
their study, Pew states, "[b]etween 2001 and 2011, about two-thirds (68 percent) of the $12.7 trillion growth in federal debt has been due to new legislation. Forty percent of this legislative growth was the result of tax cuts enacted after January 2001, and 60 percent resulted from spending increases.
Technical and economic revisions combined caused about one quarter (27 percent) of the growth, and changes in other means of financing accounted for 6 percent."
Wow, sounds like government happened. Almost 70% of the federal debt is directly contributed to new legislation-- legislation that greatly expanded government and was largely never paid for. What legislation could that possibly be? I mean I know we have a Big Government, islamofascistcommieliberal president right now, but that's only two years of the 10. Something has had to have taken place these last ten years to have increased the debt so much.
Pew lists the top 6 legislative policies that contributed the most to the debt in case anybody is wondering.
1. 2001/2003 Bush tax cuts
2. wars in Iraq and Afghanistan
3. Bush's Medicare Part D expansion
4. Bush's TARP
5. Obama's stimulus in 2009
6. the 2010 extension of the Bush tax cuts
Five of the 6 are bona fide Republican policies. The Obama stimulus, which contributes about 6% to the change in the debt, is a firm reaction to the bankrupting policies of the 8 years prior. In other words, if it hadn't been for the Bush tax cuts, the completely unfunded Medicare Part D expansion, the two ongoing, endless wars and Bush's socialist TARP program, there wouldn't have been a need for the 2009 stimulus. Or better said: without 8 years of Republican rule, the 2009 stimulus legislation would have never happened or been required.
To be certain, the economic downturn contributed greatly to the debt as well. The recession led to less federal tax revenue and more spending on unemployment benefits. Naturally, the revenue loss would have been much less, too, had the Clinton-era tax rate not been replaced with the Bush tax rate. So again, the Republican policy not only created huge deficits but created much larger deficits during the recession than would have been under Democratic policy.
The sources of debt are pretty clear. Government-busting legislation and excessive spending.