On a daily basis, political leaders stoke fears about the growing U.S. federal budget deficit. Senator Judd Gregg (R-NH), ranking Republican on the Senate Budget Committee, warns that “the United States will “essentially be where Greece is in about seven years.” Senator Tom Coburn (R-OK) says that the growth of the federal deficit “… puts our kids and grandkids at great risk.”
And Democrat Erskine Bowles, former Chief of Staff to President Clinton and the chair of President Obama’s deficit reduction commission, calls growing debt and deficits a “cancer” that must be stopped.
Pretty serious stuff, huh? You would then think that, with a “cancer” eating away at the nation’s vitals, threats to our adorable grandchildren, and the prospect of becoming a bunch of irresponsible Mediterraneans, lazing about in the sun and retiring early (wait—that last one sounds pretty good), there would be a serious look at where the debt and deficit actually comes from and what could be done to slow or reverse it.
We need political courage to get the budget in control. But, the only pseudo-courage being offered is cuts in social programs, including entitlement programs for the elderly—Social Security and Medicare. There is precious little serious talk about raising taxes or cutting military spending. An editorial called “The Phoney War over U.S. deficits” in the conservative English financial newspaper, the Financial Times, called out the hypocrisy of complaining about unemployment benefits when the Bush tax cuts remain a fundamental and structural cause of the deficits.
There is no courage or honesty in blaming the stimulus programs, TARP, or Social Security for the deficit and debt. Consider where the deficit comes from. Look at the graph from the Center for Budget Priorities.
It shows how much smaller the deficit would have been starting last year, 2009. The graph shows the largest sources of the current deficit colored in orange, yellow, and blue. Without the Bush tax cuts on the wealthy, spending on the wars, and the current downturn (that decimated earnings and wealth and therefore tax revenues on income and wealth) the deficit would be much smaller.
If you are going to solve the the deficit, go to its sources.