Cause of decline in U.S. financial positionThe Republicans just finished nearly trashing the US economy because they were upset with "Obama's reckless spending". Hmm. The above sure looks like Bush, Bush, Bush to me.
Both economic conditions and policy decisions significantly worsened the debt outlook since 2001, when large surpluses were forecast for the following decade by the CBO. The Pew Center reported in April 2011 the cause of a $12.7 trillion shift in the debt situation, from a 2001 CBO forecast of $2.3 trillion cumulative surplus by 2011 versus the estimated $10.4 trillion public debt in 2011. The major drivers were:
- Revenue declines due to two recessions, separate from the Bush tax cuts of 2001 and 2003: 28%
- Defense spending increases: 15%
- Bush tax cuts of 2001 and 2003: 13%
- Increases in net interest: 11%
- Other non-defense spending: 10%
- Other tax cuts: 8%
- Obama Stimulus: 6%
- Medicare Part D: 2%
- Other reasons: 7%
The extent to which the deficit and debt increases are a cause or effect of wider systemic problems is frequently debated. For example, in January 2008, then GAO Director David Walker pointed to four types of "deficits" that cause the overall fiscal problem: budget, trade, savings and leadership.
Tuesday, August 2, 2011
Wikipedia Dissects the US Debt
Wikipedia is a surprisingly good source of analysis about the US economy and what government policies and spending are causing the decline in the financial health of the federal government: