Congressional Republicans claim that the nation’s red ink is the result of reckless spending by President Obama. However, the reality is much more complicated.
As verified by PolitiFact during the 2012 campaign, the annual rate of increase in spending under Obama is the second or third lowest under any president in 60 years, and is much lower than under President George W. Bush.
Admittedly, the national debt has grown significantly, but depressed revenues because of the recession were a major reason.
The Republicans correctly point out that Medicare is a leading contributor to the deficit. However, they seldom acknowledge that Bush and a Republican Congress made the deficit worse by enacting the Medicare prescription drug program without cutting other spending or raising taxes to pay for it.
Inexplicably, some of Obama’s most strident Republican critics voted for the budget-busting prescription drug program – namely, current Senate Minority Leader Mitch McConnell, current House Speaker John Boehner, current House Majority Leader Eric Cantor and current House Budget Committee Chairman Paul Ryan.
Despite the Republican rhetoric, the federal deficit is coming down. In a 10-year projection issued in February, the nonpartisan Congressional Budget Office estimated that the deficit for the 12 months ending Sept. 30 will be about $845 billion. If that estimate proves correct, the current fiscal year will break a four-year string of deficits over $1 trillion.
Furthermore, measured as a percentage of the economy, the CBO estimated that this year’s deficit will be only half as large as the deficit was in 2009 and will drop by another 50 percent by 2015.
There are multiple reasons for the improving picture:
* As the economy recovers, individuals and businesses are earning more taxable income, while the government is spending less on programs to help the unemployed.
* Taxes on the wealthy were increased in January 2013 as part of a bipartisan agreement to avoid the “fiscal cliff.”
* Although their tactics have sometimes been reckless, tea party Republicans have succeeded in holding spending below what it would have been without their seizure of the House of Representatives in the 2010 election.
* Although the trend may be temporary, health care costs have been rising more slowly in recent years, thereby moderating the growth in spending on Medicare and Medical Assistance.
Despite the decline in annual red ink, dark clouds remain. The CBO projected that, compared to the size of the economy, the accumulated debt from years of deficit spending will remain much higher than it was for the past four decades. When rates eventually rise, the cost of paying interest on that debt will increase the annual deficit.
Future deficits will also grow because the retirement of the baby boomers and rising health care costs will result in higher spending for Social Security, Medicare and medical assistance.
Although the process has been ugly, Washington has made progress toward a responsible budget. However, that progress may soon grind to a halt. On one hand, President Obama insists that the next round of deficit reduction must include additional taxes on the wealthy. On the other hand, Republicans insist that they will not allow any further increase in taxes. The GOP’s alternative is to reform Social Security, Medicare and medical assistance by forcing Americans to bear a greater share of their own retirement and health care costs and by scaling back help for low-income citizens to pay for medical and nursing home care.
Unfortunately, most Americans do not earn enough to cover the cost of a catastrophic health problem or to build an adequate retirement nest egg on their own. In contrast, some Americans have gained disproportionately during the past three decades and can afford to pay higher taxes. For example, as reported by the CBO, after-tax income from 1979-2009 rose by about 150 percent for the wealthiest 1 percent of U.S. households; however, it rose by only about 50 percent for the next wealthiest 19 percent of households and by only about 40 percent for all other households.
Prior to the sequester, the Committee for a Responsible Federal Budget calculated that only about 25 percent of the deficit reduction enacted since the 2010 election will come from tax increases.
However, if the sequester budget cuts remain in place, the share provided by tax increases will drop to about 20 percent. That is hardly a balanced approach.
Raising taxes on the wealthy is a better alternative than cutting health and retirement benefits for everyone else.
It is also a better alternative than ending progress toward a responsible budget.
William Lloyd of Somerset represented Somerset County in the state House of Representatives (1981-1998) and served as the state’s small business advocate (November 2003-October 2011). He writes a monthly column for The Tribune-Democrat.