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Six Years After Cheney Said ‘Deficits Don’t Matter,’ The National Debt Hits A 50-Year High

By Pat Garofalo on October 2, 2008 at 7:30 pm

"Six Years After Cheney Said ‘Deficits Don’t Matter,’ The National Debt Hits A 50-Year High"

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In 2002, Vice-President Dick Cheney and the Bush administration’s economic team met to discuss a second round of tax cuts, which would follow Bush’s 2001 cuts. At the meeting, “then-Treasury Secretary Paul H. O’Neill pleaded that the government — already running a $158 billion deficit — was careening toward a fiscal crisis.” Allegedly, Cheney replied by saying that “deficits don’t matter.”

Six years later, the Bush administration’s consistent belief that deficits don’t matter has increased the national debt to over $10 trillion. This is the highest dollar amount ever, and pushes the debt to 69% of the gross domestic product, which is the highest percentage since 1955.

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Bush has presided over the largest increase in the debt of any president in history. When he took office, “the national debt stood at $5.727 trillion.” In eight years, there has been an increase of over 70%.

And the Bush administration has seemingly not learned any lessons from this, as the FY2009 budget had a near-record deficit of $407 billion. This deficit was calculated before the administration spent $900 billion rescuing troubled financial institutions and proposed a $700 billion economic bailout. The bailout bill put forth by Treasury Secretary Henry Paulson increased the federal debt ceiling – the amount to which the debt is legally allowed to go – to $11.3 trillion.

As the Center for Budget Policy and Priorities has shown, 42% of the “fiscal deterioration” and explosion of the deficit that occurred under Bush was due to tax cuts:

The key factors have been large tax cuts and increases in security-related programs. For fiscal 2009, some $1 trillion of the $1.3 trillion deterioration in the nation’s fiscal finances stems from policy actions, and tax cuts account for 42 percent of this $1 trillion deterioration.

The conservative practice of cutting taxes while spending millions on wars has led to the largest debt in half a century, and Sen. John McCain (R-AZ) is proposing exactly the same policies. An analysis by the Center for American Progress found that if McCain’s economic plan was in place for eight years, it would leave a debt of $12.7 trillion, besting Bush’s record.

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