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.
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.
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.