"What Caused the Budget Deficit?"
David Leonhardt has a nice article breaking down the sources of the growth in the budget deficit. Since Leonhardt works for The New York Times rather than USA Today, they didn’t see fit to illustrate his article with a pie chart, but I made one myself:
— “The first category — the business cycle — accounts for 37 percent of the $2 trillion swing.”
— Second, Bush-era legislation “like his tax cuts and the Medicare prescription drug benefit, [that] not only continue to cost the government but have also increased interest payments on the national debt.”
— Third, “Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000 [...] 20 percent of the swing.”
— Fourth, “About 7 percent comes from the stimulus bill that Mr. Obama signed in February.”
— Fifth, “only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.”
In other words, the very high deficits are not Obama’s fault according to any normal way of assessing political blame. That said, large deficits aren’t a moral failing that we need to hold someone accountable for. Rather, they’re a potential future practical problem that will have to be solved. Doing that will probably require a mixture of higher taxes, somewhat more hard-core health care reform that is likely to pass in 2009, and reductions in defense and possibly Social Security outlays. I don’t really find it especially surprising or alarming that nobody wants to vote for any of those things in 2009. After all, nobody who has to stand for election really wants to do any of that stuff. And the deficit isn’t a problem in 2009 and almost certainly won’t be in 2010. The main issue is whether Congress will be prepared to take tough measures when and if doing so actually proves necessary. Meanwhile, the health reforms being debated in congress will get us some of the way to where we need to be, and also hopefully lay the groundwork for further measures if the best hopes about what’s currently on the table don’t wind up materializing. The simple fact of the matter, after all, is that nobody really knows what the impact of something like comparative effectiveness research will be. It could save a lot of money, or it might not—we might just get healthier while spending a similar amount of money. But if we get it in place sooner rather than later, we’ll know and be in a position to act.