Contrary to popular belief, the “wasteful spending” slice of the federal budget pie that is often blamed for America’s ballooning national debt is actually a slim one in comparison to decreased revenues. The debtor situation facing the U.S. is a product of many decisions made during two presidential administrations that were deemed important to the country, regardless of their long-term fiscal impact.

 

At the beginning of the last decade, the U.S. was projected to have a $2 trillion surplus by now, according to the Congressional Budget Office. Instead, it is saddled with more than $10 trillion in debt to outside investors. (Another $4 trillion is owed to the Social Security trust fund and other government entities.)

 

The biggest reason for this turnaround is the loss of tax revenues, from massive tax cuts implemented under President George W. Bush—and continued under President Barack Obama—and from millions of people losing their jobs during two recessions. These factors alone robbed the federal treasury of $6.3 trillion in anticipated revenue.

 

Other costly decisions made under Bush include the Iraq and Afghanistan wars ($1.3 trillion) and the new prescription drug benefit (Part D) for Medicare recipients ($272 billion).

 

Obama’s 2009 economic stimulus added $719 billion to the debt. More tax cuts passed in December 2010 added another $391 billion. Overall, the current administration is responsible for $1.7 trillion in new debt.

-Noel Brinkerhoff

 

Running in the Red: How the U.S., on the Road to Surplus, Detoured to Massive Debt (by Lori Montgomery, Washington Post)

From Surplus to Debt (Washington Post)