President Obama often refers to "the failed policies of the past" to criticize his predecessor, President Bush. One of those Bush "failed policies," according to Obama, was the Bush tax cuts, which the President and practically every other Democrat have railed against for years. There is a reason for such criticism, though it really wasn't the Bush tax cuts alone that caused the problem. It was Bush cutting taxes at the same time he ramped up federal spending that led to federal deficits and a net increase in federal debt of around $4.5 trillion during his tenure in office.
Keep Obama's "failed policies of the past" rhetoric in mind as you read the CBO's latest debt projections on Obama's watch. From the Washington Post:
President Obama's proposed budget would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said Friday. Proposed tax cuts for the middle class account for nearly a third of that shortfall... "Over the next 10 years, those policies would reduce revenues and boost outlays for refundable tax credits by a total of $3.0 trillion," wrote Douglas W. Elmendorf, the CBO director. Combined with interest payments on that shortfall, the tax cuts account for the entire increase in deficits that would result from Obama's proposals.
If Bush cutting taxes and increasing federal spending was a "failed policy of the past," then how should we describe Obama's cutting taxes and increasing spending at twice the rate Bush did, resulting in twice as much debt as Bush ? Should we call Obama's policies, failed policies of the past on steroids, or what ??? When Obama promised change, I'm betting most of you didn't anticipate a change for the worse.
Any long-term CBO debt projection contains assumptions, of course, and the current CBO projections (through 2020) include assumptions that GDP will increase over 4% per year, that unemployment will gradually fall to 4.8%, and that the price index will remain relatively stable. I don't want to be a pessimist here, but what if those assumptions DON'T come to pass ??? The accumulated debt will then be even greater. Even if the CBO assumptions are correct, we will have a federal debt well over $20 trillion by the end of the decade, with interest payments on the debt soaring to $800 billion annually.
And that renders most of Obama's presidential economic pronouncements to be little more than the politics of the meaningless.
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