Source: NY TIMES
So let’s go through this …
$673 billion of the gap comes from the wars in Iraq and Afghanistan, tax cuts and the Medicare Advantage. Now you may say – Obama has had four years in office nearly … if he wanted this to happen then he would have done that already. Obama has worked to make reductions in all 3 of these key areas and Republicans have fought tirelessly to keep them even though they are the #1 cause for the deficit. But somehow Republicans are the “deficit hawks”. Actually – no … no they’re not.
The wars in Iraq and Afghanistan
#1 – Republicans think we shouldn’t have left Iraq. We’re out of Iraq
#2 – Republicans don’t want to leave Afghanistan although Obama is slowly pulling out.
#3 – Obama has promoted generals who are talking about a defense budget that spends less; the defense budget is obscene and bloated. People talk about “supporting the troops” any time you talk about cutting the defense budget but those same people are talking about going to war or putting those same troops in harm’s way. When someone hides behind the troops to promote more defense spending … they’re really talking about money that will go to private defense contractors.
#4 – When Republicans played chicken with America’s credit rating last year refusing to authorize payment for America’s bills … the Republican House signed a bill that Obama and John Boehner negotiated where certain cuts would kick in automatically if Congress could not come to an agreement on how to reduce the deficit by $1.2 trillion over 10 years. Half of those cuts via the deficit are through the defense budget. (source)
So – with defense cuts … Republicans will not support them even as we stop operations in Iraq and Afghanistan. If you stop those operations – one would suspect that you can stop spending those dollars but Republicans want those dollars to be spent in other areas of defense. That’s not good for the deficit.
The Bush Tax Cuts
President Obama has called for the expiration of the Bush tax cuts for the rich which end on December 31st, 2012.
#1 – Obama isn’t calling for the expiration of the Bush tax cuts for the middle class which make up a good amount of the total tax cut bill but he is calling for ending the tax cuts for the rich. Republicans are fighting this tooth and nail; conservatives would rather throw their own mother into the middle of a busy street than to increase taxes on the rich.
#2 – Some might argue that Obama extended these Bush tax cuts for the rich in December of 2010 and he did. But as much as that pissed me off at the time – I see that as completely necessary today. The economy is still very fragile and he negotiated Republicans not to block an important treaty with Russia, removal of DADT, and other very important stimulative measures to boost the economy. In return for the $81 billion in tax cuts for the rich that Republicans pursued – he also received $56 billion in extensions in unemployment benefits, $112 billion in the payroll tax cut for the middle class, $8 billion in low income tax credits etc. He received an agreement on larger tax cuts for the middle class to help families and stimulate the economy.
But by extending those tax cuts for the rich – he also took that issue off the table. The economy has been slowly improving and is tepid. Had the tax cuts for the rich expired – the Republican party would have blamed the slow recovery on the elimination of the tax cuts for the rich pointing to some sort of causal relationship between the two. American voters are likely to have bought that argument hook, line and sinker. Now – the argument doesn’t exist. The only question that is left is why haven’t these supposed tax cuts for the rich worked?
#3 – President Obama has already said that he will allow the Bush tax cuts to expire at the end of this year and he will not sign another extension of Bush tax cuts for the rich. If Romney wins – Democrats will likely waiver on this. If Obama wins – it will be a mandate.
So – that’s two major areas the Republican party will not budge on that add tremendously to the deficit. But – it is also fair to say that President Obama’s embrace of middle class tax cuts isn’t responsible either in the long term. Right now – taxes under President Obama are lower than they have been under any President in modern history. (source).
Medicare Advantage or Medicare Part D was passed under George W. Bush that was mostly a handout to seniors and was not paid for. There were no spending cuts to offset the increase in government spending here; Paul Ryan and nearly every other so called conservative voted for this.
#1 – As part of Obamacare – those increases in spending that go directly to insurance companies and medical providers that didn’t exist pre-2004 …. they’re gone. Medicare Advantage saps Medicare of funds and has weakened the financial solvency of the program for seniors. So – Obama has cut out the (mostly) wasteful and unnecessary spending bill and used that towards Obamacare. (source).
#2 – Now some might say that to transfer that spending from Medicare Advantage to Obamacare is just a transfer and no real reduction; however – the #1 increase in government spending as a % comes from healthcare costs. The increase in healthcare costs is bankrupting the country and Obamacare’s main role was to put in a set of systems that reduced the inflation of healthcare costs. Not only does Obamacare bend the cost curve on healthcare costs and reduce the deficit … a recent study by the non-partisan Congressional Budget Office found the law reduced the deficit by $50 billion more than previously thought (source).
#3 – Not only does Obamacare reduce the deficit long term by bending the cost curve (America currently spends more on healthcare than any other country in the world and its not even close) … one of the reasons that Republicans knocked him for the legislation is because he had to raise taxes on middle and large sized businesses as part of the deficit reducing nature of the bill. Republicans RAILED against this bill because it included having to make tough choices. If you want to balance the budget – you have to make tough choices.
Those are the three major elements of the deficit that in conjunction with an economy falling of the ledge that led to the $1 trillion deficit that George W. Bush’s administration handed President Obama.
Now – it’s absolutely true that President Obama has supported Keynesian style stimulus measures to help prop up the American economy as it navigates through hostile and treacherous economic waters; there is no question that those short term measures cost money. By definition – to engage in Keynesian economics is to engage in deficit spending. That’s how economics works. Anyone who disagrees can consult Herbert Hoover for advice or just watch what’s going on as Europe has engaged in fierce austerity measures over the past several years (which coincidentally is exactly what conservatives are trying to replicate).
So – like Bush … Obama supported the bank bailout and an auto bailout. Both of them did. We lost almost $500 billion in revenues just from all the people losing their jobs due to the Bush economic crisis. The recession started in December of 2007 which snowballed into over 4 million jobs being lost in 2008 and another 2.2 million jobs lost in the first three months of 2009. All of those people losing their jobs means a lot less in taxes at the state, local and federal levels. And that high unemployment is one of the primary drivers of our current deficit.
Now – we’ve talked about all of this before HERE. Look at this chart of government spending comparing President Obama to prior presidents:
Also regarding government spending … under President Obama is less than any president in the past 60 years. That was rated “mostly true” by Politifact. (source)
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