The New York Times has a long and interesting analysis of the gigantic federal deficits that will be thick upon us like flies to shit for the next coupla hundred years. Before we get to the Times piece, drink in the gathering gloom:
Now here's the Timesman David Leonhardt's take:
There are two basic truths about the enormous deficits that the federal government will run in the coming years.
The first is that President Obama's agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.
Leonhardt discusses the ways in which various Bush policies, many of which have either been supported whole hog or extended with a lot of hand waving by Obama, helped the red ink stack up (?). For instance, the Iraq and Afghanistan wars, various sorts of tax cuts and AMT patches, the stimulus and TARP plans, and account for about 2/3 of the deficit growth. The rest is related to business cycle stuff. The 2001 and current recessions, Leonhardt writes, not only decreased federal tax revenues but increased spending on various welfare programs as well.
He also notes that while Medicare spending is one of the great engines of seriously screwed government spending, there's simply no scenario in which Medicare will be reformed with real savings within the next several years. Meaning it can't be seen as a means of trimming the deficit over the next decade. Leonhardt underscores that the GOP isn't serious about cutting spending, either, delivering only a comical $5 billion in specific cuts in a recent plan.
So what will curb the deficit? "The solution," he writes, "will involve some combination of tax increases and spending cuts. And it won't be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous."
In fact, Obama is pushing pay-as-you-go, meaning the government is supposed to match any new spending with a cut somewhere else. That's a good idea that never seems to get put into play in the end (go ask Ronald Reagan). Based on the Clinton-era climb from deficits to surplus, I'd say the real way out is likely to be minor tinkering with taxes (Clinton raised top marginal rates while cutting capital gains etc.), reduced spending (Clinton trimmed spending more with a Democratic Congress than with a GOP one), and a helluva lot of economic growth (good luck on that one boys!).
Read the full Times piece for a good blow-by-blow of how we got here. And skip over the Obama apologetics built into formulations such as this one: "Mr. Obama's main contribution to the deficit is his extension of several Bush policies." Look, the freaking god-emperor ran on a campaign of, lemme remember now, hope and change. So far, he's only been hoping for a lot more change to fill federal coffers, while planning on a gigantic spending binge far beyond the stimulus and TARP payouts. Indeed, his proposed budget for FY2010 represents a 19 percent increase over FY2008. In a truly unflattering fashion, Obama has harped on all the problems and deficits he inherited from Chimpy McHitler. Well, Mr. President, you're in the big boy seat now and you signed off on every goddamn awful bit of legislation in the past six months or so (remember, you voted for TARP?).
None of the Times story will be news to Reason readers who knew full well that Bush was a budget-buster from Day One. But it's definitely worth a read.