US Budget Deficit: I'm Emailing My Representatives Today

Why do our expenses exceed our revenues? Over the past decade or so, the main factors have been tax cuts, wars, recessions, and expanded spending for health care.

A few thoughts on President Obama's and House Speaker Boehner's separate addresses to the nation last night on the budget debate and the debt crisis:

• Obama came off much better than Boehner. The president explained the situation, summarized the main points of disagreement, advocated for the plan he wants, and exhorted Congress (Congress, not a particular party) to compromise for the greater good. Boehner, on the other hand, was eager to blame Obama and Obama alone. He appeared stern and resigned: this did not seem like a person willing to compromise. His position seemed to be that Obama either had to join him or to lump it.
• On the plans outlined by the two men: I prefer the plan described by Obama, yet I don't entirely trust the president or the Government to close tax and entitlement loopholes for "the richest Americans" and corporations. I also suspect Boehner's program would most affect and hurt America's poor and needy.
• What will happen: I have no idea. We are essentially locked into a prisoner's dilemma for gargantuan stakes. I can't see the Tea Party wing approaching anything like a compromise. Congress is so polarized right now. The whole country is. But there's also big, big money at stake for everyone. I'm at a loss to see if anyone will act rationally.
• What I'll do: I am going to email my representatives and senators. 

Some interesting graphs from the New York Times illustrate the recent history of the deficit:

The accompanying text to the graphs:

The first graph shows the difference between budget projections and budget reality. In 2001, President George W. Bush inherited a surplus, with projections by the Congressional Budget Office for ever-increasing surpluses, assuming continuation of the good economy and President Bill Clinton’s policies. But every year starting in 2002, the budget fell into deficit. In January 2009, just before President Obama took office, the budget office projected a $1.2 trillion deficit for 2009 and deficits in subsequent years, based on continuing Mr. Bush’s policies and the effects of recession. Mr. Obama’s policies in 2009 and 2010, including the stimulus package, added to the deficits in those years but are largely temporary.

The second graph shows that under Mr. Bush, tax cuts and war spending were the biggest policy drivers of the swing from projected surpluses to deficits from 2002 to 2009. Budget estimates that didn’t foresee the recessions in 2001 and in 2008 and 2009 also contributed to deficits. Mr. Obama’s policies, taken out to 2017, add to deficits, but not by nearly as much.

A few lessons can be drawn from the numbers. First, the Bush tax cuts have had a huge damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels. Second, a healthy budget requires a healthy economy; recessions wreak havoc by reducing tax revenue. Government has to spur demand and create jobs in a deep downturn, even though doing so worsens the deficit in the short run. Third, spending cuts alone will not close the gap. The chronic revenue shortfalls from serial tax cuts are simply too deep to fill with spending cuts alone. Taxes have to go up.

In future decades, when rising health costs with an aging population hit the budget in full force, deficits are projected to be far deeper than they are now. Effective health care reform, and a willingness to pay more taxes, will be the biggest factors in controlling those deficits.

I hope our political representatives start to live in the world of reality very soon.