Your Deficit in Charts
David Leonhardt's column deconstructing the projected federal deficit between 2009 and 2012 is better than a must-read. It's a must-bookmark. The question is fairly simple: In 2001, the Congressional Budget Office expected that the federal government would run an annual surplus of $800 billion or so in 2009, 2010, 2011 and 2012. Now it projects more than a trillion dollars in deficits. What happened? What accounts for the change?
The New York Times crunched the numbers. The answers, in descending order, are the downturn in the economy (37 percent of the change), the policies passed by George W. Bush (33 percent), the extension of policies passed by George W. Bush (20 percent), the stimulus bill (7 percent), and the rest of Barack Obama's agenda (3 percent). Matthew Yglesias offers this in graph form:
Some might be surprised that Obama's prospective agenda doesn't account for more on that graph. After all, health-care reform alone is expected to cost more than a hundred billion dollars a year. The only policies that increase the deficit, however, are those paid for by borrowed dollars. And the Obama administration is insisting on funding its policy proposals with existing dollars. It's a bit of a novel approach after the past eight years of debtor government -- so novel, in fact, that it's been effectively ignored. People are so used to assuming that government spending is deficit spending that health reform is being attacked for both being too expensive in a time of deficits even as the Obama administration gets tagged for all manner of proposals to raise revenue.
But this is why there's a big fight over capping the employer tax exclusion. This is why the Obama administration proposed capping itemized deductions. It would be easier to leave the tax code alone. But the administration needs the revenue to pay for health reform. That makes achieving health reform harder, but it makes the deficit much better.
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