How Washington F@#$%! the budget = Since 2001, lawmakers time and again have cut taxes or increased spending without finding ways to pay for their decisions. Both parties share the blame.
THE FIX OF FIXING THE US BUDGET
by Charles Riley, CNN
Note for WoP readers: Another piece yet again frm Ghulam Mitha:
The prophetic words uttered by that English genius [Oscar Wilde] are still ringing in my ears…’Empires decline when they’ve to pay their bills’.
There is an interesting article on CNN about how, under baby Bush, America’s financial decline started, from 2001—the year the war on terror also started. I couldn’t help reflecting upon the decline of other empires, notably the Soviet’s when they invaded Afghanistan in 1979. 20 years later the USSR no longer exists on the map. Now what about the great American empire? Is it also doomed to perish…like the Soviets? Because the US too has to pay it’s bills.
The article depicts how the US is in dire financial straits. In 2001 the ratio of US debt to GDP was 60%. Ten years later it has doubled to 120%.
When Bush and Republicans were in power, the Democrats opposed them and now the Republicans are opposing the Democrats on exactly the same tax and budget issues.
Obama is no different than Bush. Both are literal pawns on the Zionist chessboard. One black, one white. Same shaped pieces.
BUSH TAX CUTS: 2001, 2003 and 2006
After a brief few years of budget surpluses at the end of the Clinton administration, lawmakers opened the new century by blowing a hole in the budget with major tax cuts
Since 2001, lawmakers time and again have cut taxes or increased spending without finding ways to pay for their decisions. Both parties share the blame.
The Bush tax cuts carried an initial 10-year cost estimate of $1.35 trillion, according to the Congressional Budget Office. They were reauthorized and expanded in 2003, and then again in 2006. In 2010, President Obama signed another extension.
The cost of the latest two-year extension? $544.3 billion.
Proponents argued that the tax cuts would spur economic growth. But Democrat Tom Daschle, then the Senate majority leader, warned in 2001 that the cuts were too large and too expensive.
“I just know that at some point that reality is going to come crashing down on all of us and we’re going to have to deal with it,” Daschle said.
WAR FUNDING: 2001 TO PRESENT
In order to fund wars in Iraq and Afghanistan, Presidents Bush and Obama have spent more than $1 trillion on direct costs alone.
On top of that, annual defense spending has just about doubled since 2001, rising to almost $700 billion in 2010. Military spending now accounts for more 20% of the entire federal budget.
Obama ordered more troops to Afghanistan in 2009, while he has simultaneously drawn down forces in Iraq. Costs are still sky-high. In February, Obama requested $118 billion to fund the wars just for fiscal year 2012.
MEDICARE DRUG BENEFIT: 2003
Without finding a way to pay for it, Congress passed a law in 2003 that expanded prescription drug benefits for seniors on Medicare.
Originally estimated to cost $395 billion over 10 years, costs are now expected to be much higher — and there is no expiration date.
Bush characterized the measure as “the greatest advance in health care coverage for America’s seniors since the founding of Medicare.” But there was no corresponding tax increase or spending cuts to pay for it.
Now, it’s estimated that Medicare Part D will cost about $1 trillion dollars over the next 10 years.
BUSH STIMULUS: 2008
With economic indicators signaling a slowdown, lawmakers mounted a bipartisan effort to move a $168 billion stimulus package through Congress in hopes of stopping the recession in its tracks.
The tax cuts and other incentives — totaling around 1% of GDP — weren’t paid for.
Bush praised the quick work of Congress and urged Americans not to “overreact” to the economic troubles. But by the time the nation recovers, the government will have pumped trillions into the economy.
TARP BAILOUT: 2008
In October 2008, Congress authorized the Treasury Department to spend up to $700 billion to help stabilize financial markets.
The money would be used to bail out banks and Wall Street firms, finance General Motors and Chrysler’s trips through bankruptcy and help homeowners modify mortgages they could no longer afford.
When lawmakers authorized Treasury Secretary Henry Paulson (right) to tap the aid, it was unknown how much would ever be returned to the Treasury. Turns out, the bank bailouts have turned a small profit, while taxpayers are still holding the bag for bailouts for the auto industry and AIG.
According to the latest CBO estimate, TARP — the whole program — will ultimately cost taxpayers $19 billion.
AMERICAN RECOVERY ACT: 2009
In the face of a deepening recession, Congress put together a massive stimulus package. A combination government spending and tax cuts, the bill included money for infrastructure, energy-related projects and unemployment benefits, among other items.
It was originally estimated to cost $787 billion but later revised to $862 billion.
Not a single Republican in the House voted for the bill.
“Just because Republicans spent too much money after September 11 and lost our way on financial matters doesn’t mean the Democratic Party should be allowed to wreck our ship of state,” said Republican Congressman Zach Wamp. “This is taking us quickly down the wrong road. Vote no.”
OBAMA TAX PACKAGE: 2010
Sold as a form of stimulus, this legislation included a reduction in the estate tax threshold, a patch for the alternative minimum tax, a partial one-year payroll tax holiday and some additional tax breaks for businesses that invest in plants and equipment.
It also included an extension of the Bush tax cuts through the end of 2012, and is projected to cost $858 billion over ten years. The spending and tax cuts in the bill were, once again, not offset by any increase in federal revenue.
With both the annual budget deficit and public debt hitting record levels, and the House now controlled by cut-happy Republicans, the debate has shifted to reducing the size and scope of government.
DEBT AT THE BREAKING POINT
There is plenty of blame to go around for the nation’s current budget troubles. Democrats and Republicans alike pushed major legislation that increased government spending, without corresponding increases in revenue.
Of course, there was also the deep recession, which started in 2007 and caused tax revenue to plummet.
Today, the national debt stands at more than $14 trillion, and Washington is gearing up for a brawl over the debt ceiling, which will have to be raised sometime in the next month or so. Both sides agree the debt must be addressed, though there’s little agreement on how to get there. Stay tuned!
Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the ‘Wonders of Pakistan’. The contents of this article too are the sole responsibility of the author (s). WoP will not be responsible or liable for any inaccurate or incorrect statement / s contained in this post.
YOUR COMMENT IS IMPORTANT
DO NOT UNDERESTIMATE THE POWER OF YOUR COMMENT
Wonders of Pakistan supports freedom of expression and this commitment extends to our readers as well. Constraints however, apply in case of a violation of WoP Comments Policy. We also moderate hate speech, libel and gratuitous insults.