What are the origins of today's $14 trillion debt?
WASHINGTON - All the sound and fury in Congress over paying what some call "the nation's credit card bill" raises two obvious questions: Who ran up the debt, and what were the biggest charges?
Given the government's budget surplus in 2000 -- and the fact that the administrations both of Presidents George W. Bush, a Republican, and Barack Obama, a Democrat, added to the debt during every year they were in office -- the blame falls on both parties, experts say.
The same goes for Congress. Both Republicans and Democrats controlled Congress at various points over that decade, with the GOP dominating the U.S. House for most of the decade other than between 2007 and this January, and Democrats controlling the Senate since 2007.
"Because neither party is blameless for the decisions that led to this problem, both parties have a responsibility to solve it," Obama said in a speech earlier this week. But he also pointed out that his Republican predecessor had inherited a budget surplus and left Obama to deal with a deep recession, two wars and rapidly worsening deficits.
"In the year 2000, the government had a budget surplus," Obama said. "But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation's credit card."
On the other side of the deficit coin, congressional Republicans have pointed out that Obama's administration -- in part, because of the massive economic stimulus plan -- has run up far worse deficits than the Bush administration, and failed this year to propose a new budget that would aggressively tackle the problem.
"Nearly $4 trillion has been added to the debt ceiling since [Obama] became president. It was $10 trillion only 30 months ago; now it's $14 trillion," U.S. Sen. Roy Blunt, R-Mo., told reporters recently. "We were actually spending, during the Bush years, at or below the 40-year average [as a percentage] of GDP [gross domestic product]. Now we're at a new number that the government hasn't been anywhere close to since World War II."
Debt Causes: Wars, Tax Cuts, Drug Benefits, Recession
What were the key factors in running up the budget deficits over the last decade? While deficit analysts vary in the extent to which they assign blame to specific actions, most tend to agree that the costs of wars, tax cuts and the recession were prime factors.
A recent New York Times analysis of the debt history of the past decade attributed the deficit largely to "the Bush-era tax cuts, war spending in Iraq and Afghanistan, and recessions."
Even though many conservatives have blamed other categories of federal spending, the Times analysis concluded that "the non-defense discretionary spending on areas like foreign aid, education and food safety was not a driving factor in creating the deficits. In fact, such spending, accounting for only 15 percent of the budget, has been basically flat as a share of the economy for decades."
U.S. Sen. Claire McCaskill, D-Mo., tends to reflect that analysis in her comments. "When you put a brand-new entitlement program [Medicare prescription drugs] on the credit card, when you put two wars on the credit card, when you put a massive [Bush-era] tax cut on the credit card -- those are the major contributors, along with unemployment benefits, that are causing these records deficits," she told reporters this week. "We need to be honest and say this problem was caused by both parties."
According to a study by the liberal Center for Budget and Policy Priorities, "the events and policies that pushed deficits to these high levels in the near term were, for the most part, not of President Obama's making. If not for the Bush tax cuts, the deficit-financed wars in Iraq and Afghanistan, and the effects of the worst recession since the Great Depression (including the cost of policymakers' actions to combat it), we would not be facing these huge deficits in the near term."
The center concluded, "By themselves, in fact, the Bush tax cuts and the wars in Iraq and Afghanistan will account for almost half of the $20 trillion in debt that, under current policies, the nation will owe by 2019. The stimulus law and financial rescues will account for less than 10 percent of the debt at that time."
A bipartisan source of data on the federal budget is the Congressional Budget Office, which has analyzed historical trends in several reports. The CBO found that "federal debt held by the public is high by historical standards but is not without precedent" -- given that the debt climbed by about 30 percent of GDP during World War I, and that debt surged to nearly 80 percent of GDP in World War II.
"In contrast," the CBO found, "the recent jump in debt -- so far, roughly 25 percent of GDP -- can be attributed in part to an ongoing imbalance between federal revenues and spending but, more important, to the financial crisis and deep recession and the policy responses to those developments."
In its own analysis of the key congressional votes over the last decade that led to today's massive debt, the Washington Post found that "75 percent of the members currently serving in Congress voted for at least one --- and in most cases more than one --- of three policies that contributed to fully one-third of the $12.7 trillion swing from projected surpluses to real debt: President George W. Bush's 2001 and 2003 tax cuts, funding for the wars in Afghanistan and Iraq and President Obama's 2009 stimulus bill."
With some exceptions, the study found, most congressional Republicans supported tax cuts and the wars, while most Democrats backed the stimulus package and the wars. The bottom line: The policies of both parties led to today's major debt problem.
Lawmakers Blame Each Other for the Problem
Both Republicans and Democrats in Congress tend to blame the other side for most of the annual deficit problems, even though both parties -- in different ways -- worsened the debt.
"It's absolutely accurate that President Bush added $5 trillion to the debt over eight years," Blunt told reporters in a recent conference call. But he added that "this president [Obama] has added $5 trillion over 30 months," in part because of the economic stimulus spending, which was approved by a Democrat-controlled Congress.
"I'm not saying that to defend $5 trillion over eight years," Blunt said. "But the Bush administration started with an economic slowdown that [was due to] the high-tech bubble that had burst in the last year of the Clinton administration."
For their part, Obama and other Democrats argue that the Great Recession bequeathed by Bush dug a deep hole that still entraps the nation's economy. "As a result [of the recession and previous Bush-era policies], the deficit was on track to top $1 trillion the year I took office," Obama said earlier this week.
"To make matters worse, the recession meant that there was less money coming in, and it required us to spend even more -- on tax cuts for middle-class families to spur the economy; on unemployment insurance; on aid to states."
For her part, McCaskill told reporters that "the vast majority of Republicans in the House have voted to raise the debt ceiling a number of times, and the vast majority of them voted for the most serious contributing factors to our deficit," including the wars and the Bush-era tax cuts. "They have an obligation to step up and compromise. They helped cause the problem."
But U.S. Rep. Todd Akin, R-Wildwood, contends that the economic stimulus bill and other Obama administration initiatives are the worst culprits in worsening the debt. He told the Beacon that the stimulus bill "was more spending in one snap of the finger than all of the revenues of all 50 states added together. You take all of the tax revenue from individuals from the 50 states, add it up, and it's less than $787 billion."
Reminded that most Republicans backed the two wars, Akin responded: "So did the Democrats. They voted for going into Afghanistan and Iraq as well. That said and done, the total bill for the Iraq and Afghanistan wars over a 10-year period is about $1 trillion."
Meanwhile, he said, Obama "is dropping a $1.5 trillion deficits every year for three years in row." Akin concedes that every year of the Bush presidency saw deficits, saying that "we've had trouble with deficit spending for a long time. It's just that Obama has put it on steroids."
Some outside analysts blame Congress for failing to raise revenue to pay for the wars in Afghanistan and Iraq. In an interview with Forbes magazine in 2008, Robert Hormats -- a State Department official who is a former vice chair of Goldman Sachs International and senior economic adviser to Henry Kissinger at the National Security Council -- said that "in every other major war, there has been a tax increase. This time, there has been a tax cut . . . If war is worth fighting, it's worth encouraging or asking Americans to pay at least some of the cost of the war."
In his book, "The Price of Liberty: Paying for America's Wars from the Revolution to the War on Terror," Hormats found that the U.S. had borrowed the entire cost of the war and shifted that cost of the war to the next generation.
And the true long-term costs of the Afghanistan and Iraq wars are likely to be much higher than the $1 trillion or so on the books. A new study, "The Costs of War" by the Eisenhower Research Project based at Brown University's Watson Institute for International Studies, found that the wars -- including costs incurred in Pakistan -- will cost Americans between $3.2 trillion and $4 trillion, including medical care and disability for current and future war veterans.
A Congressional Research Service study in March estimated that this nation had spent $1.28 trillion on the wars, but did not attempt to estimate future costs.