Q: Why do we now have such a large federal budget deficit?
A: 1. Ten years of the Bush tax cuts enacted in 2001 and 2003 have accumulatively cost $2.5 trillion dollars in federal revenues. The tax cuts primarily benefited wealthy individuals and corporations, turned the modest budget surpluses under the Clinton administration into growing deficits, but failed to promote economic growth. Tax revenues remain depressed as even fewer workers are employed at decent wages following the onset of the Great Recession.
2. The costs of the lengthy wars in Afghanistan and Iraq are being paid for by borrowed money rather than taxes.
3. When the great recession broke out following the financial collapse caused by reckless speculation on the housing derivative markets, the federal government borrowed more money to bail out banks and other financial institutions. The Obama Administration also administered a modest but costly economic stimulus program that alleviated the worst consequences of the crisis, especially for state and local governments and for the unemployed. However that stimulus funding has lapsed, threatening millions of vital jobs in education and other public services at the state and local levels.
Q: What is really at stake in the Budget Debate in DC?
A: A manufactured crisis over raising the debt ceiling is being used by Republicans and conservative Democrats to attack Social Security and Medicare, which are highly popular, cost efficient and vitally needed government “entitlement” programs. Our values as a nation are expressed in the national budget, in how we raise our national revenues and prioritize our spending.
