Polls show that a large majority of Americans blame wasteful or unnecessary federal programs for the nations budget problems. But routine increases in defense and domestic spending account for only about 15 percent of the financial deterioration, according to a new analysis of CBO data.The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3trillion in anticipated revenue. Thats nearly half of the $12.7trillion swing from projected surpluses to real debt. Federal tax collections now stand at their lowest level as a percentage of the economy in 60 years.Big-ticket spending initiated by the Bush administration accounts for 12percent of the shift. The Iraq and Afghanistan wars have added $1.3trillion in new borrowing. A new prescription drug benefit for Medicare recipients contributed another $272billion. The Troubled Assets Relief Program bank bailout, which infuriated voters and led to the defeat of several legislators in 2010, added just $16billion and TARP may eventually cost nothing as financial institutions repay the Treasury.Obamas 2009 economic stimulus, a favorite target of Republicans who blame Democrats for the mounting debt, has added $719billion 6percent of the total shift, according to the new analysis of CBO data by the nonprofit Pew Fiscal Analysis Initiative. All told, Obama-era choices account for about $1.7trillion in new debt, according to a separate Washington Post analysis of CBO data over the past decade. Bush-era policies, meanwhile, account for more than $7trillion and are a major contributor to the trillion-dollar annual budget deficits that are dominating the political debate.
Given this analysis, how can someone who is serious about reducing the debt (in a way that takes seriously our obligations to consider first the impact of our policies on the poorest among us) think that the right approach is to further cut taxes on the rich and on corporations and then to dismantle Medicare and Medicaid? The most charitable interpretation of the Ryan plan is that it is based on such a blind adherence to discredited supply-side ideas that Ryan actually believes that the plan is the best way to help the poor over the long run. A more realistic assessment, in my opinion, is that the plan's design very straightforwardly reflects the political commitments of Ryan and of his party -- shrink government and let the poor fend for themselves in the free market, as Ayn Rand commanded. Ockham's Razor, etc.