Let's be clear about this: the budget deficit is principally the product of four factors:
- the Bush tax cuts (which were designed to eat up the Clinton surplus)
- the Iraq war (off budget)
- the Afghanistan war (off budget)
- the Medicare prescription drug benefit (unfunded)
- the annual "doc fix" which boosts Medicare reimbursement above the level set in the Medicare statute's formula.
The Congressional Budget Office chart below shows that IF the Bush tax cuts are allowed to expire the medium-term deficit disappears. (top chart) So much for the Big Lie that Obama, TARP, etc. brought on the deficit. IF YOU cut your income would your debt rise or fall? No need for Keynesian economics on this point. The bottom chart shows what happens if we keep the Bush tax cuts - reducing revenue. The key is the dotted line: revenue projections - GWC
"the forecast also presents another opportunity to remind people that the medium-term budget outlook is perfectly fine if Congress adheres to the law as it's currently written. That means no repealing the health care law, for one, but more significantly it means allowing the Bush tax cuts to expire, and (unfathomably) allowing Medicare reimbursement rates for doctors to fall to the levels prescribed by the formula Congress wrote almost 15 years ago. In other words, no more 'doc fixes.'
Helpfully, CBO juxtaposed these two alternative futures in a pair of graphs and, just as last time, it projects that deficits will disappear entirely by the end of President Obama's second term (if he gets a second term) if Congress were to just sit on its hands and do nothing."
No comments:
Post a Comment