Why is the Obama administration so constrained, and why is it so difficult to find ways to fund any change in health care?
The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.
You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.
The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.
Yglesias described the chart’s inputs:
— “The first category — the business cycle — accounts for 37 percent of the $2 trillion swing.”
— Second, Bush-era legislation “like his tax cuts and the Medicare prescription drug benefit, [that] not only continue to cost the government but have also increased interest payments on the national debt.”
— Third, “Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000 […] 20 percent of the swing.”
— Fourth, “About 7 percent comes from the stimulus bill that Mr. Obama signed in February.”
— Fifth, “only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.”
Got any solutions for the deficits? Growing the economy may be the only way out — demonstrating, as if we needed to, the precarious situation we find ourselves in. It’s a tightrope walk.