Lyons: GOP’s tax cuts for rich “created national debt..” (Real Cause of Deficit Pt 3)

John Boehner - Australian Prime Minister Addresses Joint Meeting Of Congress
Australian Prime Minister Addresses Joint Meeting Of Congress
In This Photo: John Boehner

Speaker of the House John Boehner (R-OH) seems to fight back tears while listening to Australian Prime Minister Julia Gillard address a joint meeting of the U.S. Congress from the floor of the House of Representatives at the U.S. Capitol March 9, 2011 in Washington, DC. Gillard emphasized the long and strong bond between her country and the United States.

Hunter Hatcher at Looney Bin in Little Rock Last Night

Last night (March 16, 2011) at the Looney Bin in Little Rock. I must say that the other 10 comics were just not funny at all.  Hunter got the most laughs by far. Here is a joke he did to finish off the night.

Matt Jones skit from 1/14/2011 show at Luigi’s Pizza in Bryant, Arkansas

I wonder if the speaker of the house got to read Gene Lyons article  (that is mentioned below)which accuses him and other Republicans of the main reason the federal debt is so out of control today!!!

Brian Riedl, Senior Domestic and Economic Policy Analyst at The Heritage Foundation, discusses how President-elect Obama can keep his campaign pledge of fiscal discipline and the need to make tough choices about government spending.

Gene Lyons asserts in his article, “Wisconsin government: In cash we trust, but unions we bust,” (Feb 25, 2011) that GOP Speaker John Boehner should be ashamed for “extending the Bush administration’s tax cuts for millionaires that basically created the national debt his party now pretends to be so concerned about.”

Brian Riedl is the author of the article “The Three Biggest Myths About Tax Cuts and the Budget Deficit,” (Heritage Foundation, June 21, 2010), and the next few days I will be sharing portions of his article.

Riedl’s budget research has been featured in front-page stories and editorials in The New York Times, The Wall Street Journal, The Washington Post and The Los Angeles Times. He has discussed budget policy on NBC, CBS, PBS, CNN, FOX News, MSNBC, and C-SPAN. He also participates in the bipartisan “Fiscal Wake-Up Tour,” which holds town hall meetings across America focusing on the looming crisis in Social Security, Medicare, and Medicaid.

Dissecting the Myths

The data contradict many popular myths about federal tax cuts and the rapidly expanding federal deficit.

Myth #1: The 2001 and 2003 tax cuts wiped out the $5.6 trillion surplus for 2002–2011.

Fact: They caused just 14 percent of the swing from projected surpluses to actual deficits.

The budget surplus peaked at $236 billion in 2000. However, Senator John Kerry (D–MA), among others, has criticized President George W. Bush for having “taken a $5.6 trillion surplus and turned it into deficits as far as the eye can see.”[1] The critics have pointed specifically to the $1.7 trillion in tax cuts enacted in 2001 and 2003 as the leading creator of deficits. However, the numbers tell a different story.

First, the $5.6 trillion surplus never actually existed. It represents the cumulative 2002–2011 budget surplus projected by the Congressional Budget Office (CBO) in early 2001. Instead, the United States is now set to run a $6.1 trillion deficit for 2002–2011—a swing of $11.7 trillion. The surplus projection itself was completely unrealistic. It assumed that the late-1990s economic and stock market bubbles would continue forever and generate record-high tax revenues. It assumed no recessions, no terrorist attacks, no wars, and no natural disasters. It also assumed that discretionary spending would fall to 1930s levels as a percentage of the gross domestic product (GDP).

Tax cuts played a small roll in the loss of projected surplus

It is possible to diagnose the specific causes of the lost surplus. Since the 2001 budget surplus projection, the CBO has published 28 baseline updates. Each update specified the causes of the deteriorating surplus or expanding deficit since the previous update. Combined, the 28 updates identify the causes of the $11.7 trillion swing. As Chart 1 shows, these causes are:

  • Economic and technical revisions ($3.8 trillion or 33 percent of the swing). Most of these arose from CBO’s early 2001 budget projections understandably not anticipating two recessions and two major stock market corrections over the decade.
  • The 2001 and 2003 tax cuts ($1.7 trillion or 14 percent). These tax cuts receive most of the blame for the lost surplus, but are responsible for just one-seventh of it.[2] And the tax cuts for “the rich”—those earning more than $250,000 annually—account for just 4 percent of the saving.
  • The 2009 stimulus ($0.7 trillion or 6 percent). The stimulus plays a significant role in the 2009 through 2011 budget deficits, but a small role in the overall deficits over the decade.
  • Other new spending ($3.7 trillion or 32 percent). Defense spending accounts for $2 trillion, other discretionary spending for $700 billion, and new entitlement spending for $1 trillion. The largest entitlement expansions came from the new Medicare drug entitlement, financial bailouts, farm subsidies, and refundable tax credits.[3]
  • New net interest costs ($1.4 trillion or 12 percent). Instead of the federal government paying off the entire national debt by 2009 as the CBO had projected in 2001, rising debt meant steeply rising net interest costs.
  • Other tax cuts ($0.4 trillion or 3 percent). This includes the 2008 tax rebates, annual tax extension packages, and the patches to the alternative minimum tax (AMT).[4]
  • Japanese emperor addresses nation

Japanese authorities have established a temporary radiation cleaning shelter in Nihonmatsu, Fukushima Prefecture. Japan’s Emperor Akihito has delivereda rare address to a jittery nation in dread of nuclear catastrophe as millions struggled in desperate conditions after quake and tsunami disasters.«

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