Bush Policies And Recession “Dug The Hole” – Not Obama And Tester

Prior To President Obama’s Inauguration, President Bush Had Already Created A Projected $1.2 Trillion Deficit For Fiscal Year 2009. From the Washington Times:  “The Congressional Budget Office announced a projected fiscal 2009 deficit of $1.2 trillion even if Congress doesn’t enact any new programs. […] About the only person who was silent on the deficit projection was Mr. Bush, who took office facing a surplus but who saw spending balloon and the country notch the highest deficits on record.” [Washington Times, 1/8/09]

NYT: President Bush’s Policy Changes Created Much More Debt Than President Obama’s. The New York Times published the following chart comparing the fiscal impact of policies enacted under the Bush and Obama administrations:

[New York Times, 7/24/11]

Recession Added Hundreds Of Billions In Deficits By Increasing Spending On Safety Net While Shrinking Tax Revenue. The Center on Budget and Policy Priorities (CBPP) explains: “When unemployment rises and incomes stagnate in a recession, the federal budget responds automatically: tax collections shrink, and spending goes up for programs like unemployment insurance, Social Security, and Food Stamps.” According to CBPP: “The recession battered the budget, driving down tax revenues and swelling outlays for unemployment insurance, food stamps, and other safety-net programs. Using CBO’s August 2008 projections as a benchmark, we calculate that the changed economic outlook alone accounts for over $400 billion of the deficit each year in 2009 through 2011 and slightly smaller amounts in subsequent years. Those effects persist; even in 2018, the deterioration in the economy since the summer of 2008 will account for over $300 billion in added deficits, much of it in the form of additional debt-service costs.” [CBPP.org, 11/18/10; CBPP.org, 5/10/11, citations removed]

Over The Coming Decade, The Bush Tax Cuts Are The Primary Cause Of Federal Budget Deficits. The Center on Budget and Policy Priorities prepared a chart showing the deficit impact of the Bush tax cuts (orange), the Iraq and Afghanistan wars, the recession itself, and spending to rescue the economy:

[CBPP.org, 5/10/11]

CBPP: Bush Tax Cuts And Wars Are Driving The Debt. According to the Center on Budget and Policy Priorities:

The complementary chart, below, shows that the Bush-era tax cuts and the Iraq and Afghanistan wars — including their associated interest costs — account for almost half of the projected public debt in 2019 (measured as a share of the economy) if we continue current policies.

[Center on Budget and Policy Priorities, 5/20/11]

 “Wasted” Recovery Act Created Millions Of Jobs, Boosted GDP, And Cut Taxes

Recovery Act “Succeeded In…Protecting The Economy During The Worst Of The Recession.” From the Center on Budget and Policy Priorities: “A new Congressional Budget Office (CBO) report estimates that the American Recovery and Reinvestment Act (ARRA) increased the number of people employed by between 200,000 and 1.5 million jobs in March. In other words, between 200,000 and 1.5 million people employed in March owed their jobs to the Recovery Act. […] ARRA succeeded in its primary goal of protecting the economy during the worst of the recession. The CBO report finds that ARRA’s impact on jobs peaked in the third quarter of 2010, when up to 3.6 million people owed their jobs to the Recovery Act. Since then, the Act’s job impact has gradually declined as the economy recovers and certain provisions expire.” [CBPP.org, 5/29/12]

At Its Peak, Recovery Act Was Responsible For Up To 3.6 Million Jobs. According to the nonpartisan Congressional Budget Office:

CBO estimates that ARRAs [sic] policies had the following effects in the third quarter of calendar year 2010:

• They raised real (inflation-adjusted) gross domestic product by between 1.4 percent and 4.1 percent,
• Lowered the unemployment rate by between 0.8 percentage points and 2.0 percentage points,
• Increased the number of people employed by between 1.4 million and 3.6 million, and
• Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 5.2 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers). [CBO.gov, 11/24/10]

Recovery Act Included $288 Billion In Tax Cuts. From PolitiFact: “Nearly a third of the cost of the stimulus, $288 billion, comes via tax breaks to individuals and businesses. The tax cuts include a refundable credit of up to $400 per individual and $800 for married couples; a temporary increase of the earned income tax credit for disadvantaged families; and an extension of a program that allows businesses to recover the costs of capital expenditures faster than usual. The tax cuts aren’t so much spending as money the government won’t get — so it can stay in the economy.” [PolitiFact.com, 2/17/10]

Affordable Care Act Reduces The Deficit

CBO: The Affordable Care Act Will Reduce Deficits By Over $200 Billion From 2012-2021. According to Congressional Budget Office Director Douglas Elmendorf’s testimony before the House on March 30, 2011: “CBO and JCT’s most recent comprehensive estimate of the budgetary impact of PPACA and the Reconciliation Act was in relation to an estimate prepared for H.R. 2, the Repealing the Job-Killing Health Care Law Act, as passed by the House of Representatives on January 19, 2011. H.R. 2 would repeal the health care provisions of those laws. CBO and JCT estimated that repealing PPACA and the health-related provisions of the Reconciliation Act would produce a net increase in federal deficits of $210 billion over the 2012–2021 period as a result of changes in direct spending and revenues. Reversing the sign of the estimate released in February provides an approximate estimate of the impact over that period of enacting those provisions. Therefore, CBO and JCT effectively estimated in February that PPACA and the health-related provisions of the Reconciliation Act will produce a net decrease in federal deficits of $210 billion over the 2012–2021 period as a result of changes in direct spending and revenues.” [“CBO’s Analysis of the Major Health Care Legislation Enacted in March 2010,” CBO.gov, 3/30/11]

• July 2012 Report Affirmed Projection That ACA Will Reduce Deficits. According to a Congressional Budget Office Report titled “Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision”: “CBO and JCT have not updated their estimate of the overall budgetary impact of the ACA; previously, they estimated that the law would, on net, reduce budget deficits.” [CBO.gov, July 2012]

Defense Cuts Were Part Of Debt-Reduction Deal That Republicans Demanded

The Federal Budget Control Act Was A Last-Minute Deal To Raise The Debt Ceiling That Also Created The Deficit Reduction Super Committee. From PolitiFact: “Last year, the United States government was reaching its legal debt limit, which meant Congress had to authorize a higher level for borrowing. Raising the debt limit (also called the debt ceiling) was in some ways symbolic: Congress has the power of the purse, and the decisions to spend the money had already been made. In prior administrations, Congress approved higher debt limits with some partisan sniping (including from then-Sen. Obama against President George W. Bush) but without too much fuss. But in the summer of 2011, House Republicans insisted that actual spending cuts go along with an increase to the debt limit. House Speaker John Boehner led negotiations with the Obama White House, and at first the two sides seemed to be moving toward a wide-ranging overhaul of the federal budget, referred to in the media as a ‘grand bargain.’ The closed-door negotiations fell apart, though. […] Republicans and Democrats came to a less ambitious agreement to raise the debt limit through the Budget Control Act of 2011. The law found approximately $1.2 trillion in budget cuts spread over 10 years. But it also directed Congress to find another $1.2 trillion through a Joint Select Committee on Deficit Reduction. This 12-member committee became known as ‘the super-committee.’” [PolitiFact.com, 9/21/12]

• Debt Ceiling Deal Imposed Harsh Defense Cuts Triggered By Super Committee’s Failure As Incentive For Success. From the Associated Press: “The deal between House Republicans, the Democratic-controlled Senate and the OK of the White House, came hours before the deadline for raising the amount of money the government can borrow. As an incentive, the agreement prescribes draconian cuts both parties would find unpalatable — $487 billion to defense over 10 years plus $492 billion in automatic cuts if a bipartisan congressional ‘super committee’ [failed to come up] with $1.2 trillion in savings. The committee failed.” [Associated Press via SFGate.com, 7/24/12]

Failure To Raise Debt Ceiling Could Have Resulted In Default Or Had Other Severe Economic Consequences. From CNNMoney: “A failure to raise the debt ceiling would likely send shockwaves through the underpinnings of the financial system — and possibly ripple out to individual investors and consumers. The federal government would be forced to prioritize its payments. It would risk defaulting on its financial obligations. And if that happens, credit rating agencies would downgrade U.S. debt.” [Money.CNN.com, 7/21/11]

The Deficit Panel Failed Because Conservative Lawmakers Refused To Compromise On Tax Cuts For The Rich

Deficit-Reduction Committee Failed After Republican Members Refused To Budge On Tax Cuts For The Wealthiest Americans. According to the Los Angeles Times: “The committee faced a Wednesday deadline to vote on a proposal to slash the nation’s deficits by $1.5 trillion over the decade. The panel that was brought into existence as a result of the summer debt ceiling fight spent three months in mostly secret negotiations. A deal needed to be posted by Monday evening to provide a 48-hour review. But Republicans and Democrats were unable to compromise on the tax and spending issues that have divided Congress all year, punting the debate to next year’s presidential and congressional campaigns. Republicans refused to substantially raise taxes and wanted to cut federal deficits largely by reducing spending on Medicare and other domestic programs. Democrats wanted a more equal balance of new taxes and spending cuts — a level of taxation the GOP could not accept. A focal point in final days became the George W. Bush-era tax cuts, which are scheduled to expire in December 2012. Republicans wanted to extend those tax breaks for the wealthy and other Americans, rather than carve into that source of new revenue. Most Republican members of Congress have signed an anti-tax pledge with conservative activist Grover Norquist, and were hesitant to agree to new taxes. [Los Angeles Times, 11/21/11]

Tester Voted For Bipartisan Farm Bill That Reduces The Deficit

Crossroads GPS provides no citations for its claim that “Tester voted to cut billions from farm programs,” but it is presumably referring to the farm bill recently passed by the Senate.

In July, Senate Passed Bipartisan Farm Bill That Reduces The Deficit. According to CNN: “Senators approved a giant farm bill Thursday that is estimated to cut the deficit by almost $24 billion, largely by ending direct payments to farmers and replacing them with taxpayer- subsidized crop insurance to assist farmers in need. Passage of the bill, by a vote of 64-35, was a rare agreement in a chamber that has been fractured by partisan gridlock over much of this session. Most of the bill’s savings are achieved through changes to crop assistance programs that have been in place in one form or another since the Great Depression.” [CNN, 6/21/12]

Tester Praised “Bipartisan, Fiscally Responsible Plan” For Including “Reforms That Save Taxpayers Money.” From Sen. Tester’s statement on the Senate’s approval of the farm bill:

“This Farm Bill preserves a strong safety net for farmers while making long-needed reforms that save taxpayers money.  It’s a bipartisan, fiscally responsible plan that came together because folks worked across party lines to support Montana’s number one industry.

“Unfortunately, the House is prepared to delay work on the Farm Bill, creating the same uncertainty for farmers that it has for construction workers, teachers, and postal employees.  The House needs to put jobs and our economy first and pass the Senate’s responsible, bipartisan bill.” [Tester Statement, 6/21/12]

Tester And His Opponent Have Both Criticized House GOP Leaders For Blocking Farm Bill. According to the Billings Gazette: “As the U.S. House failed to renew the expiring Farm Bill this month, all three members of Montana’s congressional delegation criticized the House’s Republican leadership — including Republican Rep. Denny Rehberg. But U.S. Sen. Jon Tester, D-Mont. — who is being challenged by Rehberg for re-election this year — said he’s not impressed by Rehberg’s statement. ‘The only holdup of the Farm Bill is the U.S. House, where we are still waiting for someone to act responsibly and start serving Montanans,’ he said. ‘So far, all we’ve gotten is lip service.’ Tester said the failure is indicative of a Republican Party, embodied by Rehberg, that is more interested in making political points than taking care of the nation’s business.” [Billings Gazette, 9/27/12]