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How debt went out of control

August 19, 2011

How did the U.S. run up so much debt? The crucial turning point came back in 2001, said Lori Montgomery. At the time, Uncle Sam was actually running surpluses, and “the outlook was so rosy’’ that forecasters were predicting the U.S. could pay back every dime it had ever borrowed. That’s when President George W. Bush made a pivotal decision: Rather than use surpluses to pay down the national debt or fix Social Security, Bush elected to push through two massive tax cuts, on the grounds that “the surplus is the people’s money.’’ Bush and Congress then financed two wars at the cost of $1.3 trillion, spent $272 billion on a Medicare prescription benefit, and expanded other defense and domestic spending.

When the economy cratered in 2008, it cut deeply into revenues already diminished by Bush’s tax cuts. All told, Congressional Budget Office statistics show, Bush’s policies account for more than $7 trillion of the debt the U.S. has accumulated over the past decade. President Obama’s policies, including his $719 billion stimulus program, have added $1.7 trillion to that debt. Today, future budget forecasts “are unrelievedly gloomy, showing huge deficits essentially forever.’’

And it all began with a choice, 10 years ago, to cut taxes to their lowest level in 60 years, with no cuts in spending.

from The Week magazine.

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One comment

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