From staff reports
In 2001, the Congressional Budget Office predicted that the federal government would collect surplus funds in the amount of $5.6 trillion during the period 2002 through 2011.
Instead, we incurred a deficit of $6.1 trillion resulting in a gross loss in federal revenues during that period of time in the amount of $11.7 trillion. The question, of course, is why such a miscalculation occurred.
The budget office and two nonpartisan groups, the Committee for a Responsible Federal Government and the Pew Fiscal Analysis Initiative, all conducted independent studies to answer this question, and all three come up with the same answers. Here are the summaries:
• The overall weakened economy was the primary cause. Growth for the entire period was predicted to be 3 percent. But from 2002 through 2007, growth was only 2.6 percent. Then during the period 2008 through 2011, growth was only an average of 0.2 percent. This overall lower-than-expected growth caused a 27 percent drop in federal revenue expectations during those years.
• The second highest cause was a 13 percent drop in federal revenues caused by enactment and continuation of all the Bush-era tax cuts, amounting to a 13 percent drop in federal revenues. Other smaller contributors were the Iraq and Afghanistan wars, increases in discretionary spending, defense spending increases not related to wars, the Obama stimulus, and the 2010 tax cuts.
Given the numbers and the reasons, it is clear to us that neither party alone caused our economic dilemma today; both of them did so, which is not surprising.
It seems rather naive to be arguing about which party alone caused today’s American economic problems. Again, they both did so big time by cutting federal revenues as shown above, yet continuing to spend at historically high levels.
The question for Americans to decide this year is which political party stands the best chances of resolving our economic problems at hand today.