Postcard from Reality


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In today's Post, Dana Milbank reports on a joint briefing held by the Heritage Foundation and Brookings Institution to warn about the growing deficit and oncoming "crunch." Scholars from both places agree that a combination of tax increases and spending cuts will be needed to address the problem.

Bob McIntyre wrote about this situation back in March, saying:
Counting interest paid on the bonds held by Social Security, about a fifth of non-Social Security taxes paid this year will go to interest payments. Unless Bush's mistakes are reversed, interest will devour 30 percent of our non-Social Security taxes by 2015 -- and this frightening trend will continue to accelerate
thereafter. As any-one who's ever run up a credit-card bill knows, interest means paying for past spending. It's never pleasant, and at some point it can become impossible.
The interest on our debt is a key factor in our annual deficits. This 2001 Citizens for Tax Justice analysis shows, among other things, how reducing or increasing the deficit creates a compound effect on the ongoing deficit or surplus. In other words, good practices one year lead to easier practices the next, whereas bad decisions one year make the problem much worse the next. With that in mind, the analysis helps to explain how reduced spending, increased taxes, and the accompanying reduction in interest payments on our debt turned the Reagan Deficit into the Clinton Surplus.

Another report by Citizens for Tax Justice, this one from 2003, shows the unprecedented levels of post-war era deficit spending by the Reagan, George H.W. Bush, and George W. Bush administrations. And of course, every one of those borrowed dollars spent represents a compounded problem being handed on to future governments and future generations.

Bush has been adding to this problem from both sides, with his irresponsible tax cuts, but also with dramatic, well-documented, spending increases. Non-defense, discretionary spending has risen dramatically, even as the government copes with increased Homeland Security and Defense costs.

Thank you for visiting Tax Justice Blog. CTJ and ITEP staff will soon retire this domain. But ITEP staff are still blogging! You can find the same level of insight and analysis and select Tax Justice Blog archives at our new blog, http://www.justtaxesblog.org/

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