Insanity1040

Where Did The Debt Come From?

Graph showing effect of the economy (20%), tax cuts (24%), and new spending (54%) on the deficit.

You can’t fix a problem unless you understand what the problem is. This video from The Center for American Progress explains the origins of our current budget deficit. It’s a good and simple 3-minute primer on how our nation’s finances got where they are today.

When it comes to defining the causes of our ballooning deficit, there’s an awful lot of finger-pointing, with some blaming increased government spending, others blaming Bush-era tax cuts, expenditures related to our wars in Iraq and Afghanistan, and stimulus spending. Some, but very few, mention the poor economy.

All these opinions are right . . . and wrong. Yes, each of these things are responsible for part of our ballooning deficit, but, as this video shows, no one component is responsible for all the deficit. If we are going to address the deficit problem, we need to address all of the components that created it. That means you can’t rely on reduced spending to do the job, nor simply raise taxes or expect an improved economy to fix things. You have to address the whole problem, you have to address all of these things.

The bottom line is we must reduce spending and improve the economy, but spending cuts alone won’t do the job, and the economy has and always will be an undependable component that performs well in some years, and worse in others. That means that, unless we address taxes, increase revenues, and restore equity to our system of taxation, we won’t close the deficit. It’ll continue to spiral out of control.

Center for American Progress, http://www.youtube.com/watch?feature=player_embedded&v=LcvLHHMC4iI

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