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Wednesday, October 11, 2006
$250 Billion FY2006 Deficit: Cause and Effect
To follow up on Matt's discussion below of the final deficit figures for FY2006, I thought I'd point to some of the wildly disparate explanations offered for it.
Says Speaker Hastert, whose credibility right now is not exactly at an all-time high: "Republicans have cut the deficit in half three years ahead of schedule because they know that tax relief fuels America's economy." President Bush added a corollary last night: "Do we keep taxes low so we can keep this economy growing, or do we let the Democrats in Washington raise taxes and hurt the economic vitality of this country?"
But, counters Robert D. Reischauer, former director of the Congressional Budget Office: "The consensus among economists is that the tax cuts of 2001 and 2003 and the extensions have done little to boost economic growth, having been offset by increased spending."
And CBPP provides this historical perpective: "That deficits declined in 2005 and 2006 amidst an economic recovery tells nothing about the efficacy of Administration policies, especially considering that deficits turned to surpluses during the 1990s recovery, following tax increases in 1990 and 1993."
Posted by Dana Chasin
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