Monday, August 30, 2010

The cause of the deficit

Randall Hoven at American Thinker writes: Iraq: The War That Broke Us -- Not

Hoven looks at the costs of the Iraq War and the tax cuts. Were they what drove the deficit up so high? How much did that war cost?

The correct answer to my question, according to the Congressional Budget Office, is $709 billion. The Iraq War cost $709 billion. Why Carville, Bilmes, and Nobel-winning economist Stiglitz thought the answer was $3 trillion is anybody's guess. But what's a 323% error among friends?

The CBO breaks that cost down over the eight calendar years of 2003-2010. Below is a picture of federal deficits over those years with and without Iraq War spending.

Sources: CBO and U.S. Statistical Abstract (see below).

Just for grins, use the above chart to dissect Christopher Hayes' statement that our current and future deficits are caused by "three things: the ongoing wars in Afghanistan and Iraq, the Bush tax cuts and the recession."

Two of those three things -- the wars and tax cuts -- were in effect from 2003 through 2007. Do you see alarming deficits or trends from 2003 through 2007 in the above chart? No. In fact, the trend through 2007 is shrinking deficits. What you see is a significant upward tick in 2008, and then an explosion in 2009. Now, what might have happened between 2007 and 2008, and then 2009?

Democrats taking over both houses of Congress, and then the presidency, was what happened.

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