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Over at the Center for Budget and Policy Priorities, Kathy Ruffing and James R. Horney are reminding us - in case we've forgotten the way so much of the media have - that the deficits we're facing in the next decade are due to the economic downturn, financial rescues, and Cheney-Bush policies, including the tax cuts they crafted for their wealthy cronies.

Some critics continue to assert that President George W. Bush’s policies bear little responsibility for the deficits the nation faces over the coming decade — that, instead, the new policies of President Barack Obama and the 111th Congress are to blame. Most recently, a Heritage Foundation paper downplayed the role of Bush-era policies. ... Nevertheless, the fact remains: Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years.

The deficit for fiscal year 2009 was $1.4 trillion and, at nearly 10 percent of Gross Domestic Product (GDP), was the largest deficit relative to the size of the economy since the end of World War II. If current policies are continued without changes, deficits will likely approach those figures in 2010 and remain near $1 trillion a year for the next decade.

The events and policies that have pushed deficits to these high levels in the near term, however, were largely outside the new Administration’s control. If not for the tax cuts enacted during the presidency of George W. Bush that Congress did not pay for, the cost of the wars in Iraq and Afghanistan that were initiated during that period, and the effects of the worst economic slump since the Great Depression (including the cost of steps necessary to combat it), we would not be facing these huge deficits in the near term.

Ultimately, of course, it will be up to women and men of good sense to deal with the accumulated indebtedness caused by the Great Recession, the trillions spent on war and the Cheney-Bush welfare for their pals. But, whatever one's point of view about how the current administration has handled the economic mess we're in or how much Democrats prior to 2001 contributed to laying the foundation for that mess, nobody can deny with a straight face that the mess was inherited.

Ruffing and Horney point out that the Iraq and Afghan wars and the Cheney-Bush tax cuts will add $7 trillion in deficits in 2009 through 2019, including interest on that borrowed money). On the other hand, the cost of the American Recovery and Reinvestment Act (the stimulus package) and other legislation designed to pull us back from the brink will add $1.1 trillion over the same period, including interest. And yet, as the CBPP authors point out, the Heritage Foundation - which has for more than three and a half decades been boosting the fortunes of politicians making economic war on Americans in the bottom 80% of the population - dares to claim that Cheney-Bush policies are having no significant impact on deficits.

Riiiiiiiight. Just as the supply-side economics that Heritage helped cram down our throats in the Reagan era had no impact on the upward transfer of wealth of the past 30 years.

Thanks to deficit commission co-chief Alan Simpson and others, we know what one of the big pushes is going to be regarding deficits. Eviscerating Social Security. But as the folks at Campaign for America's Future have noted, Social Security is not going to bankrupt the country by massively increasing the deficit through entitlement spending as long as our political leaders take a few corrective steps. And those don't require raising the age of retirement yet again. We don't need generational warfare added to class warfare to handle structural deficit problems.

A study by the National Academy of Social Insurance last October made this clear. Lifting the cap on earned income above $107,000 would take care of much of the problem, or, we "could at least set the cap so that it covers 90 percent of the earned income of all workers, as Congress originally intended; because high-end salaries have exploded while low-end salaries have stagnated, the current cap covers only 83 percent of earned income."

Moreover, as CAF says, Social Security benefits need to be raised:

The average Social Security benefit — $1,155 per month, or about $13,860 per year for a retired worker — is only slightly higher than the U.S. poverty thresholds. And it’s less than what a retired person actually needs to meet all of their basic needs when you take into the account the rising cost of medical care and housing. The average retiree still paying a mortgage on their home would need almost twice what they’re receiving in Social Security in order to make ends meet, according to one recent report.

A popular argument is that since people are living longer, we should raise the retirement age. Under current law, the age at which people are eligible for full Social Security benefits is set to increase to age 67 for people born in 1960 or later. That means Social Security’s full retirement age is already much older than eligibility ages in private (or public) pension plans, which remain 65 or earlier. Moreover, it is older than the ages for penalty-free withdrawals from 401(k)s or IRAs (59½). Finally, at a time when some economists argue that the country is going into a long-term period of historically high unemployment, it makes no sense to force older workers to stay in the workforce longer than they want.

Only the most thoroughgoing hypocrites can claim they seek to deal with deficit spending while ring-fencing military expenditures. The United States continues to spend more than the next 20 countries combined for military purposes, a good portion of that is to maintain access to resources, particularly oil. With a clean-energy economy, that spending could be vastly reduced and focused purely on defense. Getting there might require a little more deficit spending in the short run for the sums needed to really make clean energy a reality. But in the not-too-distant long run, the return on that investment would allow us to reduce military spending and would also generate the jobs needed to improve the economy and thus the tax base and thus our ability to pay off the accumulated debt.

But you can pretty much be sure that these military cuts, vast investments in clean energy and sensible Social Security changes will not be part of the deficit commission's recommendations. Moving in that direction will require, as reform always does, dogged progressive efforts.

Originally posted to Meteor Blades on Mon Jun 28, 2010 at 12:52 PM PDT.

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