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Saturday, November 26, 2011

What caused the increase in the National Debt?



The Pew Center reported in April 2011 a $12.7 trillion shift in the debt situation, from a 2001 CBO forecast of a cumulative $2.3 trillion surplus by 2011 versus the estimated $10.4 trillion public debt we actually face in 2011. 

The major causes in the increase in the National Debt were:
  • Revenue declines due to the recession, separate from the Bush tax cuts of 2001 and 2003: 28%
  • Defense spending increases: 15%
  • Bush tax cuts of 2001 and 2003: 13%
  • Increases in net interest: 11%
  • Other non-defense spending: 10%
  • Other tax cuts: 8%
  • Obama Stimulus: 6%
  • Unfunded Medicare Part D: 2%
  • Other reasons: 7%

Bush increased defense spending by 40 per cent after 911. This increase not include the cost of the Iraq or Afghan War. He also started the two middle east wars, but did not raise federal income tax to pay for the wars. 

The Obama Stimulus was a modest increase to the National Debt. Obama should have rescinded the Bush Tax cuts to raise revenues to pay for the stimulus, but the Congress didn't get that done. 



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