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Old 02-05-2013, 07:31 PM   #10
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Join Date: Aug 2005
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Originally Posted by Arkie View Post
Even as a % of GDP, it's the highest it's been since it spiked during WWII.
Some important distinctions, bolded.

2001 vs. 2011
Cause of change between CBO's 2001 projection of a $5.6 trillion surplus between 2002–2012 and the $6.1 trillion debt increase that actually occurred.

In June 2012, CBO summarized the cause of change between its January 2001 estimate of a $5.6 trillion cumulative surplus between 2002 and 2011 and the actual $6.1 trillion cumulative deficit that occurred, an unfavorable "turnaround" or debt increase of $11.7 trillion. Tax cuts and slower-than-expected growth reduced revenues by $6.1 trillion and spending was $5.6 trillion higher. Of this total, the CBO attributes 72% to legislated tax cuts and spending increases and 27% to economic and technical factors. Of the latter, 56% occurred from 2009 to 2011.[35][36]

The difference between the projected and actual debt in 2011 can be largely attributed to:

$3.5 trillion – Economic changes (including lower than expected tax revenues and higher safety net spending due to recession)
$1.6 trillion – Bush Tax Cuts (EGTRRA and JGTRRA), primarily tax cuts but also some smaller spending increases
$1.5 trillion - Increased non-defense discretionary spending
$1.4 trillion – Wars in Afghanistan and Iraq
$1.4 trillion - Incremental interest due to higher debt balances
$0.9 trillion - Obama stimulus and tax cuts (ARRA and Tax Act of 2010)[36]

The U.S. budget situation has deteriorated significantly since 2001, when the CBO forecast average annual surpluses of approximately $850 billion from 2009–2012. The average deficit forecast in each of those years as of June 2009 was approximately $1,215 billion. The New York Times analyzed this roughly $2 trillion "swing", separating the causes into four major categories along with their share:

Recessions or the business cycle (37%);
Policies enacted by President Bush (33%);
Policies enacted by President Bush and supported or extended by President Obama (20%); and
New policies from President Obama (10%).

Several other articles and experts explained the causes of change in the debt position.[37][38][39]


Why Our Current National Debt is not the Largest in History
The overwhelming majority of people believe the national debt has never been as large as it is today. However, like so much popular information regarding the federal government’s budget, it simply isn’t true. It’s been much larger, and that period of history hardly saw the collapse of the US economy. Furthermore, many economies that we would consider sound and strong actually have more debt than we do. On top of all that, federal government debt is not analogous to that in the private-sector because it represents an injection of wealth, not a drag on growth.
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