Your average poorly informed lefty (but I repeat myself) will reliably tell you that our current fiscal straits are the result of three things: 1. Bush’s wars; 2. Bush’s tax cuts for the rich; 3. Bush’s bank bailouts.
That is not true, of course: The main bank bailouts (odious as they were) have been paid back, often at a profit. The money-losing parts (and the likely money-losing parts) are the ones insisted upon by Barack Obama and his Democratic colleagues: the foreclosure-prevention programs, the endless maintenance of Fannie Mae and Freddie Mac, etc.
The Iraq War, in its most expensive year, cost $140 billion, according to the Congressional Budget Office. Its total cost over the years is estimated at about $700 billion — a good deal less spending than, say, Obama’s stimulus package. It is not, and has not been, an exceptionally large driver of our deficit spending.
Our deficit is running around $1.6 trillion. If we took all military spending — not just the Iraq and Afghanistan wars, but the whole shebang — and cut it to $0.00, we’d save about $664 billion a year. Iraq and Afghanistan will cost about $170 billion combined in FY2011. Ending the Bush tax cuts for “the rich” — for the $250,000-and-up crowd, in Obama’s formulation — would put on average about another $80 billion a year into Treasury coffers. (CBO estimates the ten-year cost of those tax cuts at $800 billion.) The spending on the wars and the forgone revenue from the Bush tax cuts do not add up to much of that $1.6 trillion deficit: a little less than 16 percent.
The tax cuts for the unrich were a good deal more expensive, which is why Obama’s rhetoric on the tax cuts sort of makes my head hurt: The president says he agreed to tax cuts for “the rich” only to preserve tax cuts for “the middle class” — which is to say, he agreed to a mere $800 billion in tax cuts that he didn’t want in order to preserve a considerable $2.2 trillion in tax cuts that he did want — and then argues that our problem is too many tax cuts, two-thirds of which he was so intent on keeping that he took the other third, too. But even that $2.2 trillion over ten years would not make much of a dent in our $1.6 trillion annual deficit.
And just who are these “rich”? Under Obama’s arbitrary, politically minded cutoffs ($200,000 for an individual, $250,000 for a couple), a public-school administrator earning $130,000 a year married to a pharmacist earning $125,000 a year and raising four kids is rhetorically lumped in with “millionaires and billionaires,” as the president put it, and desperately in need of a tax hike — but a single guy earning $198,000 a year is in the middle class, and his $2.2 trillion in tax cuts must be protected.
Definitional quibbles aside, the war spending and the Bush tax cuts don’t add up to a whole lot in the context of the $1.6 trillion deficit. What does?
The Department of Health and Human Services will see more than $900 billion in outlays in FY2011. About $83 billion of that is discretionary spending on things like the Centers for Disease Control. Almost all of the rest is Medicare and Medicaid — the two programs that President Obama has vowed to shield from substantial reform of the sort envisioned by Rep. Paul Ryan. The other big driver of spending, as the president himself acknowledged yesterday, is Social Security, meaningful reform of which he also promises to resist.
Obama’s big plan for the health-care entitlements is appointing a committee, called the Independent Payment Advisory Board (IPAB). This committee will be composed of experts. (Really.) And they will, the president promises, expertly discover ways to reduce Medicare spending. At the end of that sentence is an invisible asterisk: The committee is forbidden to change anything about the structure of Medicare, to increase premiums, to change cost-sharing arrangements, etc.