CBO: How We Swung From $5.6 Trillion Projected Surpluses to $6.2 Trillion Actual Deficits

Yossi Gestetner

In early 2001, the Congressional Budget Office projected that the USA will accumulate a total of $5.6 trillion in budget surpluses from 2002 through 2011, but the government instead racked up $6.2 trillion in new debt in this very time. This is an $11.8 trillion swing in a mere ten years.

The CBO works with numbers available at the time of the calculations without factoring in potential troubles such as a 9/11 Terror Attack,business corruption and so on. These eventualities were not considered when the agency projected the trillions in surpluses a decade ago. Regardless and for what it is worth, here is how the $12.03 trillion* turnaround happened according to the CBO (the numbers are approximate):

•  30.6% of the turnaround took place in the Bush Republican Years (2001 through 2006) with an annual average of $612 billion.
•  15.2% took place in the Bush Democrat-controlled years (2007 and 2008) with an annual average of $914 billion.
•  54.1% took place since Obama became President (in early 2009) with an annual average of $2.167 trillion.

Here is the breakdown by others factors:

•  $8.605 trillion of the $12.03 trillion* turnaround accrued due to Legislative changes such as new spending, new programs and the "cost" of tax cuts. The rest accrued due to economic and technical changes, such as recessions.
•  20.3% ($1.750 trillion) of the $8.60 trillion Legislative Turnaround is due to the increased outlays and reduced income of the 2001, 2003, and 2004 Bush Tax Cuts of which billions went to expand the Child Tax Credits for the poor and reducing tax rates for the Middle Class.
•  4.54% ($391 billion) of the $8.60 trillion Legislative Turnaround is due to the cost and reduced revenue of the 2010 Tax Act passed in the Lame Duck session.
•  3.03% ($261 billion) of the $8.60 trillion Legislative Turnaround is due to tax changes of the American Recovery and Restoration Act (better known as The Stimulus).
•  Combining the "cost" of all tax changes since 2001 (including the 2001, 2003, 2004 Bush Tax Cuts for the rich, middle class, and the poor; the Stimulus and Lame Duck Session tax provisions), amounts to $2.402 trillion dollars; which is only 27.9% of the Surplus-to-Deficit swing that accrued due to Legislative Action through the last eleven years. Additionally, the $2.40 trillion is only twenty percent of the total Surplus-to-Deficit swing of since 2001.
•  Some Context: The total $2.402 trillion "cost" of all tax changes since 2001 (which includes changes for the poor, middle class and '95% of working Americans' as Obama likes to say), amounts to an annual average "cost" of $218.45 billion, which is only 15.9% of the average annual $1.368 trillion deficits the US has in the last three budgets (2009, 2010 and 2011).
•  The Medicare Prescription Drug Program added $272 billion through 2011.

Whichever way you twist and turn the numbers, the facts remain clear: A) The bulk of the $12.0 trillion turnaround from projected surplus to actual deficits through the last eleven years took place after the Democrats came to power in 2007 and more so when Obama became President. B) Only a small percent of it is due to tax cuts, including tax cuts for the poor, middle class and '95% working Americans,' tax changes that the Democrats would certainly not advocate should be rolled back. Or maybe they would...

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*While the first budget of President Bush was FY 2002, he had an effect on FY 2001 which started just months before he became President. Similarly, the first budget year of the Democrat Congress was FY 2008, but Pelosi/Reid had an effect on the FY2007 budget. President Obama had an effect on the 2009 budget despite the fact that it started a few months before he came into office. Therefore, the above calculations actually run on an eleven year stretch with a surplus-to-deficit turnaround of $12.03 trillion. FY 2001 counts as the first of Bush's six years, and 2009 counts as the first of the three Obama years. After all, Obama was a member of the Senate Majority since early 2007. It is therefore fair game to place it at his feet FY 2009 from its start).