Budget and Health Care Numbers

Much of the discussion on Health Care reform is on its effect on the deficit. Obama claims there is none - short term or long term. The Congressional Budget office disagrees, saying they think it will add something like $23B/year of the next 10 years. Even if we assume the CBO is correct, this represents a very small amount of the budget deficit over that time, especially compared with GWB's policies. Here is a graphic representation of the policies contributing to the deficit, according to CBO numbers:

It's actually pretty easy to separate causes of the budget deficit seeing as, when GWB took over, there was a surplus. So everything contributing to the budget since then is either GWB's fault based on his policies over the past 8 years, or Obama's fault, for his policies over the past 6 months - or both (ie. Obama continuing GWB's policies.

Here's an article breaking down the graph:

http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.html?_r=2

...The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying....

The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.

About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.

Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.

About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.