Monday, December 22, 2008

“The $10 Trillion Hangover: Paying the Price for Eight Years of Bush”

Linda Bilmes and Nobel economist Joseph Stiglitz have a piece in the January 2009 edition of Harper’s Magazine called “The $10 Trillion Hangover: Paying the Price for Eight Years of Bush.”
They estimate that the cost of undoing the Bush administration’s economic choices, from the wars in Iraq and Afghanistan to the collapse of the financial system, soaring debt and new commitments to interest payments and Medicare, all add up to over $10 trillion.
Stiglitz and Bilmes write, “As bad as things are, though, this is just the beginning.” They add, “The Obama Administration, facing the most serious economic crisis in at least a generation, will need to mount an expansionary fiscal policy. The problem is how much the country’s debt mountain will crimp our ability to pay for the type of change we just voted for."

I think that if you go back to 2001, when the President took office, you can remember there was a surplus, a budget surplus of about $150 billion and the congressional budget office at the time was projecting that that surplus would continue over the next several years. And since then, things have unraveled in every possible dimension that you can measure and certainly across every metric that economists measure. The budget deficit has disappeared. Our national debt has gone from about $5.5 trillion to between $10 and $15 trillion, depending on how much of the bailout you count. Inflation is higher. Unemployment is higher. Four million manufacturing jobs have been lost. Five million people have lost their health insurance. And the more you look into it, the more you see the very severe economic consequences that have been the result of errors and poor judgment during the past eight years.

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