- The Washington Times - Tuesday, February 8, 2011

While Democrats and Republicans say they are ready to begin filling in the nation’s deep borrowing hole, budget hawks remain skeptical of lawmakers’ ability to fulfill their vow, given that many of them did the digging in the first place.

Even as the outlines of the problem — the retirements of baby boomers and growing federal entitlement program obligations — have been clear for a decade, time after time lawmakers at critical junctures deepened the deficit by cutting taxes, adding a prescription drug benefit to Medicare and spending freely to try to stimulate the struggling economy.

“The greatest indictment you can make of anyone who served between 2000 and now is having wasted time,” said Douglas Holtz-Eakin, a former head of the Congressional Budget Office and now president of the American Action Forum, a conservative think tank. “We knew the baby boomer retirement was coming, we knew the debt entailed large ramp-ups in existing entitlement programs, and we didn’t fix them.”

The issue is about to come to a head once again in the next few months with a fight on Capitol Hill over whether to raise the government’s debt ceiling beyond the already record-shattering $14.3 trillion limit. Some congressional Republicans are demanding major spending cuts and changes in federal budget philosophy as the price for their vote.

A quick history lesson shows how badly the nation’s finances were mismanaged — on a bipartisan basis — since the turn of the century.

In the late 1990s, the U.S. federal debt situation had stabilized, reaching $5.6 trillion at the end of 2000, with four years of federal surpluses at the end of the Clinton administration. But since then, the government has added more than $8 trillion to the tab.

Key to that was the economic downturn. But the tax cuts, new Medicare benefits and the costs of the wars in Iraq and Afghanistan also vastly complicated the effort to restore fiscal order.

President Obama wound down the war in Iraq while stepping up the war in Afghanistan, but he also spent lavishly early in his administration in an attempt to bring the economy out of the doldrums - adding again to the nation’s credit bill. Mr. Obama created a bipartisan deficit commission to take up the thorny issues related to Social Security, Medicare and Medicaid spending; its recommendations have been praised but given little evident follow-up.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the coming debate over raising the debt limit will offer party leaders another shot at convincing voters that “we can’t have tax cuts and spending increases because the math does not work.”

“The debt ceiling is an opportunity to productively force the discussion, but members of Congress who have voted for all those policies and already passed them really can’t dig their heels in with the debt ceiling and act like that’s being fiscally responsible,” Mrs. MacGuineas said. “What’s fiscally responsible is putting the policies in place to change the fiscal course.”

Through the 1970s, budget tables from the Office of Management and Budget (OMB) show, the federal government generally ran large annual deficits only in times of war or during economic downturns.

That started to change in the 1980s, after President Reagan and a politically divided Congress approved large increases in defense spending combined with tax cuts that reduced government revenue.

The moves helped create annual deficits between 1983 and 1992 that averaged $206 billion, according to OMB.

As a result, the gross federal debt mushroomed from about $995 billion at the end of 1981 to $4 trillion at the end of 1992, while the public portion of that debt jumped from $789 billion to nearly $3 trillion.

Deficits continued to climb through 1992, reaching $290 billion, only to gradually fall to $22 billion in 1997 when President Clinton was in the White House and Republicans controlled Congress.

In 1998, the nation enjoyed its first surplus since 1969 and continued to run surpluses for a few years. While the total debt continued to grow, the government paid down the public portion by more than $400 billion between 1998 and 2001.

The fiscal direction of the country changed again in 2001.

After the Sept. 11 terrorist attacks, President Bush and the Republican-controlled Congress led the charge for the wars in Iraq and Afghanistan and later paved the way for a prescription-drug benefit for seniors, known as Medicare Part D.

The Congressional Research Service estimates that the wars have cost more than $1 trillion, while the prescription drug program has led to $207 billion more in spending. The GOP also spearheaded sweeping tax increases in 2001 and 2003, which the Center on Budget and Policy Priorities, a left-leaning think tank, estimates reduced federal revenues by at least $2.3 trillion.

During Mr. Bush’s eight years in office, the national debt jumped from $5.628 billion to $9.98 trillion. Mr. Obama’s $814 billion stimulus package and unchecked entitlement spending over the past two years pushed the total debt past $14 trillion.

“There is not a great track record of spending among Republicans, particularly in the first half of the Bush administration,” Mr. Holtz-Eakin said. But with Democrats at the helm, “between 2008 and 2010 we had the single worst Congress on spending — period.”

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