The Perverse Bush Legacy

Future economic historians will have no problem identifying the reason and apportioning the blame for the collapse in US public finances in the early part of the 21st century. All they have to do is look at the data and see the ‘W’ staring back at them (as outlined above). The factors behind the two collapses in the tax take as a percentage of GDP? The George W Bush tax cuts and the financial crisis under Bush (not necessarily caused, but aided and abetted by the administration). The latter of course, is the main reason for the increase in debt, not the ‘profligate spending’ of the current administration. Note that US is at the lowest tax take in nearly 40 years, and the projected increase in revenues from 2010 onwards comes about primarily because of an end to the tax cuts. The result of this collapse, amazingly, is a call for retrenchment of government spending, particularly on social expenditure (for e.g. see Blinder’s piece in the WSJ).

The perverse legacy of W reminds me of another…

`My name is Ozymandias, King of Kings:
Look on my works, ye mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare…