The 3 U.S. Policy Mistakes Most Responsible for S&P Downgrade

1. 2001 Bush Income Tax Cut
2. No Health Care Cost Control, Through 2008
3. Wars Paid for With a Credit Card

By IBTimes Staff Reporter | August 6, 2011 2:52 PM EDT

As a result of Standard & Poor's stunning and controversial decision Friday night to downgrade the credit rating of the U.S. Government, the "Washington blame game" will start soon, and while there's enough blame to go around on both sides of the aisle, the three biggest factors that set the nation on the wrong fiscal course were public policy mistakes made by President George W. Bush from 2001 through 2008.

Tax Cut Tilted Toward the Rich

The biggest mistake, or the factor that most contributed to S&P's downgrade of the U.S. Government was the 2001 Bush Income Tax Cut.

The $1.35 trillion tax cut -- a tax cut that many economists and policy professionals felt was not necessary from a stimulus standpoint, given that the U.S. economy was already recovering from the mini 2001 recession -- instantaneously turned a U.S. Government budget surplus into a budget deficit.

You read correctly: President Bill Clinton, D-Ark., in fiscal 2001 -- the Clinton administration's last fiscal year -- was the last president to run a budget surplus: the Clinton administration notched a $127.3 billion surplus in fiscal 2001 -- the fourth consecutive year of surpluses.

http://www.ibtimes.com/articles/193639/20110806/why-downgrade-standard-and-poor-s-s-p-budget-deficit-bush-obama-clinton-national-debt.htm

Moreover, the argument forwarded here is that it will take the United States a minimum of two decades -- 20 years -- to recover from those three major fiscal mistakes -- longer if income taxes are not increased on upper-income Americans.

Further, conservative Republicans, other conservatives, and supply-side economists can assert forever that entitlement reform and cuts in discretionary federal spending are the keys to balancing the federal budget, but the reality of the facts on the ground, argue differently: a deeply flawed income tax cut and wars paid for with debt turned a budget surplus into a large budget deficit, and the nation will not be on a sound fiscal course until those mistakes are corrected.