In its latest forecast, the Congressional Budget Office (CBO) once again confirmed that the United States does not face a near-term debt problem. Over the next few years, annual budget deficits will continue to fall in both dollar terms and as a percentage of the U.S. economy. Over the next decade, the debt will remain stable measured as a share of GDP.
But longer term, the American national debt will once again begin to grow rapidly as the usual suspects--an aging population and the growth in their health care costs--push Uncle Sam's red ink to 100 percent of GDP by 2038. But perhaps the biggest culprit of all is one that largely goes unmentioned: the Bush tax cuts of 2001 and 2003.

As the chart above shows, had the Bush tax cuts expired as scheduled in 2013, the debt as a share of the U.S. economy would plunge by almost half. The Washington Post summed it up this way:

Despite multiple deficit-reduction deals during the past three years, the national debt is projected to swell to 100 percent of the economy by 2038, due primarily to the enormous cost of caring for an aging society. Making matters worse: tax cuts for the vast majority of Americans made permanent during last year's fiscal cliff showdown. If the tax cuts had been allowed to expire, projections showed the debt dropping to 52 percent of GDP during the next 25 years.

As you'll recall, the deal to avert the so-called "fiscal cliff" earlier this year is predicted to raise $620 billion over the next decade. But while the top income tax rate was nudged from 36 to 39.6 percent and the capital gains rate from 15 to 20 percent for families earning over $450,000 a year ($400,000 for individuals), the rest of the Bush tax cuts were left in place. The cost to the United States Treasury? $3.3 trillion over just the next 10 years.
That makes the Bush tax cuts the gift that keeps on taking. As the Center on Budget and Policy Priorities (CBPP) previously explained in 2008 and 2011, the Bush tax cuts accounted for about half the deficits during his tenure and, if made permanent, would produce more red ink than Iraq, Afghanistan, TARP and the recession combined.

In January 2012, the Washington Post estimated that while President Obama's policies had added $983 billion to the U.S. national debt from 2009 to 2011, Bush's accounted for a whopping $5.1 trillion during his time in the Oval Office. But as Ezra Klein rightly pointed out, that analysis did not account for the revenue hemorrhaging the Bush policies would cause indefinitely into the future:

What's also important, but not evident, on this chart is that Obama's major expenses were temporary -- the stimulus is over now -- while Bush's were, effectively, recurring. The Bush tax cuts didn't just lower revenue for 10 years. It's clear now that they lowered it indefinitely, which means this chart is understating their true cost. Similarly, the Medicare drug benefit is costing money on perpetuity, not just for two or three years. And Boehner, Ryan and others voted for these laws and, in some cases, helped to craft and pass them.

Of course, with Congressional passage of and his signature on January's fiscal cliff deal, President Barack Obama made the Bush tax cuts his own. Given the fragile U.S. economic recovery, he was right to do so at the time. Had the U.S. fallen over the fiscal cliff, the CBO estimated that the combination of spending cuts and tax increases in the could reduce gross domestic product by 2.9 percent and drive the unemployment rate from 7.9 percent today to 9.1 percent by the end of this year.

Doing nothing and letting all of the Bush tax cuts expire would have largely ended America's long-term debt problem, as the chart above shows. But cutting too much debt too soon would have been very painful indeed.
Over the longer term, there are clearly two tasks for policy makers in Washington. One, get the rate of growth of health care costs under control. The other? Raise more revenue by unwinding at least some of the Bush tax cuts.