The NYTimes lead article discusses the Bush Budget Proposal. The weak of heart (like myself) should brace themselves to read that he wants $2.77 trillion for the next fiscal Year. This Budget includes $36 bn in Medicare cuts--a totally unpassable bill in Congress without fundamental change in the program--so add the $36 billion back on. The administration will ask for $120 billion for Iraq and Afghanistan for operations into 2007; remember the Days when these Incursions (Wars) were not to cost even $100 bn, and We would not have significant Casualties? Then there is the great Whizbang, where the Deficit is going to be cut in half, but Tax revenues are down, Spending is up, and in the short-term, the current deficit will be $460+ billion.
New Estimates of the Budget Outlook:
Plus Ça Change, Plus C’est la Même Chose
Alan J. Auerbach, William G. Gale, and Peter R. Orszag1
January 31, 2006
This remains a more-detailed study of Bush financing. Short passages of interest:
About 58 percent of the deterioration in the official baseline figures since 2001 is
due to lower revenues, and 42 percent is due to higher spending.
decline can be attributed to legislated tax cuts (29 percent), other declines in
revenue (28 percent), legislated spending increases (36 percent) and other changes
in spending (6 percent). Declines in revenue have also accounted for most of the
deterioration in actual budget outcomes (as opposed to 10-year projections)
between 2000 and 2006. Tax revenues as a share of GDP have fallen
dramatically since 2000, and are low relative to their average value between 1960
and 2000. Spending as a share of GDP has risen somewhat since 2000, but
nonetheless remains at or below its average level between 1960 and 2000.
Outside of the retirement trust funds, the adjusted 10-year budget faces a deficit of
$7.8 trillion over the next decade (4.6 percent of GDP). Thus, a simple way to
summarize the fiscal status of the government is to note that the retirement trust
funds face substantial long-term deficits, and under realistic assumptions about
current policy, the rest of government faces deficits in excess of 4 percent of GDP
over the next decade.
The Bush Tax Cuts have been a disaster! They have not produced the Capitalization of American industry to make it competitive with foreign manufacture--check the Current Accounts Deficit. They have not been coupled with Federal Spending Cuts, and worse; the Administration picks and choses when they will include Spending in the Budget. The absolute worst, though, consists of the Administration doing everything to maintain and extend the Tax Cuts, while using their Expiration date statistics to hide the real Deficit levels. lgl