Tuesday, February 5, 2008
The Progress Report Of Not Much Progress
President Bush took office in 2001 with an advantage few presidents have enjoyed: a $236 billion budget surplus. But Bush quickly "blew through" President Clinton's surplus. Now the next administration will have to pay the price for Bush's fiscal irresponsibility. With his new budget, Bush is trying to create the appearance of compensating for his fiscal exuberance, terminating or reducing 151 government programs -- while still producing near record deficits. While Bush's budget plan "has little chance of surviving in a Democratic Congress," he is in effect washing his hands clean of his economic mismanagement, delaying "until 2009 decisions on how to cope with short- and long-term financial problems." The next president will "inherit a fiscal meltdown,"Senate Budget Committee Chairman Kent Conrad (D-ND) said. Conrad and Sen. Judd Gregg (R-NH) are considering setting up "a bipartisan commission to help the next president and Congress deal with these issues, possibly through legislation."
IRRESPONSIBILITY OF BUSH'S TAX CUTS:
In 2001, Bush said his tax cuts would cost the government $1.3 trillion, but his 2009 budget -- which calls for making his signature tax cuts permanent -- indicates they would "cost the government more than $2 trillion in their second decade." Extending the 2001 and 2003 tax cuts would give the top one percent of households more than $1.1 trillion in benefits over the next decade, according to the Center for Budget and Policy Priorities -- more than the entire amount the government spends on elementary and secondary education or veterans' medical care. Without offsets, permanent tax cuts would increase deficits and add to national debt, "essentially doubl[ing] the size of the debt in 2050." Not surprisingly, Bush has not proposed adequate measures to pay for the cuts. Conrad noted the irony of preserving Bush's tax cuts while proposing devastating blows to Medicare and Medicaid. "We believe that is a very odd sense of priorities. That is not a sense of priorities that are shared by the American people," he said. The budget also includes $19.7 billion for SCHIP funding, but this would not "allow states to cover more uninsured children" and is still inadequate to maintain current programs.
EXORBITANT DEFICIT AND DEBT:
"Slumping revenues and the cost of an economic rescue package will combine to produce a huge jump in the deficit to $410 billion this year and $407 billion in 2009, the White House says, just shy of the record $413 billion set four years ago." This deficit will undoubtedly hamstring future administrations. For example, budget experts "agree that there is not enough money to be had" from conservative approaches to cut "wasteful federal spending." But the White House remains cheerful. "This budget is one that keeps spending under control," Bush trumpeted. And while Bush has attempted to embrace fiscal conservatism by cutting earmarks, his budget would only cut pork by $18 billion, a number "so small as to be of symbolic importance." Furthermore, unless the "economy rebounds" and revenue pours in, "deficits will push the cumulative federal debt past $12 trillion in the next five years." "I would suggest to you the debt is the threat," Conrad stated, saying Bush will likely see an "almost a doubling of the national debt on his watch."
THE SECRET BUDGET:
The "budget achieves balance by 2012," Bush said yesterday. But the forecast is likely to be worse than what the White House is saying. To achieve its deficit goals, the White House predicts the economy will grow at 2.7 percent rate this year, "higher than what private sector economists" anticipate and a full point higher than the Congressional Budget Office's projections. House Budget Committee Chairman John Spratt (D-SC) said a more likely scenario is a "deficit that remains in the $200 billion range in 2012." Moreover, billions in spending are unaccounted for in the budget. For example, Bush budgeted $70 billion for the Iraq and Afghanistan wars -- but only accounted for costs up to the first half of FY2009. In reality, around $200 billion is expected to be spent. Furthermore, Bush did not take into account the costs "of assuring that higher alternative minimum tax rates originally aimed at several hundred very wealthy people don't hit tens of millions of middle-income earners." Conrad accused Bush of "hide-the-ball budgeting." Gregg concluded that this budget is "not a serious budget."