Painful cuts and bigger deficits

Hmmm… the president’s budget will require painful cuts in programs, and no progress on deficit reductions…
… and these are the Republicans’ complaints!

Republicans warn Bush budget won’t cut deficit – Jan. 29, 2004
Republicans fight Bush budget plan
Lawmakers say Bush’s plan will mean painful cuts and will barely dent the deficit.
January 29, 2004: 3:44 PM EST
WASHINGTON (Reuters) – President Bush’s plans to sharply limit some federal spending next year will barely dent the deficit but could mean painful cuts in programs ranging from veterans’ health to medical research, Republican lawmakers who oversee the spending process warned Thursday.
Bush will send his fiscal 2005 budget to Congress Monday. In it, he will propose limiting the growth in federal discretionary spending outside of defense and homeland security to about 0.5 percent — far less than the rate of inflation.
White House officials call that “the foundation” of a plan to cut this year’s record federal budget deficit — which they are expected to project at between $520 billion and $530 billion — in half over the next five years.
[…]
But in briefing papers prepared for this weekend’s party retreat — expected to be dominated by budget debates — the Republican “appropriators” who actually divvy up federal funds each year noted even a complete freeze in the spending targeted by Bush would cut the deficit by only a “minimal” $3 billion.
[…]

Filed under: Economics

$477 billion deficit for 2004

OMB Watch – Economy and Jobs Watch: CBO Projecting Large Deficits
The Congressional Budget Office (CBO) today released their baseline budget estimates for 2005-2014. The analysis shows that in 2004 deficits will likely reach $477 billion – which is 4.2% of GDP – and that deficits will continue over the next decade, reaching a cumulative $1.9 trillion baseline over the next 10 years.

The CBO “baseline,” however, is not a forecast, but rather an estimate of revenue and spending under current law. Current legislative proposals, including extending past tax cuts, any new tax cuts, or greater than legislated increases in spending on defense, homeland security, and other areas, would increase the deficit beyond the CBO’s baseline.

For example, the figure below shows the baseline deficit over the 1004-2014 period as well as the deficit adjusted to include the effect of making various tax cuts permanent. (Data is from Table 1-3 of the CBO report).

If the tax cuts are extended, the deficit will remain near $400 billion for the rest of the next decade.

(Click for Large Version)

In addition, the current estimated deficits represents a $1 trillion deterioration in the 10-year budget situation since just last August. About 70 percent of the change was due to new legislation, and the rest from economic factors and technical revisions.

This data continues to show continuing irresponsbility on the part of federal budgeters and the administration.

Filed under: Economics

10 Trillion Dollar Turnaround

The Century foundation has just released a report entitled
“How the Federal Budget Forecast Went From $5 Trillion in the Black to $5 Trillion in the Red In Just Two and a Half Years,” by Bernard Wasow.
The report shows how we went from record surpluses to massive deficits.

Filed under: Economics

Norquist Continues Offensive Comparisons

Whitehouse advisor Grover Norquist is standing by his comparison of the estate tax to the Holocaust.
Now he is also equating “high marginal tax rates” with Nazism…

FORWARD : News : Anti-tax Activist Defends Holocaust Comparison
A top anti-tax activist and White House ally is standing by his comparison of proponents of the estate tax to the perpetrators of the Holocaust, while taking the analogy further and dismissing his critics as “socialists.”
“The Nazis were for gun control, the Nazis were for high marginal tax rates,” said Grover Norquist in an interview with the Forward. “Do you want to talk about who’s closer politically to national socialism, the Right or the Left?”
Norquist said his comments were entirely reasonable because he was drawing comparisons to misguided socialist policies. He also sought to distinguish his comments from two 30-second videos comparing President Bush to Adolf Hitler that were temporarily posted on the Web site MoveOn.org.

Filed under: Economics

Consumer Debt at $2 Trillion

Well, this can’t be very good…

U.S. Consumer Debt Grows at Alarming Rate (washingtonpost.com)
According to the latest figures from the Federal Reserve, America’s consumer debt has topped $2 trillion for the first time, continuing what debt experts view as an alarming surge in recent years.

Filed under: Economics

New Articles

OMB Watch – The Watcher – January 12, 2003 Vol.5 No.1 –
FEDERAL BUDGET
————–
*Economy and Jobs Watch: Unemployment Down, No New Jobs
*Economy and Jobs Watch: Long-term Budget Choices

Filed under: Economics

Black is White

Here’s the dumbest thing I’ve read in a while about the Bush tax legislation…
Since when is 41% a majority?
What this poll says to me is that 59% of americans think that the Bush tax legislation was not good for them.

Bush Tax Cuts Validated in New Poll
Los Angeles, CA, (PRWEB) January 10, 2004 — A new poll conducted by Zogby International […]found that a majority of Americans think the Bush tax cuts were good for them.
The survey asked: “Personally, were the Bush tax cuts good for you or bad for you?”
Forty-one percent of Americans said the tax cuts were good for them. Another 31% of voters said the tax cuts made no difference and only 25% said the tax cuts were bad for them.

Filed under: Economics

Longer-run Economic Performance

Sustained Budget Deficits: Longer-Run U.S. Economic
Performance and the Risk of Financial and Fiscal Disarray
Robert E. Rubin, Peter Orszag, and Allen Sinai
“The U.S. federal budget is on an unsustainable path. In the absence of significant policy changes, federal government deficits are expected to total around $5 trillion over the next decade. Such deficits will cause U.S. government debt, relative to GDP, to rise significantly. Thereafter, as the baby boomers increasingly reach retirement age and claim Social Security and Medicare benefits, government deficits and debt are likely to grow even more sharply.
The scale of the nation’s projected budgetary imbalances is now so large that the risk of severe adverse consequences must be taken very seriously, although it is impossible to predict when such consequences may occur. ”

Filed under: Economics