Try as they might, there’s just no convincing way to spin dismal results like these.
This year’s federal budget deficit will reach a record $422 billion, and the government is now expected to accumulate $2.3 trillion in new debt over the next 10 years, the Congressional Budget Office reported yesterday.
The expected deficit for the current fiscal year, which ends Sept. 30, is $56 billion less than the CBO predicted in March, as a recovering economy added to tax receipts. But it is $46 billion more than last year’s record shortfall, with even more red ink possible, the nonpartisan agency reported: The expected total 10-year deficit would climb from $2.3 trillion to $3.6 trillion if President Bush is able to extend the tax cuts he enacted. They are currently set to expire in 2011.
“This is a fiscal situation in which we cannot rely on economic growth to cause deficits to disappear,” warned CBO Director Douglas Holtz-Eakin, a former economist for the Bush White House. “The budgetary outlook will be dictated by policy choices.”
In a comment that can only be described as an Orwellian masterpiece, the Bush campaign’s policy director said, “The $56 billion decrease in the deficit projection today is a sign of the economic growth that is a result of President Bush’s leadership on tax relief.”
You see, when Bush runs the largest deficit in the history of the world, which has grown dramatically every year of his presidency, we should be thankful for his “leadership.” When Clinton runs the largest surplus in history, we should thank Reagan. This is GOP Econ 101.
But the story of this year’s deficit is even worse than the media reports are letting on.
When one excludes the fact that Bush is raiding Social Security to obscure his budget picture, the deficit is actually $571 billion.
That’s just for starters. The Center on Budget and Policy Priorities noticed a few other trends worth noting.
* If the economy is growing, the deficit should be falling. It’s not.
At this point in previous economic recoveries, deficits have almost invariably begun to shrink rather than continued to rise. The current economic recovery, however, is different; it has featured the largest deterioration in the government’s fiscal position of any recovery since World War II. A substantial “structural” deficit has developed that will persist as the economy grows, unless policies change.
* We’re looking at a long-term disaster.
Realistic assumptions indicate deficits will total $4.4 trillion over the next decade: Although CBO’s official projections show deficits declining over the next ten years to $65 billion by 2014, CBO notes that its official projections do not reflect the costs of extending the tax cuts beyond their scheduled expiration dates. As CBO director Douglas Holtz-Eakin testified in July, “…baseline revenue projections are made less reliable by the existence of expirations that few people expect to occur as written in current law.”[2] In addition, while CBO’s projections overstate likely future costs of military operations and reconstruction in Iraq and Afghanistan, they otherwise include defense levels below those CBO estimates to be needed to fully fund the Administration’s multi-year defense plan.
CBO’s new report and other CBO documents include additional estimates indicating that if the tax cuts are continued and projected defense expenditures are adjusted to make them more realistic (including both a downward adjustment to reflect an assumption that operations in Iraq and Afghanistan will phase down over the next few years and an upward adjustment to reflect the full cost of the Administration’s multi-year defense plan), projected deficits will not fall below $340 billion in any year, will average more than $440 billion per year over the next decade, and will total approximately $4.4 trillion over the ten-year period.
* And it’s the tax cuts’ fault.
Calculations based on CBO and Joint Tax Committee data show that of the $8.7 trillion deterioration over the 2002-2011 period, $5.5 trillion is attributable to tax cuts, defense funding increases, and domestic program increases enacted by Congress. (The rest is due to economic or technical factors.) Tax cuts account for the majority of the $5.5 trillion deterioration that is due to the actions of policymakers. In other words, the tax cuts have increased the deficit more than all program increases combined.
Finally, as I am wont to do, I thought it’d be fun to remind readers of some of the ways in which Bush has described deficits in the past:
* Bush on August 23, 1997:
“All Republicans believe in a fiscally sound government. American families balance their budgets and pay their bills, and the federal government must do so as well. Living within our means, means better living for the families of America. Interest payments on our national debt are now our nation’s largest expenditure. What a waste of taxpayers’ hard-earned dollars.”
* Bush on Feb. 3, 1997:
Bush voted for a Republican Governor’s Association resolution supporting a balanced budget amendment to the U.S. Constitution as a step “toward improving the economic prospects of all Americans, especially middle-income families and the disadvantaged.”
* Bush on February 27, 2001:
“Unrestrained government spending is a dangerous road to deficits, so we must take a different path.”
* Bush on January 29, 2002:
“[O]ur budget will run a deficit that will be small and short-term.”
* Bush on Feb. 3, 2003:
“My administration firmly believes in controlling the deficit and reducing it.”
Promises made, promises broken. Either Bush didn’t believe these words when he said them, in which case he’s breathtakingly dishonest, or he’s committed perhaps the grandest flip-flop in political history. I’ll let the Bush campaign tell us which one of these is true.