Government Debts grow

[tw]

From the Economist of 22 Jun 2002
Sometime this summer, when most of Washington has left for the beach, the Bush administration will release some news it would rather bury: that America's federal budget is spilling red ink and is likely to stay that way. ... Using some heroic assumptions, Mr Bush may still cling to the idea of a balanced budget by 2005, but who will believe him? ....

The speed of fiscal decline is remarkable. A year ago, the Bush administrate claims it could live within the current official celing for government dbt of $5.95 tirllion until 2008. Now the Trasurey Department desperately need Congress to raise that celing by June 28th. ...

... with healthy economic growth, government revenues could be $400billion - $600 billion lower than expect over the next decade. That alone could nearly wipe out Mr Bush's margin for error [as the economic numbers look worse - not better]. According to the CBO's most recent analysis, Mr Bush's proposals will generate a cumulative surplus of just $680 billion over the next decade.

The Bush numbers also do not allow for inevitable changes in the tax system. For instance, his budget assumes that the people paying "Alternative Minimun Tax" will rise from 2 million in 2001 to 35 million by 2010. ... AMT will have to be rejigged. ... A study from the Brooking Institution argues that such reform could cost government up to $700 billion over the decade. ...

The Bush White House is certainly talking tough. Sizeable increses in defence spending, it aruges, should be made up for by belt-tightening elsewhere. ...

... According to the CBO's latest report, spending in the first 8 months of fiscal 2002 was 10% higher than in the same period last years. Discretionary spending outside defence (where Mr Bush wants to be tough) rose by 17% last year and this year, so far, is going up at a 9% rate.

Worse, Mr Bush himself could be one of the worst offenders. He recently promised a big rise in foreign aid. Though White House official insist that the new Department of Homeland Security can be created at no cost, no one believes them. ... "it boggles the mind" that you can reorganize 170,000 people at no additional cost. [acutal costs are estimated at maybe "tens of billions of dollars"]

So the idea that discretionary spending will fall in real terms seems fanciful. Even if it just rose in line with the population, that alone would add over $400 billion to spending over the next ten years. And that excludes spending increases on entitlements. Given rising health-care costs, Congress would surely be forced to put more money into Medicare. Both parties in Congress are discussing expanding Medicare to include perscription drug coverage...

Sen Joseph Lieberman ... recently suggested that part of the Bush tax plan should be postponed if the economy remains weak. ... Republicans will not touch the tax cut; indeed they want them all to be permanent. It is spending that must somehow be stopped. Welcome to the era of deficit politics.

Why are big deficits and massive spending increases always seems to appear when conservative Republicans in power? The more conservative, then greaeter the accounting is fudged. George Jr's solution: government must spend less on the economy and more on big defense weapons - such as Star Wars. Does this nonsense ever end? We spend more than the military of top 5 countries combined. When does the cold war end? Our secret military budget alone is larger than any other nation's military budget. But we spend too much on our people and infastructure? Deficits are acceptable if it means a bigger military? How quickly this President wipes out a surplus budget. Do you feel safer?