Why George W. Bush can't balance his budget.
The best way to address the deficit and move toward a balanced budget is to encourage economic growth and to show some spending discipline in Washington, D.C.
--President Bush, 2006 State of the Union Address
Spending discipline. This from the same president who pushed for the Medicare Prescription Drug, Improvement and Modernization Act -- a spending bill that will add some $535 billion to the cost of Medicare over the next 10 years. Not to mention that 20 years out, as an aging baby boom generation needs the program, budget estimates put the cost at well over $4.5 trillion dollars. Mr. Bush has yet to mention how the government will pay for this plan. And because the bulk of the cost will come long after he leaves office, what the president likes to leave out is that promised benefits can only come from massive cuts in education or national defense (or an enormous hike in taxes).
What's telling is how quickly President Bush was able to squander the budget surplus we had just six years ago. When the president took office, the ten-year budget surplus was projected at $5.6 trillion by the CBO (the Congressional Budget Office, or the accounting arm of Congress). By August of 2003, the CBO projected a ten-year deficit of $1.4 trillion. If the tax cuts are made permanent, as Mr. Bush plans to do, the ten-year deficit grows to $6.0 trillion ($6,000,000,000,000 with all the zeros). That means that by 2014, there will be a extra $90,000 of federal debt for every family in America.
It must be said that Mr. Bush took office right before the economic storms of a recession and the bursting of the stock market bubble, not to mention the chaos following 9/11. Yet the Concord Coalition, a bipartisan think-tank of budget hawks and conservative economists, estimates that at least one-third of this $10 trillion swing in the budget (from a $5.6 trillion surplus to a $6 trillion deficit) can be accounted for by the Bush tax cuts.
Our president promised in 2003 to spend whatever it takes to get the job done in Iraq and Afghanistan. So while American lives are sacrificed to bring democracy to the Middle East, Mr. Bush has never once asked the rest of America to sacrifice their hard-earned money to make this possible. In fact, he has rewarded Americans, again and again, with tax cuts -- blood money as it were, to keep the faithful in line behind an unpopular war.
Why tax cuts are a moral issue.
If this tax relief is good for Americans three or five or seven years from now, it is even better for Americans today.
--President Bush, 2006 State of the Union Address
Bush's reasons for the tax cuts change when the occasion suits him. In 2001, before the effects of the recession were in full swing, the tax cuts were needed to give Americans back part of the projected budget surplus. In 2002, while the recession was very much a reality, the tax cuts were needed to kick start the sluggish economy. And since 2003, the tax cuts have been needed, according to Mr. Bush, to provide long-term incentives for economic growth.
I have no problem with the tax cuts of 2002, needed to provide relief for a slow economy. Temporary tax cuts in times of recession can be a boon to consumers who cannot or will not spend, freeing cash to speed up sluggish growth. However, the president's original tax cuts might better have been used to fund the growing cost of Medicaid. And the tax cuts on the table today, for "long-term growth", have no basis in sensible economics -- especially with a brand-new drug prescription plan that will cost us some $2.5 trillion dollars over the next 20 years.
Conservative economist Milton Friedman (a budget hawk if there ever was one) believed that permanent tax cuts were only a good idea if they were accompanied by permanent cuts in spending. Economists of all stripes agree that you cannot cut taxes in any permanent way if you do not cut long-term spending. This simply means that tax cuts without spending cuts will only shift the burden of taxes to future generations.
This is why tax cuts are a moral issue. Permanent tax cuts only shift the sacrifice from today's generations to the generations of tomorrow. Meaning that you and your children will be forced to pay higher taxes in the not-so-distant future, to pay for Bush's tax cuts today. The only other option is massive spending cuts in education, the military, homeland defense and social security/health benefits for the aged -- leaving children, the elderly and our nation's security out to dry.
The good news is that there are ways to avoid this future. Doing away with Mr. Bush's tax cuts -- especially at a time when the economy is recovering -- is a good start. Reforming social security, health care and sky-rocketing budget spending are all vital steps as well. What we need is a national figure who will ask Americans to give up some minor comforts today, in order to secure the rights of our children tomorrow.
Unfortunately, our president is not one such leader. Mr. Bush should be ashamed for refusing to recognize the blatant immorality of his reckless tax cutting and slipshod budgetary spending. It's not simply voodoo economics; it's just plain wrong. And the American people have a responsibility to call him out on it.
Wednesday, February 01, 2006
Posted by jonny at 7:51 PM