According to an article the other day in the New York Times—Bush Unveils Ambitious New Budget (free registration required), The Shrub(TM) will be submitting to Congress a budget that will go down in history for creating one of the biggest deficits in our nation’s history.
The budget that President Bush sends to Congress on Monday would expand the military, create a major new social entitlement, energize the economy and, most likely, produce big deficits for the foreseeable future.
Not since the early days of Ronald Reagan’s presidency has an administration harbored such bold ambitions and such a lack of concern about red ink. White House officials concede that deficits could top $300 billion this year and next, and the budget will probably not project a return to surpluses in the next five years.
Five years? Hell, Allen Greenspan’s staff have already said we’d be lucky if we see surpluses again within the next decade.
White House officials said this week that they would propose an increase of roughly $16 billion for military spending in the 2004 fiscal year, but they also conceded that they might ask for additional billions in the months ahead even if the country does not fight a war with Iraq.
“It’s possible,” said Mitchell E. Daniels Jr., director of the White House Office of Management and Budget. “Why could it happen even if there is not a war? The history of defense spending has been one of surge and purge, where you waste money on the way up and on the way down. The president is trying to force the hard choice” to maintain steady growth, Mr. Daniels said.
OK, did you get that part? The part about how even if they don’t go to war they might still ask for billions more? The defense contractors must be rubbing their hands together in such glee that they’re risking friction burns right now.
If the country does goes to war, Mr. Bush plans to ask Congress for additional billions to cover those costs as well.
But of course. Wouldn’t want to plan that into the budget now even if it does seem like he’s hell-bent on going to war regardless of whether anyone else, including his own countrymen, approve of it.
The president’s budget will also leave out other big new liabilities linked to his tax plans. The budget will include Mr. Bush’s proposal for tax-advantaged individual retirement programs. But the tax cuts will not show up in his budget, which lays out costs for the next five years, because contributions to the savings plans will not cut a taxpayer’s current taxes. The tax cuts will only occur as people retire and start to withdraw the profits that accumulate, which will be tax free.
Nor will the budget include the huge costs of Mr. Bush’s call to make his tax cuts from 2001 permanent. The Congressional Budget Office has estimated that cost at $785 billion over 10 years, but almost none of those costs will show up until nearly the end of the decade.
Mr. Bush’s Democratic opponents in Congress are already starting to attack the budget as “reckless” and “irresponsible,” and House Democrats have calculated that the sum total of Mr. Bush’s tax plans would add $1.7 trillion in debt by 2011.
The thing that cracks me up is the Republicans love to bash Democrats as the “tax and spend” party. Let’s be honest, though, at least with that method the Government actually has the money to SPEND!
Ah how I long for the days of Clinton where our primary concern was whether or not he was porking the interns in the oval office. At least the economy wasn’t in the shitter and he wasn’t working overtime to make sure it was as deeply entrenched in the red as possible. Maybe that’s the problem, we just need to get G.W. laid a couple of times and perhaps he’ll mellow out. Consider the following:
Restoring Fiscal Discipline, Replacing Decades of Budget Deficits with Surpluses
Moving From Record Deficits to Record Surplus
In 1992, the deficit was $290 billion, a record dollar high, and was projected to reach over $400 billion this year. Instead, we had a budget surplus of $124 billion in 1999.
The current surplus is the largest dollar surplus on record (even after adjusting for inflation) and the largest as a share of our economy since 1951.
With the government no longer draining resources out of capital markets, businesses have more funds for productive investment. This has helped to fuel a 12 percent real annual increase in producers’ durable equipment investment since 1993 – the sixth year in a row of double-digit growth. This compares to 3 percent annual growth from 1981-92, a period that saw the debt held by the public quadruple.
[source: National Economic Council; OMB, 12/3/99]
Paying Off the National Debt
In 1999, public debt was reduced by $88 billion, which follows the $51 billion debt reduction in 1998, and brings the two-year total up to $140 billion. Public debt is $1.7 trillion lower in 1999 than was projected in 1993.
As a result of Clinton-Gore debt reduction, interest payments on the debt were $91 billion lower than projected. In 1993, the net interest payments on the debt held by the public were projected to grow to $321 billion in 1999.
Debt reduction brings real benefits for the American people. Reduced debt means lower interest rates and reduced payments on car loans and student loans. A family with a home mortgage of $100,000 might expect to save roughly $2,000 per year in reduced mortgage payments. Lower interest rates have saved families with typical car loans or student loans $200.
With the President’s plan, we are now on track to eliminate the nation’s publicly held debt by 2015. The last time the United States did not have a national debt was during the administration of Andrew Jackson (1835).
[source: OMB, 10/27/99; Treasury Dept, Office of Economic Policy, From Widening Deficits to Paying Down the Debt: Benefits for the American People, 8/4/99]
Fiscal Discipline for America’s Future
From 1980 to 1992, spending as a share of GDP increased, rising from 21.7% to 22.5%. Since President Clinton took office, spending as a share of the economy has fallen from 22.5% in 1992 to 19.3% in 1999—the lowest level since 1974.
Real discretionary spending has declined by more than one-half percent per year under President Clinton; from 1980 to 1992, real discretionary spending increased 1.0 percent per year.
At the same time, President Clinton has increased investments in education, technology and other areas that are vital to growth.
[source: Office of Management & Budget, 10/27/99; Budget of the U.S. Government FY 2000, Historical Tables,Ӕ (table 8.4)]
Kinda makes you nostalgic for the previous administration, don’t it? Thanks to Jason for digging this bit of economic history up.