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November 10, 2003

Bush's Deficit- $800 Billion by 2013?

When I posted my recent entry about the massive debt Bush is foisting on our country, a number of comments chided me for accepting the very conservative assumptions of the Congressional Budget Office.

A fair criticism since the debt will be even worse if Bush implements his stated policy goals, a point even the conservative Economist magazine agrees with:

these official projections, and similar ones by the White House, bear no resemblance to reality. The CBO is forced by law to make extremely implausible assumptions both about taxes and spending. The White House does so because it suits Mr Bush's political purposes. No fiscal expert believes either of them.

As the magazine notes, making the tax cuts permanent, dealing with the oddities of the Alternative Minimum Tax, making realistic spending assumptions, and incorporating the Prescription Drug proposal makes the deficit careen out of control.

As the graph to the left shows, we could easily see annual deficits approaching $800 billion per year in ten years due to Bush's policies. The largest wallop is making the tax cuts permanent, which will cost the budget an additional $400 billion yearly by 2013.

The sad fact is how much better Reagan looks in retrospect. Not only did he agree to correct many of his deficit mistakes with later tax increases, the 1986 Tax Reform Act was an actual improvement in tax sanity, as opposed to the bizarre mess Bush has made of the tax code.

Some conservative defenders (and liberal critics) of Bush Junior see the deficits as a strategy to starve the budget and force dramatic spending cuts. But The Economist doesn't buy that Bush's policies are coherent enough to even justify that malevolent explanation:

"this attempt to impose logic on the Bush strategy is belied by the administration's own actions. For all the talk of Social Security reform, the only White House action on entitlements has been to expand them...There is no admission [by Bush] that America faces a fiscal mess, and no shifting from the mantra that all tax increases, at all times, are bad. The real reason to fret about America's fiscal outlook is that this self-delusion shows little sign of changing."

Posted by Nathan at November 10, 2003 02:07 AM