Here's to hoping Pres. Bush is right about the world being flat and that America can spend itself out of debt.
We had a couple of recent posts about Bush's apparent obsession with creating deficits through tax cuts, the last being in a 9-23-04 post entitled "2, 4, 6, 8, who do we appreciate? Not Congress, not today; not the GOP; not Demo's -- Bush to get 4th tax cut in 4 years. Sorry kids and grandkids."
That post noted that a headline of a 4-23-04 N.Y. Times article tells the sad story: "Deal in Congress to Keep Tax Cuts, Widening Deficit." It reviwed how, putting aside efforts to control the federal deficit before the elections, Republican and Democratic leaders agreed Wednesday to extend $145 billion worth of tax cuts sought by President without trying to pay for them, representing the fourth tax cut in as many years.
Today's Washington Post has a must read article by Jonathan Weisman reviewing in detail the Bush record of mounting debts entitled "The Tax-Cut Pendulum and the Pit." It begins with the beginning and gives who did and recommended at when.
You get the feel by the way the article begins:
In 2002, with midterm elections approaching and the nation edging toward war in Iraq, President Bush's economic team divided into opposing camps, with one side worried about rising budget deficits and the other pressing for tax cuts to stimulate a stagnant economy.
One group, led by Treasury Secretary Paul H. O'Neill and White House budget director Mitchell E. Daniels Jr., watched anxiously as the government's 2002 balance sheet swung from a record $313 billion surplus projected when Bush took office to a $157 billion deficit projected that August. How could the president demand fiscal discipline from Congress, they argued, then push expensive reforms of Social Security and the tax code if he continued cutting taxes?
The other side, led by White House economists Lawrence B. Lindsey and R. Glenn Hubbard, focused on economic growth, which had slipped from a 5 percent surge in the first three months of 2002 to 1.3 percent in the next quarter. Employment had slid by 235,000 jobs between January and September. Deficits would have little if any effect on the economy, they assured Bush, but if the president wanted to halt the stock market's slide and prop up incomes, he had to cut taxes more.
After weeks of debate, Bush made his choice clear, unveiling a $674 billion tax-reduction package on Jan. 6, 2003, that was larger and bolder than even Hubbard and Lindsey had expected. The proposal locked in Bush's record as a tax cutter. But it also contributed to mounting budget deficits and debt that may prove to be one of Bush's most enduring legacies.
When Bush took office in January 2001, the government was forecasting a $5.6 trillion budget surplus between then and 2011. Instead, it is now expecting to accumulate an extra $3 trillion in debt -- including a record $415 billion in the fiscal year that ended Sept. 30. The government has to borrow an average of more than $1.1 billion a day to pay its bills, and it spends more on interest payments on the federal debt each year -- about $159 billion -- than it does on education, homeland security, justice and law enforcement, veterans, international aid, and space exploration combined.
. . . .
Through it all Bush has stood his ground, pushing through four tax cuts in four years totaling $1.9 trillion over a decade, and opposing repeated efforts to roll back any of them.
. . . .
[A]t a meeting with the vice president, Treasury Secretary O'Neill "tipped his hand," said an administration participant in the session, and warned that the government was careening "toward a fiscal crisis." But by then, the Treasury secretary was virtually alone. On Dec. 6, he was fired.
. . . .
To finance its deficits, the Treasury has increasingly looked to investors overseas, especially foreign governments, to buy U.S. Treasury bonds. But recent economic data suggest foreign buyers may be losing interest, afraid that a sudden drop in the value of the dollar will upend portfolios swollen with U.S. currency.
That post noted that a headline of a 4-23-04 N.Y. Times article tells the sad story: "Deal in Congress to Keep Tax Cuts, Widening Deficit." It reviwed how, putting aside efforts to control the federal deficit before the elections, Republican and Democratic leaders agreed Wednesday to extend $145 billion worth of tax cuts sought by President without trying to pay for them, representing the fourth tax cut in as many years.
Today's Washington Post has a must read article by Jonathan Weisman reviewing in detail the Bush record of mounting debts entitled "The Tax-Cut Pendulum and the Pit." It begins with the beginning and gives who did and recommended at when.
You get the feel by the way the article begins:
In 2002, with midterm elections approaching and the nation edging toward war in Iraq, President Bush's economic team divided into opposing camps, with one side worried about rising budget deficits and the other pressing for tax cuts to stimulate a stagnant economy.
One group, led by Treasury Secretary Paul H. O'Neill and White House budget director Mitchell E. Daniels Jr., watched anxiously as the government's 2002 balance sheet swung from a record $313 billion surplus projected when Bush took office to a $157 billion deficit projected that August. How could the president demand fiscal discipline from Congress, they argued, then push expensive reforms of Social Security and the tax code if he continued cutting taxes?
The other side, led by White House economists Lawrence B. Lindsey and R. Glenn Hubbard, focused on economic growth, which had slipped from a 5 percent surge in the first three months of 2002 to 1.3 percent in the next quarter. Employment had slid by 235,000 jobs between January and September. Deficits would have little if any effect on the economy, they assured Bush, but if the president wanted to halt the stock market's slide and prop up incomes, he had to cut taxes more.
After weeks of debate, Bush made his choice clear, unveiling a $674 billion tax-reduction package on Jan. 6, 2003, that was larger and bolder than even Hubbard and Lindsey had expected. The proposal locked in Bush's record as a tax cutter. But it also contributed to mounting budget deficits and debt that may prove to be one of Bush's most enduring legacies.
When Bush took office in January 2001, the government was forecasting a $5.6 trillion budget surplus between then and 2011. Instead, it is now expecting to accumulate an extra $3 trillion in debt -- including a record $415 billion in the fiscal year that ended Sept. 30. The government has to borrow an average of more than $1.1 billion a day to pay its bills, and it spends more on interest payments on the federal debt each year -- about $159 billion -- than it does on education, homeland security, justice and law enforcement, veterans, international aid, and space exploration combined.
. . . .
Through it all Bush has stood his ground, pushing through four tax cuts in four years totaling $1.9 trillion over a decade, and opposing repeated efforts to roll back any of them.
. . . .
[A]t a meeting with the vice president, Treasury Secretary O'Neill "tipped his hand," said an administration participant in the session, and warned that the government was careening "toward a fiscal crisis." But by then, the Treasury secretary was virtually alone. On Dec. 6, he was fired.
. . . .
To finance its deficits, the Treasury has increasingly looked to investors overseas, especially foreign governments, to buy U.S. Treasury bonds. But recent economic data suggest foreign buyers may be losing interest, afraid that a sudden drop in the value of the dollar will upend portfolios swollen with U.S. currency.
posted by Sid Cottingham | 5:45 AM
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