Wednesday, February 09, 2005

The Dream of a Lower Deficit...

Well, one of my favorite economists puts Bush's "Dream Budget" to rest once and for all. I thought lying to the American people was going to mean big trouble after Nixon, but I was wrong once again.
The dishonesty of the administration about budget deficits has reached levels unheard of. These folks have absolutely no shame. Bush presented today a budget that claims that he will achieve his goal of reducing the deficit by half by 2008 (from a false 2004 baseline of $521 billion rather than the actual 2004 deficit of $412b) and will achieve a deficit of "only" $233b by 2009. Even better news, the administration claims today: the "halving" of the deficit will be reached by 2008, a year earlier than original 2009 target for it.

Who are these accounting scam artists trying to deceive? Do they think everyone in America and around the world is a mathematically challenged total idiot or an accounting moron?
Unfortunately, it's much worse than that - I haven't figured out whether it's contempt for the average American, or the knowledge that deficits aren't really going to stay a headline on CNN for more than a day. It's just not an issue that's going to bump Jacko from the news. On top of that, almost every single news pundit in America won't touch the issue, because they know nothing of the complexities of accounting and economics. Can we give Nouriel his own show yet?
The reality is, that based on realistic scenarios outlined last week by the non-partisan Congressional Budget Office, the deficit by 2009 will be close to $600b (or 4.0% of GDP) rather than falling to $233b; and the deficit will reach over $1,100b (or 5.5% of GDP) by 2015.

How do they create the false $233b deficit by 2009?

1. They assume spending cuts that are, by any historical and political standard, impossible to achieve.
2. They assume revenue growth that is altogether wishful thinking and false based on current trends. And they do not consider the long-run costs of making all the Bush tax cuts permanent.
3. They do not count the ongoing costs of the continued defense and homeland security spending and of future military and homeland security build-ups.
4. They phase-in a budget busting social security privatization (that will cost alone $4.5 trillion in the next 20 years) only starting in 2009.

This is worse than dishonesty; it is the most squalid manipulation of budgets ever seen aimed at pretending to achieve a budget figure that is utterly unrealistic and false in every possible dimension.
Click on the link above and go read the rest of it, already!

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