What America is Saying … About the Deficit
What America is Saying … About the Deficit
For fiscal year 2004, the deficit stood at $413 billion, or 3.6 percent of gross domestic product, marking the fourth consecutive year of fiscal deterioration. President Bush has cited his intention to cut the deficit in half over the next five years, in part through spending discipline. Yet this projection remains untenable as the administration’s budget plans disregard the cost of extending certain tax cuts and fail to account for any funding for operations in Iraq, Afghanistan or the international war on terror beyond the end of the current year. As the president approaches the start of his second term, the deficit remains an impediment to sound policy reform. Below is a sampling of what America is saying about the deficit.
Detroit, Mich. – Detroit Free Press
November 7, 2004 – Editorial
"In his second term, with stronger Republican support in Congress, President George W. Bush is expected to push quickly to make his tax cuts permanent. Looming large in the background is the federal deficit, and even larger, the growing national debt.
"The deficit is the amount the government is living beyond its means in any given budget year. The debt is the accumulation of all the borrowing the government does to continue its spending.
"For the federal fiscal year that ended Sept. 30, the budget deficit was $413 billion. A few weeks later, U.S. Treasury Secretary John Snow informed Congress that the national debt had reached its legal limit, $7.38 trillion. That’s about $25,000 apiece for the current U.S. population, if you’d like to send in your share to clear the books.
"Actually, Congress is expected simply to raise the debt ceiling, for the third time in the past three years�?
"If the federal government was a household, it would be in debt counseling by now, probably forced to cut that credit card in half and throw it away�?
"The deficit was never much of an issue in the presidential campaign. It may be that it has just gotten too huge for people to comprehend. But taxpayers ought to understand that about 19 percent of all federal spending now goes to interest payments, and that number will only rise as the government budgets are allowed to remain so badly out of balance."
Washington, D.c= – The Washington Post
November 8, 2004 – Editorial
"The election now over, Bush had a chance to speak honestly about the budget: to acknowledge that his vision of a low-tax economy has been pushed unrealistically. His grand tax-reform agenda offered the perfect opportunity for elegant retreat: He could have promised to raise revenue by closing tax loopholes. Instead, the president insisted that loophole closings would be offset by yet more tax cuts elsewhere. And he repeated the Big Lie that he has a five-year plan to halve the budget deficit.
"�?But the biggest problem with the Big Lie is that the five-year time frame is irrelevant. The real fiscal challenge lies beyond, with medical inflation that we can’t seem to control and the retirement of the baby boomers."
Chattanooga, Tenn. – Chattanooga Times Free Press
November 8, 2004 – Editorial – No link available
"The deficit-ridden Bush administration will have to borrow another $147 billion mostly from Asian central banks – in just the first quarter of 2005 – to keep its checks from bouncing, the Treasury Department confirmed the day after the election. At that rate, the federal budget deficit for the 2004-05 fiscal year will end up close to $600 billion. And that’s not counting the annual Social Security surpluses ($65 billion next year) the Bush team has been gobbling up every year since taking office to mask the true size of Mr. Bush’s deficit-spending and borrowing binge. Nor does it count new funding, now estimated at $75 billion, that Bush officials have confirmed they soon must seek to pay the rising costs of the Iraq war in 2005�?
"The president’s borrowing binge for the first four years has already increased the national debt by 40 percent, from $5.25 trillion to $7.35 trillion, making the United States by far the biggest debtor nation in the world. At the same time, the Treasury Department reports, annual revenue to the government from taxes has fallen by $100 billion this year below the level it was when Mr. Bush took office in 2001, due mainly to tax cuts, not the brief recession. In the same period, spending has soared; this year’s spending by the Bush administration will be $400 billion higher than when he took office�?
"The most frightening part of all this rising debt for unsound policies is the risk to the national and global economies. Mr. Bush’s policies invite excessive reliance on the Chinese and Japanese central banks that are now buying most of the Treasury notes Washington has to float to sop up its red ink and keep its checks from bouncing. That’s extraordinarily risky because it makes the United States so vulnerable to Asian decisions. It compromises U.S. independence, as well. And it threatens global financial and economic instability: When we can’t keep our fiscal house in order and catch a cold, the countries tied to our economy catch pneumonia."
Fort Lauderdale, Fla. – Sun Sentinel
November 5, 2004 – Editorial
"�?The Treasury has used bookkeeping tricks to make ends meet. But that can’t go on forever, and lame-duck lawmakers will soon have to do the dirty deed again – and raise the ceiling beyond the $8 trillion mark.
"With a solid victory Tuesday, President Bush has plenty of political leverage and comfortable majorities in both houses on Capitol Hill. Given the advantageous political standing, the president should spare no effort to get the nation’s finances back in order."
Atlanta, Ga. – The Atlanta Journal-Constitution
November 7, 2004 – Editorial – No link available
"Even if the president were content to leave well enough alone, in two years the annual interest on the federal debt would be larger than last’s year’s deficit, according to Congressional Budget Office estimates�?
"At some point the balance between expenditures and receipts will be so out of whack that it can’t be fixed without great pain to everyone. So far, even Federal Reserve Chairman Alan Greenspan has been unable to scare voters – or the president – about the chaos that could be created by mixing big budget deficits with the huge cost of Social Security and Medicare for aging Americans.
"Instead, the White House has made much of the fact the 2004 budget deficit came in $100 billion lower than expected. That was because of increased tax receipts created by an expanding economy.
"The economy is widely forecast to grow more slowly – perhaps 3.5 percent in 2005 against around 4.5 percent this year.
"A weaker economy will provide a thinner cushion to help offset deficit spending, just as the president is selling the idea the United States can afford more tax breaks, mostly for a small percentage of its citizens."
Winston-Salem, N.C. – Winston-Salem Journal
November 4, 2004 – Editorial – No link available
"�?Bush faces the real possibility that he will repeat the mistake that his Texan predecessor, Lyndon Johnson, made in the mid-1960s. Johnson tried to have "guns and butter" to pay for the Vietnam War while starting huge social programs. Bush wants "guns and tax cuts." While trying to pay for a war in Iraq and other military operations against terrorists, he’s also trying to keep the drastically reduced tax rates that he won temporarily in his first term. The result could be the same that Johnson experienced: huge deficits that spark inflation.
"The deficit is the one area where Bush may face resistance in a generally supportive Congress. His party’s deficit hawks are sure to demand a return to fiscal responsibility. It remains to be seen whether the majority of the Republicans in Congress will demand fiscal maturity from their president."
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