CBO Budget Deficit Estimates Too Low-Dems Attack Bush
After the Congressional Budget Office officially issued the staggering news of $400+ billion deficits for this year and next, the Democratic candidates on the campaign trail in unison hit Bush hard today on his fiscal mismanagement. Several even got in some good lines while doing so.
Congressional budget analysts said Tuesday that the government faces at least eight more years of budget deficits, including a record $480 billion shortfall in 2004. The analysts also warned that extending Bush's tax cuts beyond their expiration combined with other spending could increase the $1.4 trillion deficit over the next decade to $1.6 trillion.
Those figures prompted criticism from Democrats, such as Howard Dean, who has called for a repeal of Bush's tax cuts. "The president has not only destroyed three million jobs, he is destroying the financial future of our children with these crazy tax cuts for the top 1 percent," the former Vermont governor said in a telephone interview.
"It's obvious this administration doesn't have the slightest clue about how to get this economy back on track, get Americans back to work and get our nation's finances under control," said Sen. John Kerry of Massachusetts, who added, "it is time to admit what millions of unemployed Americans already know - that the economic policies of George W. Bush are the worst in our nation's history."
Said Sen. Joe Lieberman of Connecticut: "The tide of red ink is rising higher than ever before. And the best George W. Bush can do is ask the American people to hold their breath. That's unfair to our kids and unacceptable for our economic health."
John Edwards, a senator from North Carolina, said the record deficits indicate it's time to say "enough of the unaffordable tax breaks for corporations and the wealthy ... and enough of pretending that deficits just don't matter."
Rep. Dick Gephardt of Missouri, cited the deficits as well as job losses as proof that the president's "tax-cut economic policy is failing, it's not helping ordinary taxpayers."
Al Sharpton also faulted the tax cuts for diverting money from education, health care, job creation and housing. Carol Moseley Braun called the deficits "part of the economic shell game that this administration has put over on the American people." She added it was neither "compassionate" not "conservative," a reference to Bush's oft-repeated description of himself.
But the best line of the day came from Bob Graham.
Sen. Bob Graham of Florida, in a variation of a line from John F. Kennedy's inaugural address, said Bush "is telling the world that Americans shall defer any price, unload any burden on our children, postpone any hardship for ourselves to give tax cuts to the wealthiest Americans."
However an analysis by the Center for Budget and Policy Priorities finds that the CBO analysis is itself too rosy, and projects annual $400+ billion deficits until at least 2008, rising to an annual deficit of $650 billion in 2013. According to the CBPP, the CBO estimates are not allowed to count tax and entitlement changes not yet enacted (a Medicare drug benefit, extension of the tax cuts beyond their expiration date), nor do they count the costs of the Iraqi occupation and reconstruction in the out years and increased defense and homeland security spending. As a result, the CBPP estimates a true ten-year deficit of $5.1 trillion, and that includes a $2.4 trillion bailout from the Social Security trust fund, which Bush is raiding to give tax cuts to the rich.
There are three items from the CBPP analysis that should be in the Democrats’ line of attack next year:
The large deficits we project for the coming decade are much more a reflection of a historically low level of revenues, measured as a share of the economy, than of an unusually high level of federal spending. CBO projects that federal revenues will equal 16.5 percent of the Gross Domestic Product this year, the lowest level since 1959, and will fall to 16.2 percent of GDP next year. (GDP is a basic measure of the size of the economy.) If the tax cuts are extended and AMT relief is provided, federal revenues will average about 17.5 percent of GDP in years after the economy recovers, which is below the average levels for the 1960s, the 1970s, the 1980s, and the 1990s.
On the spending side, assuming enactment of a prescription drug benefit and the other likely expenditures included in our ten-year deficit projection, federal spending will average about 20.8 percent of GDP. This is below its level for almost every year from 1975 to 1995.
In January 2001, CBO projected surpluses over the ten-year period from 2002 through 2011 totaling $5.6 trillion. Our projection of $5.1 trillion in deficits covers a different ten-year period. Over the same ten years, 2002-2011, we project cumulative deficits of $4.4 trillion. What caused a projected surplus of $5.6 trillion to become a projected deficit of $4.4 trillion? Of this extraordinary $10 trillion deterioration, approximately 36 percent comes from enacted or expected tax cuts, 31 percent from budget increases, especially for defense and homeland security, and the remainder from the view CBO now holds that the economic and technical underpinnings of its 2001 projection were much too rosy, both in the short run and in the long run.
In other words, two-thirds of the $10 trillion deterioration is a direct result of actions taken by George W. Bush.
Returning the budget to balance while allowing the tax-cut agenda to move forward would require budget cuts of stunning depth. If tax increases and cuts in Social Security, Medicare, defense, and homeland security are ruled out, achieving budget balance by 2008 would require cutting all remaining programs by 41 percent. This would entail reducing education, veterans programs, law enforcement, transportation and infrastructure, environmental protection, and biomedical research by that percentage, as well as unemployment compensation, Medicaid, the Children’s Health Insurance Program, child care, the school lunch and food stamp programs, and Supplemental Security Income for the elderly and disabled poor, among other areas of government expenditure.
If the Democrats cannot win an election on those issues, then frankly the country deserves what it gets. These are George Bush’s deficits, and the voters need to be reminded of that every day between now and next November.