Can't Get Real About Deficits

By Duru

January 2, 2005

I hope everyone had a good holiday season. For those who have been impacted by the earthquakes and tsunamis in Asia and Africa, I send my deepest sympathies and a pledge to do my small part to alleviate the suffering in some way. During the Christmas and New Year's holidays, I spent my time away from home, but with family and friends. I disconnected from my regular grind and routine and return to the pen and web feeling very refreshed. It is now time to roll the sleeves up again and get to work. 2005 promises to be an even more action-packed year than the last one. My traditional "Happy New Year's" cards are late, but they are on the way!

It seems that during the holidays, the Bushies also spent some time disconnecting. First, they proved just how disconnected they are on foreign policing by bungling an excellent opportunity to improve our standing in the world community. The Bushies' made a tiny initial pledge of support to the earthquake and tsunami victims that was easily outdone in scale by many other contributing countries. This gaffe was combined with a delay of several days before Bush bothered to make a direct and public statement on the tragedy. No matter how well the Bushies explain and excuse themselves, these lapses in judgment served to confirm to many out there just how out of touch, maybe even uncaring or at least disingenuous, America is about the rest of the world. Fortunately, I have my full faith in individual Americans to bridge the gap in good faith that our government seems to love to dig deeper.

Perhaps our slow response was related to the intense and excruciating work the Bushies did over the holidays to tweak budget numbers to produce the illusion that they will cut the deficit in half over the coming lame duck term. I am sure it absorbed every spare brain cell in the House. But it also must have reminded folks how little money we have left to spend willy-nilly. That $350 million (and more if you count non-cash assistance) will add to our borrowing needs (I am pretty sure no one will sacrifice any pork barrel projects to pay for this assistance). When people around the world denounce America for being stingy given our untold riches, they should show at least a little mercy - for now, we are living on borrowed time and any semblance of richness is currently on loan from other countries who hold the real riches (or at least I hope they have something backing up all the funds they have lent us!)

Anyway, what got me going this morning on this topic was an alarming article in the New York Times that detailed the budget chicanery that will help Bush deliver on his grand deficit-busting pledge. Needless to say, I was quite disappointed. After I gave the Bushies some credit over getting real about our prospects for job growth, I began noticing that the administration was starting to get real about governing period. But the cold hard reality of Federal finance has also brought me back to reality. I encourage all to read the actual article (or something similar), but I will list out some highlights below:

1. Start with higher deficit numbers. $521 billion was forecasted but the actual shortfall was $413. Note that it is not clear to me how the surplus revenues from Social Security and Medicare play into these numbers.

2. Assume huge increases in tax revenues - $217 billion in 2005 and $800 billion by 2009. As I have cynically noted many times before, the Bushies have an amazing calculator that shows the more you cut taxes, the more money you get. When these massive tax cuts are made permanent, I guess the government should expect big bucks in return.

3. Exclude costs of the terrorism wars in Iraq and Afghanistan. This is nothing new, but the logic of it continues to baffle me. Even if we consider invading, bombing, and shooting part of America's regular day-to-day business, the costs of doing business should still be included in an official part of the budget. Shouldn't it? The bill for 2005 is likely to reach about $100 billion, and I think there is no end in sight to the money we can continue to pour into these wars, especially in Iraq, because these terrorists that we have allowed to take root in Iraq will prove just as tough, determined, and intractable as the ones elsewhere in the Middle East. 'Nuff said on that one.

4. Exclude costs of making tax cuts permanent. Apparently, we do not have to pay for these tax cuts until after Bush has safely slid from the scene and handed his problems to another President.

5. Exclude costs of privatizing Social Security. I would like to think that the Bushies are excluding these costs because they do not really believe they can get away with this madness. But alas, America seems ready to go along with many of the Bushies' mad schemes so I fear this too shall pass. Current estimates of transition costs are $1 to 2 trillion, but whose counting? We can just borrow what we need, and the administration is claiming that however much it is, the costs are really savings because the money will be used to save Social Security. You know, I seem to recall that as Clinton was leaving office with huge surpluses, he insisted on using that money to save Social Security. Too bad we can't get back to those days of real budget discipline. =sigh=

6. Exclude costs of fixing the alternative minimum tax. Now this was a new one on me. It seems that fixing this growing monster will cost $87 billion in 2009 and growing to $500 billion in 2014. Perhaps here again no one truly believes that Congress can actually get its act together to make some real tax reform, but it does not matter since the costs are conveniently going to burden the next President!

Whew….I am tired just trying to comprehend the billions, trillions, and quadrillions leaking forth from D.C. I have nothing left to say but to repeat I wish we could all manage our finances this way. If so, we could all die billionaires!

*note all data quoted from " In Plan to Reduce Deficit, White House Turns to Old Projections," by Edmund L. Andrews, January 2, 2005, New York Times

© DrDuru, 2005