The budget deficit this year will be close to $600 billion, handily outpacing – indeed, about doubling – the prior record, set by Bush 41. Take a minute to think about this. (It adds about $5,000 in national debt for each American household, plus whatever new debt your household took on all by itself.)
Take a minute, also, to consider that we are not in the depths of unprecedented recession – the sort of economy in which you might be comfortable running a big deficit in order to stimulate the economy. The 5.8% unemployment rate, while near the peak of the last Bush administration, is nothing like the 10% of the early Seventies, let alone the 25% rate of the You Know What.
Take a final minute to see if there may be a pattern here. During Reagan/Bush, we slashed taxes on the wealthy even as we were ramping up the military, and added $3 trillion to our National Debt, doubling two centuries of accumulated debt in just 12 years. Under Bush/Cheney, we are doing it again – only bigger.
The reasons you haven’t seen this $600 billion number are:
- the Administration has not yet added in the $75 billion-plus cost of the Iraq war, and
- the Administration treats this year’s $160 billion Social Security surplus – the surplus that was to be left untouched in a conceptual ‘lock box’ to help finance Baby Boom retirement – as if it were tax revenue to be spent now rather than saved for your retirement. (As a practical matter, the way we’d ‘save’ $160 billion a year is by using it to pay down our National Debt, so that in the decades when we needed to, we could build it back up.)
Add those two numbers to the published deficit estimates you’ve been reading, and you get pretty close to $600 billion.
The problem: it’s likely to get worse. The tax cuts for our wealthiest taxpayers have only begun to phase in. And now the Bush Administration is pushing for more. It’s not impossible to imagine trillion-dollar annual deficits.
This is a deeply discouraging prospect that fundamentally threatens our economy. It also threatens the Social Security and Medicare benefits most baby boomers are counting on to supplement their retirement savings.
And it is so unnecessary. Why not just freeze tax cuts for the best off right here? The top 1% is already getting about $10,000 a year from the cuts passed so far, about ten times what the average tax-payer gets.
Keep phasing in the cuts that apply to the bottom 97% or 98% or 99% of the people – which also benefit the top 1% – but torpedo any further tax relief for the best off.
As I’ve asked before, what will Dick Cheney do with the extra $327,000 a year the Bloomberg News Service estimates he will save? Buy an extra ten US-made automobiles every year?
Yet the cuts keep coming.
The Wall Street Journal looked at the Congressional Budget Office analysis of the Bush budget last week and reported:
Bush’s Tax Plan Won’t Boost Economy, CBO Analysis Finds
By a WALL STREET JOURNAL Staff Reporter
WASHINGTON — The Congressional Budget Office said that President Bush’s tax and spending proposals will do far less to spur economic growth in coming years than the White House suggests — and might not provide any kick at all.
So why are we doing this? Why are we closing down after-school programs for kids and running up massive deficits . . . to cut taxes on the rich?
This is more than an academic question. This is going to affect how you and I and our kids live in the years to come.
Retirement looms for the baby-boomers. The year 2008 is more or less the start of that tidal wave. So it is prudent for them individually – and for us as a nation – to set money aside for the decades to come, unless we want old homeless people starving in the streets. We save individually by contributing to our retirement plans; we as a nation ought to do it by contributing $160 billion a year in surplus FICA taxes to the conceptual ‘lock box.’ Except that the Bush Administration has decided to take that $160 billion and use it to cut taxes on folks earning half a million or a million or ten million or more a year.
Imagine how you would feel if your employer took the money it deducted from your paycheck for your pension plan and counted it as current revenue to be paid out in dividends to your wealthy shareholders. That’s what the Bush Administration is doing when it doesn’t include this $160 billion in its estimate of the deficit, and uses it instead to help justify the big tax cuts for the best off.
Remember the final years of Clinton/Gore and the budget surpluses? The constant refrain those last couple of years was, ‘Don’t Squander the Surplus; Save Social Security First.’ That’s what the 2000 election was largely about. I’m not sure how many voters really understood.
For more on our budget mess, click here. It does not bode well for our economy or the stock market. Red, white, and broke.