Oops. Where did the surplus go?
August 27, 2001 5:05 PM   Subscribe

Oops. Where did the surplus go? It' fascinating how MSNBC bends over backward to make it sound as if both parties shared blame equally rather then pointing straight at Bush's outrageous tax cut.
posted by muckster (36 comments total)

 
So, how do you feel about all this?
posted by revbrian at 5:11 PM on August 27, 2001


When Ronnie was blamed by the evil commie Democrats for the huge deficit, right-minded folks could at least say that what he spent helped dry up the Evil Empire (Russia) by driving them economically into the ground.
I am not sure what justifies this sudden deficit. Mr. Bush has said it is to heop stimulate the economy. Do you feel stimulated?
posted by Postroad at 5:22 PM on August 27, 2001


Is it just me or does someone else at least realize that Bush is not the cause of all evil in the world. If anyone one here actually realizes Bush was the sole cause of the defecit/tax cut they are a fool. I've seen lowly congressman and they have at least 20 little men running around figuring things out for them. The actual political figurehead does little. I'm sure Bush has hundreds of very smart and capable economists that have given him their input. These people have nothing to really gain and I'm sure they would be the same people Gore would've used.
posted by geoff. at 5:33 PM on August 27, 2001



posted by ParisParamus at 5:38 PM on August 27, 2001


>/sarcasmposted by ParisParamus at 5:38 PM on August 27, 2001


>/sarcasm< ?
posted by ParisParamus at 5:39 PM on August 27, 2001


Dear Geoff: I am mighty glad to find a guy willing to Stand by his Man in these times of ecomomic downturn. But as I recall it was Mr B who announced before the election took place that he wanted a major giveback. He got badmouthed by many economists (liberals, I suppose), and one of my favorites, Krugman, has pointed out what such a program would do to the surplus.
No. Bush turned to conservative and/or supporters of trickle down economics who believed back then and still do that the approach he planned and indeed used was a good one. So too it was said under Ronnie.
Did one man do this? you betcha! he is the most powerful fiogures in the world (his office), and his supporters in the GOP firmly believed in this approach.
The Democrats, mostly, pointed out that we would again get into a huge deficit should such legislation as Bush wanted be passed.
Thus, let the chips fall where they may but let the guy and his party who handed out the chips at least take the responsibility for what they aftermath may or may not be.
posted by Postroad at 5:52 PM on August 27, 2001


Hmm. I fail to see how removing the surplus (which means excess tax money taken from you and I) is bad. The surplus should be ZERO. Of course, you can't ever get to that, but that should be the goal.

I applaud this. Having a surplus out there means that some congresscritter is going to try to spend it. The lack of one helps to prevent that behaviour.
posted by hadashi at 5:58 PM on August 27, 2001


Yeah, cause now instead of congresscritters spending the surplus, they are spending Social Security's funds.
posted by Tenuki at 6:18 PM on August 27, 2001


Zero surplus would be a good thing except for 2 facts: 1) There is still a national debt and 2) Nobody is quite sure how to pay the tab when all the baby boomers start applying for Social Security benefits.
posted by ilsa at 6:38 PM on August 27, 2001


Well....it IS MSNBC!!
posted by {savg*pncl} at 6:48 PM on August 27, 2001


Yeah, cause now instead of congresscritters spending the surplus, they are spending Social Security's funds.

Good rhetoric, but fundamentally you're just using a scare tactic to exploit a hot-button issue. Maybe the correct solution is to --gasp-- not spend the money in the first place. Be still, my bleeding heart. (Sorry, couldn't resist).

Zero surplus would be a good thing except for 2 facts: 1) There is still a national debt and 2) Nobody is quite sure how to pay the tab when all the baby boomers start applying for Social Security benefits.

Excellent points, ilsa. How much do you think Congress would have paid down the debt absent the Bush tax cut? Not much, if history is any guide. The same issue applies to Social Security: S.S. would be just as insolvent absent the Bush tax cut. Granted, the Bush tax cut didn't exactly open the door to a solution, but then the scope of the social security program was never intended to be this large. When we took social security from a floor designed to protect the poorest of the poor and made it into a general retirement fund, we made it fundamentally unsound. We'd need a minor miracle to save it now, I think.
posted by gd779 at 6:55 PM on August 27, 2001


gd779: you'd`probably find this week's report from the Economist interesting reading. The editorial "on the disappearing budget" is even better, but that's subscriber-only. (I read it in the print version.)
posted by holgate at 7:08 PM on August 27, 2001


Thanks holgate. After reading the article you presented and doing some thinking, I'm going to throw out some of my thoughts for public comment, critique, and scrutiny.

First, the sunset provision. To me, unless Bush wins re-election, it seems politically unlikely that the Bush tax cuts will even survive the full 10 years. I imagine that once Bush is out of office the Dems will use that opportunity to bring taxes back up. So maybe the sunset clause is moot, so long as the rest of the plan makes sense.

There is currently a bipartisan consensus that the Social Security and Medicare budget surpluses will not be touched in spending and tax decisions. The sums are as tight for next year, unless that consensus is overturned... Critics have also argued that the spending assumptions in the budgetary calculations are too optimistic, especially given the propensity of congressmen from both parties to increase spending

Yeah, maybe the projections make money tight for a while. But maybe Bush is creating a crucible for tax-and-spend politicians, pitting the third rail of American politics against their desire to increase spending. As hadashi noted above, maybe that's a good thing.

The rationale for the tax-cut plan is the rapid build-up of budget surpluses projected over the coming years

Economically, maybe. But politically, the rationale behind the tax cut is smaller government spending and returning the people's money. So, on those ideological grounds, the tax cut is an unqualified success. The only question is, will it get us into hot economic water down the road?

I'm not enough of an economist to answer that question. But you'll notice that all of the article's objections (and the IMF's objections) to the tax plan are political rather than economic in nature... "it would be massively embarrassing politically", "it doesn't seem credible that Bush could politically afford to let that happen", etc. The only exception is the Economists projection that the economy will grow .5% slower than Bush projects.

Finally, note that even this anti-cut article praises the cut in the short term:

Economists were expecting the surplus projections to fall in the short-term because of the downturn; and there is a strong case for saying this is a good thing, since it means the government is extracting less money (in the form of tax revenues) from the significantly weakened economy.

Maybe all of this is my knee-jerk conservatism speaking, I don't know. For the record, I have no opinion on the Bush tax plan because I don't know enough about it.
posted by gd779 at 7:38 PM on August 27, 2001


Didn't Congress and the Senate pass Bush's budget? I'm pretty sure Bush isn't a dictator

...the Constitution sure is confusing.
posted by Mick at 8:01 PM on August 27, 2001


Maybe the correct solution is to --gasp-- not spend the money in the first place.

Great idea -- let's empty out the government's bank account so we can't afford any of the country's pressing needs. Let me know how often you use the interstate highway system after Bush switches it over to faith-based maintenance.
posted by rcade at 8:03 PM on August 27, 2001


I realize Bush bashing is the cool thing to do, but . . . why is it unreasonable to imply both parties share the blame? Bush can't approve any budget - that's up to the Congress and since the budget was first showing signs of running a surplus the congressmen have been tripping over each other trying to correct that by spending more.

Then, there's also the fact that the balanced budget never existed in the first place if you factor in the money borrowed from social security each year (which you have to do to maintain the fiction that social security is an investment and not another welfare program), it hasn't been balanced in ages.
posted by adamsc at 8:04 PM on August 27, 2001


I have one question that I hope someone can answer (tangentially related to this thread): Why is Social Security not considered a "safe" part of the budget? In other words, why is Social Security on the operating table to be sliced up and not, say, defense spending? (Or arts grants, or whatever; I'm not trying to discuss those issues here.) My point is: why is there a $200B (or $150B, or whatnot) surplus, including "Social Security spending," instead of just a $30B or so surplus (or deficit) with no discussion of Social Security in particular?

I'm not an economist, and I don't follow politics as closely as some (though probably more so than others). I'm sure there's an easy answer to this question somewhere (maybe on MeFi?), but I can anybody point me to a helpful article/resourcee to explain this???
posted by arco at 9:15 PM on August 27, 2001


Both parties share the blame insofar as both parties control Congress; my memory's hazy, but... (new memory courtesy U.S. gov't):

Senate: 58-33 (46 R, 12 D for; 2 R 31 D against)

House: 230-198 (219 R 10 D for, 197 D against).

And the President's power is more than just the ability to veto; he's also the de facto leader of his party, though the House leadership deserves some credit for keeping the troops in line. And a lot of those Democratic senators are from states where Bush did really well; and he'd go to those states and drum up support for the tax cut, which puts the senator in question in a bit of a sticky spot.

So. It takes a bit of maneuvering to make it seem a bipartisan affair. Zell Miller (quoted in the article) is a conservative Democrat who can generally be counted upon to support Bush's policies, and whom they go to when they need that 'bipartisan' gloss.
posted by dreamless at 9:21 PM on August 27, 2001


Ok, I'm a Democrat (big surprise) - and while most of the blame for this lays at the feet of the Shrubmeister, I also blame the Democrats in congress for being spineless ninnies when it came to passing the budget. Especially Daschle, who still comes across as a whimpering ninny to me - who only flexed a little muscle when he became the majority leader.

Those $300 checks don't exactly seem to be pulling us out of recession. Around now a lockbox sure sounds like a good idea.
posted by owillis at 9:26 PM on August 27, 2001


> most of the blame for this lays at the feet of the Shrubmeister

This guy lays this canard to rest by noting the the fact of timing:

the reality that the revenue and spending levels for 2001 were determined last October - before Bush took office. This President's budget won't be enacted until Ocober or later, and tax cuts will be phased in over the next ten years. So the blame for the shrinking budget belongs not to President Bush, but squarely on his predecessor.

Perpetual Beta Web Log

If the economy is shrinking, and the surplus remains constant, then at constant or increasing govt spending levels, the public will simply be working more for the government.

Anyone for a tax freedom day of Dec 29th to support a "surplus"?
posted by dand at 10:12 PM on August 27, 2001


Well, here is the official projection from the Congressional Budget Office and the effect on the projected surplus that the "Economic Growth and Tax Relief Reconciliation Act of 2001" aka "The Bush Tax Cut" will have.
posted by owillis at 12:41 AM on August 28, 2001


The sky is falling!
posted by revbrian at 2:14 AM on August 28, 2001


"Maybe the correct solution is to --gasp-- not spend the money in the first place."

Yes, that's it! I recommend we start by NOT spending money we don't have on the faith based missile defense system! Then let's scrub the Osprey that doesn't work and then the B2 bomber that will never fulfill it's stated mission parameters. That ought save enough money so we could spend money on building new schools and improve urban infrastructure. While we're at it, let's divert highway funds towards light rail projects and the 30 billion dollar corporate welfare fund the oil companies are getting in the new Cheney energy bill towards fuel cell technology.
Are you with me?

Can I get an amen?
posted by nofundy at 5:53 AM on August 28, 2001


I realize Bush bashing is the cool thing to do, but . . . why is it unreasonable to imply both parties share the blame?

When a president campaigns on a tax cut, originates a tax cut proposal, and puts the screws to his party members in Congress to support it, he deserves the lion's share of the blame (or credit).
posted by rcade at 6:20 AM on August 28, 2001


Can I get an amen?


Amen!

posted by preguicoso at 7:18 AM on August 28, 2001


First of all, the tax cut is not the only reason why the surplus is gone -- the majority of the blame lies squarely on diminished tax revenues which are a reflection of the diminishing economy. We are in a downtown which started early last year (and that's been generous to late 1999) due in no small part to the last administration's worthless energy policy, Greenspan games and the bursting of the major dotcom/tech bubble.

More importantly, understand that there has never been a Congress (particularly back in the era when the Dems ran both the House and Senate) that didn't love to dip into the so-called (but non-existent) Social Security trust. The only reason why this is even news is because the Dems want so badly to paint the tax cut and the insta-rebates that they demanded as a bad thing, before the true effect of the tax cut or the rebates can even be determined. They are doing so with the help of the supposedly non-partisan CBO figures which are based on static analyses of data which will flux over the time in the study due to outside forces which are not able to be pre-quantified.

The only reason for this "news" is to perpetuate the Dems line that this tax cut is an evil, bad thing by means of a scare tactic and a truly unfair bit of finger pointing. They are trying to make people think that Social Security is being robbed and that this will have some affect on their benefits, which is not the case. They are trying to act like this is the first time Social Security's "set-aside" will have to be tapped to meet other budgetary obligations, when it isn't.

Don't believe the hype.
posted by Dreama at 7:32 AM on August 28, 2001


The only reason why this is even news is because the Dems want so badly to paint the tax cut and the insta-rebates that they demanded as a bad thing

Democrats demanded tax cuts and insta-rebates?
posted by preguicoso at 7:34 AM on August 28, 2001


I have one question that I hope someone can answer (tangentially related to this thread): Why is Social Security not considered a "safe" part of the budget? In other words, why is Social Security on the operating table to be sliced up and not, say, defense spending? (Or arts grants, or whatever; I'm not trying to discuss those issues here.) My point is: why is there a $200B (or $150B, or whatnot) surplus, including "Social Security spending," instead of just a $30B or so surplus (or deficit) with no discussion of Social Security in particular?

Social Security income -- FICA witholding on your paycheck -- isn't actually a separate stream of income for the government; it's treated as such ("off-budget", rather than "on-budget"), but there's no legal distinction. There's currently more money coming into Social Security than is being paid out, but everyone expects this to change as the baby boomers retire. The excess money is effectively being banked to help stave of Social Security's expected insolvency down the road (2020 is the date that springs to mind, but I have no idea where I got that), but there's no legal mandate to do that. Instead of banking the entire excess, the budget is now going to have to dip into some of it. (When Al Gore was talking about Social Security lockboxes, this is the sort of circumstance he was referring to.) This isn't a new behavior on the part of budget planners, but the Democrats are probably right that they can make political hay with it, since it hasn't happened in a while.

Dreama, will you explain why you called the CBO "supposedly non-partisan"?
posted by snarkout at 7:40 AM on August 28, 2001


Let me follow up on that. Dreama, will you explain why you called the CBO, which seems to take its mandate to be politically independent very seriously, is currently headed by a former staffer in the Reagan White House, and has been headed by Republicans since 1995, "supposedly non-partisan"?
posted by snarkout at 7:53 AM on August 28, 2001


snarkout: The money is tight, but unless we increase spending, we don't have to dip into the Social Security money at all. Read the Economist article that holgate linked to above.

Dreama's right when he says that the Dems are trying to paint the tax cut as a bad thing before the true impact can even be determined. People like owillis buy right into the hype: Those $300 checks don't exactly seem to be pulling us out of recession. Even economists opposed to the cut will agree that it's a good thing for the recession, but the Dems don't want to acknowledge that fact.

rcade and nofundy: Your rhetoric aside, neither of you said anything of substance. Nofundy, though, actually hits on one of the biggest reasons against higher taxes and higher spending: governmental nepotism, porkbarrel projects, waste and inefficiency abound whenever you give politicians more money than they need. For that reason, government should be the actor of last resort, only doing the things that nobody else can do better.

Remember, politicians don't spend their own money. They spend OUR money, and they generally do it very, very badly. Besides, government is not the panacea for all of the nation's problems that you seem to think it is. Inefficiencies aside, the government is rarely able to effectively solve the root causes of most of society's important problems.
posted by gd779 at 8:05 AM on August 28, 2001


snarkout: The money is tight, but unless we increase spending, we don't have to dip into the Social Security money at all.

"The CBO concludes that in the wake of the president's tax cut and the slowing economy, the government will tap about $9 billion of the Social Security surplus in the fiscal year that ends Sept. 30," according to the Washington Post.
posted by snarkout at 8:09 AM on August 28, 2001


I stand corrected. According to CBO projections, if the economy stays on course we'll need 9 billion from the social security surplus to make the numbers work. Of course, maybe the economy will rally before then. It's also worth noting that the 9 billion will not affect disbursements, it's just going to make it a bit harder to solve the social security problem.
posted by gd779 at 8:12 AM on August 28, 2001


Looks like snarkout beat me to my own correction.

Anyway, there's another solution to this problem. If the political resolve to protect social security holds, then Congress will be forced to reduce spending. To me, that sounds like good news if it's done right... but can anyone tell me how politically likely that is?
posted by gd779 at 8:16 AM on August 28, 2001


I call the CBO "supposedly non-partisan" because its lack of true (not figurative) independence makes it impossible for politically-aligned inferences and mindsets to not have an impact on the way that analyses and projections are made. I did not specify which way the CBO leans, notice, because it's irrelevant to my point, which is merely that it is foolhardy to consider any quasi-governmentally affiliated concern to have no political implications in its workings.

That may or may not have made sense. I'm operating on 4 hours of sleep in the last 3 days, so bear with me a little.

And dammit, for the fourth or fifth and last ----ing time, I'm a woman. A female. A she, a her, a chick. Please stop calling me "he," huh people?
posted by Dreama at 9:39 AM on August 28, 2001


gd779: I'm an absolute advocate of devolved spending -- parish councils are pretty damn good -- but at times you need not only the economies of scale which come from national projects, but the consistency of delivery and infrastructure. Often, what you're dealing with isn't just money, but the clout to get things implemented.


On an economic level, my wonder is whether a potentially inflationary measure such as a pump-priming tax prebate is sound financial management when you're tightening the belt.
posted by holgate at 10:16 AM on August 28, 2001


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