Deficit, anyone?
July 15, 2003 8:25 PM   Subscribe

Is the budget deficit going to be the other shoe that drops on the Bush administration? In the OMB's mid-session review [pdf], it admits the federal budget deficit would balloon to a record $455 billion this fiscal year after absorbing immediate costs from the war in Iraq, and then climb $20 billion higher in 2004. That's a 50% increase since the administration's last forecast five months ago. At least a few economists think even that number is underestimated. To top it off, the consequences of an increasingly large deficit and accompanying tax cuts are being passed on to the states. How's that for a neat twist on federalism?
posted by monju_bosatsu (9 comments total)

Excellent post . . . lots to chew on.
posted by donovan at 10:18 PM on July 15, 2003

I think you may be slighting the OMB when you use the word "admit". It's been my semi-informed impression that the OMB is pretty non-political and does its best to keep any administration honest when it comes to money stuff.

Then again, I could be wrong.
posted by skyscraper at 10:44 PM on July 15, 2003

the consequences of an increasingly large deficit and accompanying tax cuts are being passed on to the states.

Meanwhile, emergency responders are underfunded and unprepared for a catastrophic terrorist attack.
posted by homunculus at 11:28 PM on July 15, 2003

White House spokesman Ari Fleischer cited the terrorist attacks on New York and the Pentagon in 2001, saying: "What was the cost of September 11th? What is the cost of a country that is attacked? What is the price that the American people would have to pay if something like that were ever to happen again?"

Where do the tax cuts fit in this picture?

Or in the overall picture, for that matter: clearly they have not improved the economy, contrary to prior claims ("Tax revenue has fallen for three straight years, a streak not seen since the Depression"). So what is the rationale behind tax cuts in a period of bulging deficit?

Also, in the interest of non-bias, while it is true that

"The 2003 forecast ... easily tops the previous record $290 billion deficit of 1992, even when adjusted for inflation"

it is also true that

"Measured against the size of the economy, however, the deficit still has not reached the levels of the Reagan era. "

posted by magullo at 5:31 AM on July 16, 2003

I doubt that Joe Sixpack is going to vote on an issue like a deficit, but tangible problems like joblessness definitely hit home. Not to mention the related dirty little secret called underemployment, wherein a whole bunch of us aren't working in the careers we've trained for because conditions have forced us to take anything that pays a few bucks an hour.
posted by alumshubby at 6:30 AM on July 16, 2003

So what is the rationale behind tax cuts in a period of bulging deficit?

I forget who said it first, but: A rising tide lifts all yachts.
posted by alumshubby at 6:32 AM on July 16, 2003

Meanwhile, the US trade deficit has risen to One half trillion per year

How can the US afford to keep running, year after year, record balance of trade deficits? Maybe it covers the deficits with proceeds from that surge in Afghanistan poppy production?
posted by troutfishing at 8:36 AM on July 16, 2003

In re: cost of 9/11, war in Iraq, and everything else, see War, Tax Cuts, and the Deficit over at the Center for Budget and Policy Priorities. It pretty much puts the lie to the claim that the deficit is a result of spending on national security or the war in Iraq. The War(including homeland security, Afghanistan, Iraq, and everything else) accounts for 20% of all legistlative costs for 2003 and 2004, while tax cuts account for 58%. The cost of the Tax cuts is almost three tims as great as the cost of war.
posted by dcodea at 9:20 AM on July 16, 2003

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