George Bush's big-government conservatism

[Donutboy 0]

George Bush's big-government conservatism

Between 1998 and 2001, America's federal government ran a surplus on its accounts. The prospect now is of years, even decades, of deficits. Is that scary?

IN HIS first three years as president, George Bush has cut taxes three times and yet orchestrated a sharp rise in public spending—not just, or indeed mainly, on foreign wars and “homeland security”, but also on domestic matters. For instance, spending on education has jumped by three-fifths since 2000, and spending on transport has risen by nearly half. Lower taxes, higher spending: the outcome is that the federal government, despite a steep fall in the interest it pays on its debt, has swung sharply into deficit—$450 billion this fiscal year, by most accounts.

That is not, yet, as big a deficit as that presided over by Ronald Reagan in 1983 (6% of GDP then, compared with about 4% of GDP for this year). Yet the deterioration of the government's finances today—from a surplus of 2.4% of GDP in the 2000 fiscal year—is certainly steeper.

What is more, by 1983 Mr Reagan and Congress were together attempting to do something about the deficit. Nowadays, no one with political power is bothering to try. All the Democratic presidential hopefuls want, to a greater or lesser degree, to repeal Mr Bush's tax cuts. Yet they aim to use the money not to bring down the deficit, but to expand public programmes. Mr Bush's own new legislation to pay for prescription drugs under Medicare, the federal health programme for the elderly, will cost $400 billion over the next ten years. A bipartisan conspiracy exists, it seems, to ignore the risks of a widening deficit.

What risks? After all, a year or two of sharply higher government spending in the early part of Mr Bush's presidency—when economic growth slowed sharply, a stockmarket bubble burst, and America faced unprecedented and confidence-sapping security threats—may well have been for the good. Yet, even as evidence grows that there is a reasonable chance of economic recovery, the long-term prospects for the budget look as bleak as ever.

A new and frank report by the Congressional Budget Office (CBO) shows that rising health-care costs and an ageing population mean that federal “entitlement” programmes—notably for Medicare, Medicaid and Social Security (pensions)—will claim a much higher share of the country's economic output over the coming decades. Currently, Social Security funds run a surplus that helps to finance other parts of government. But by 2015 surplus will swing to deficit, and by 2030, on current policy, the cost of Social Security will have risen from 4.2% of GDP to 5.9%.

Spending on pensions pales in comparison with health care. The range of estimates is necessarily vague, since they involve assumptions about the future rate at which health-care costs will grow faster than per-head GDP each year: since 1970, the “excess-cost growth” for retired people on Medicare has been around 3%. The CBO calculates that, if future excess-cost growth of both Medicare and Medicaid was only 2.5%, then federal spending on these programmes would jump from 3.9% of GDP in 2003 to 21% in 2050.

It is clear that holding back the growth in non-entitlement (or “discretionary”) programmes, such as defence and transport, will not be enough to ensure a sustainable budget in the long run. Unless entitlement programmes are cut too, or taxes raised to unprecedented levels, or both, the country is on a financially unsustainable path over the next half-century. “An ever-growing burden of federal debt held by the public”, the CBO concludes, “would have a corrosive and potentially contractionary effect on the economy.”

Some observers go further. In a paper presented to the American Economic Association last Monday, Peter Orszag of the Brookings Institution, Allen Sinai of Decision Economics and Robert Rubin, one of Bill Clinton's treasury secretaries, say that “substantial deficits projected far into the future can cause a fundamental shift in market expectations and a related loss of confidence both at home and abroad”—in other words, a full-blown, third-world-style financial crisis. Impishly, they quote Greg Mankiw, now Mr Bush's chief economic adviser, in a paper he co-wrote in 1995: “We can only guess what level of debt will trigger a shift in investor confidence, and about the nature and severity of the effects. Despite the vagueness of fears about [these effects], these fears may be the most important reason for seeking to reduce the budget deficits.”

The White House claims that the budget it is preparing for the 2005 fiscal year will be “committed to fiscal restraint”. But this is an election year, after all. A report in the New York Times suggests that the administration will claim to be able to halve the deficit over five years by relying on future economic growth and on cruel cuts in such programmes as housing for the poor and job-training for the unemployed. Certainly, these vulnerable groups do not tend to vote Republican. Also certainly, such cuts will barely dent the budget deficit.

Fortunately, others are thinking more seriously about the choices that need to be made to secure long-term deficit reduction. In “Restoring Fiscal Sanity”, a report to be published on January 13th by the Brookings Institution, edited by Isabel Sawhill and Alice Rivlin, once Mr Clinton's budget director, three options are offered.

The “smaller government” path emphasises cuts in “corporate welfare” (subsidised insurance, loans, etc), the devolution of responsibilities to the states, savings from that old chestnut of “waste, fraud and abuse”, and deep cuts in entitlements. The “larger government” path emphasises tax increases as the main route to sustainability. The “better government” path argues, in Clintonian style, that the government can be more effective without absorbing a larger share of GDP. The problem with this path, as the authors admit, is the difficulty of measuring the effectiveness of various government programmes, and of dealing with resistance to cutting them.

Given such resistance, it is more likely that higher taxes will play the largest part in plugging the deficit. The question, then, is whether the process of plugging begins sooner or later. Either way, Americans will soon have to accept that federal spending is rising to a permanently higher level, one closer to European levels of government spending. Perhaps they can soften the shock by taking their holidays in Paris.

[War Eagle 96 10]

911, the dot.com bubble and the war on terrorism. Clear-thinking people understand the economic troubles of our times and what has caused them. But, amazingly even with all that the defict is at it's lowest since before the Clinton administraion, as a percentage of GDP, and the economy is experiencing more rapid growth than it has in a long time. The stock market is now just about where it was during the dot.com bubble and this time it's not built on a house of cards.

Thank God for the tax-cuts and people you abhor....hard-working entrprenurial Americans....the people you pigeonhole into a group called the "rich." and sneer while you're saying it.

[Tiger Al 0]

911, the dot.com bubble and the war on terrorism.  Clear-thinking people understand the economic troubles of our times and what has caused them.  But, amazingly even with all that the defict is at it's lowest since before the Clinton administraion, as a percentage of GDP, and the economy is experiencing more rapid growth than it has in a long time.  The stock market is now just about where it was during the dot.com bubble and this time it's not built on a house of cards.

Thank God for the tax-cuts and people you abhor....hard-working entrprenurial Americans....the people you pigeonhole into a group called the "rich." and sneer while you're saying it.

Hmm, let's see: I've found an extra $1,000 in my checking account for all of the hard work I've done. What to do with it? I know, I'll reward myself with a new computer monitor!!!

On my way out the door I notice the wood moulding is beginning to rot and the door will barely stay up. That might need to be fixed later. I also notice that a nail is sticking out of one of the tires on my truck. That might need to be fixed later. As I'm backing down the driveway I accidentally run over my dog and he's limping around. That might need to be fixed later. Going down the road I notice a funny noise coming from the engine. Timing belt!!! I've heard that before. That might need to be fixed later. I was so involved in thinking about that damn timing belt that I didn't even notice the red light that I was driving through until I rear-ended a car in front of me! Thank God I was able to at least afford liability insurance. My truck wouldn't start, though, so I had to push it to the side of the road. That's definately going to have to be fixed. Fortunately, a cab was coming along about the time I needed a ride so I grabbed him. At this point I know you're asking where I told the cabbie I wanted to go, right? Hey, I'm stupid but I'm not THAT stupid!!! The sweet 20 inch flat panel was only on sale for that day so I told him to step on it and take me to Best Buy. After all, I needed a reward!!!

[Donutboy 0]

911, the dot.com bubble and the war on terrorism.  Clear-thinking people understand the economic troubles of our times and what has caused them.  But, amazingly even with all that the defict is at it's lowest since before the Clinton administraion, as a percentage of GDP, and the economy is experiencing more rapid growth than it has in a long time.  The stock market is now just about where it was during the dot.com bubble and this time it's not built on a house of cards.

Thank God for the tax-cuts and people you abhor....hard-working entrprenurial Americans....the people you pigeonhole into a group called the "rich." and sneer while you're saying it.

Can you even read two consecutive words without your Republican dyslexia setting in? Allow me to quote directly from the article.

"Yet the deterioration of the government's finances today—from a surplus of 2.4% of GDP in the 2000 fiscal year—is certainly steeper.

Now, you read the article and claim Bush had the deficit is at it's "lowest since before the Clinton administration." HUH!?!?!?!?!

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9-11, the dot.com bubble and the war for oil in Iraq have nothing to do with the projected budget shortfall of a half trillion dollars in 2004. It's called a reduction in revenue and a raise in expenditures. Again, I harken back to the article written by (Republican-friendly) The Economist, I might add.

IN HIS first three years as president, George Bush has cut taxes three times and yet orchestrated a sharp rise in public spending—not just, or indeed mainly, on foreign wars and “homeland security”, but also on domestic matters.

Please at least attempt to read the articles that you comment on in the future!!

[TrueBlue72 0]

Yeah, I can hardly wait to turn things back over to the Democrats so we can have two or three years of "good times", then have to deal with inflation, massive social(ist) programs and a weakened military. I'm old enough to remember what its like when the Democrats control the government, and I hope I don't live long enough to see that happen again.

[Tiger Al 0]

Yeah, I can hardly wait to turn things back over to the Democrats so we can have two or three years of "good times", then have to deal with inflation, massive social(ist) programs and a weakened military. I'm old enough to remember what its like when the Democrats control the government, and I hope I don't live long enough to see that happen again.

Hmmm, between 1992 and 2000 we had some pretty prosperous years and Clinton's military seemed to do a pretty good job in Afghanistan and Iraq. Socialist programs??? I seem to remember Clinton cutting down the size of government and overhauling some dysfunctional programs. Remember his "Welfare to Work" program that changed the welfare guidlines??? Of course you don't because you were probably too busy seething in front of your radio as Rush preached from his golden pulpit about the evil lieberals.

[TrueBlue72 0]

Actually, TigerAl, I don't listen to Rush..... he isn't conservative enough for me and is a windbag. His antics give true conservatives a bad name!!!!

Clinton's "prosperous years" were the result of two things. His (good) decision to leave Bush appointed Alan Greenspan in charge of the Federal Reserve and that the congress was decidedly Republican for most of his administration, forcing him to abandon the social(ist) programs that he (actually Hillary) would have loved to initiate.

In all seriousness, Bill Clinton's economic policies were not nearly as extreme as those of previous Democratic presidents. The climate they fostered, however, with the resulting scandals in the early Bush years (Enron, WorldCom, HealthSouth) are part of the reason that we've suffered through a couple of down years.

[Tiger Al 0]

Actually, TigerAl, I don't listen to Rush..... he isn't conservative enough for me and is a windbag. His antics give true conservatives a bad name!!!!

Clinton's "prosperous years" were the result of two things. His (good) decision to leave Bush appointed Alan Greenspan in charge of the Federal Reserve and that the congress was decidedly Republican for most of his administration, forcing him to abandon the social(ist) programs that he (actually Hillary) would have loved to initiate.

In all seriousness, Bill Clinton's economic policies were not nearly as extreme as those of previous Democratic presidents. The climate they fostered, however, with the resulting scandals in the early Bush years (Enron, WorldCom, HealthSouth) are part of the reason that we've suffered through a couple of down years.

Oh, ok.

[Tigermike 3,078]

9-11, the dot.com bubble and the war for oil in Iraq have nothing to do with the projected budget shortfall of a half trillion dollars in 2004. It's called a reduction in revenue and a raise in expenditures.

9-11 had no economic impact on the US economy?

The war on terror had no impact on the US economy?

the war for oil in Iraq

If it was a war for oil as you say, why has the US not received any oil from Iraq?

[AUloggerhead 2,268]

... Socialist programs??? I seem to remember Clinton cutting down the size of government and overhauling some dysfunctional programs. Remember his "Welfare to Work" program that changed the welfare guidlines??? Of course you don't because you were probably too busy seething in front of your radio as Rush preached from his golden pulpit about the evil lieberals.

Actually Al, your memory seems to be slipping: "Welfare to Work" wasn't clinton's idea and he wasn't responsible for pushing it through Congress. The 104th Congress with a Republican majority was. clinton gets credit for signing the bill but, truth be known, the bill would have become law even without his signature because it had a veto-proof majority both in the House (328 to 101) and the Senate (78 to 21.) You can look up who voted for or against it in the Senate here & also in the House here.

If you don't want to look it up, I'll tell you -- every single Nay vote against this bill in the Senate was a Democrat. All but 3 of the House Nay votes were Democrat too. Suffice to say, this bill wasn't a very popular one with the Dems. Also fyi, clinton had vetoed this bill twice before. That he signed it was good for his personal public relations only. It certainly wasn't good for the Democrat party. Just thought you might like to know.

Also, when did clinton send troops to Iraq & Afghanistan? I only remember him ordering troops to Haiti & Kosovo.

[Tiger Al 0]

Suffice to say, this bill wasn't a very popular one with the Dems.

Well, more Democratic Senators voted for it than against it and it was evenly split at 98 in the House. Not the most popular bill, no, but it did get substantial Democratic support. I liked it personally.

Also fyi, clinton had vetoed this bill twice before.

Clinton didn't veto THIS bill two other times, he vetoed two other, very partisan, versions of this bill.

The bill I'm about to sign, as I have said many times, is far from perfect, but it has come a very long way. Congress sent me two previous bills that I strongly believe failed to protect our children and did too little to move people from welfare to work. I vetoed both of them. This bill had broad bipartisan support and is much, much better on both counts.

The new bill restores America's basic bargain of providing opportunity and demanding in return responsibility. It provides $14 billion for child care, $4 billion more than the present law does. It is good because without the assurance of child care it's all but impossible for a mother with young children to go to work. It requires states to maintain their own spending on welfare reform and gives them powerful performance incentives to place more people on welfare in jobs. It gives states the capacity to create jobs by taking money now used for welfare checks and giving it to employers as subsidies as incentives to hire people. This bill will help people to go to work so they can stop drawing a welfare check and start drawing a paycheck.

That he signed it was good for his personal public relations only.

Really?

Q Mr. President, some of your core constituencies are furious with you for signing this bill. What do you say to them?

THE PRESIDENT: Just what I said up there. We saved medical care. We saved food stamps. We saved child care. We saved the aid to disabled children. We saved the school lunch program. We saved the framework of support. What we did was to tell the state, now you have to create a system to give everyone a chance to go to work who is able-bodied, give everyone a chance to be independent. And we did -- that is the right thing to do.

And now, welfare is no longer a political football to be kicked around. It's a personal responsibility of every American who ever criticized the welfare system to help the poor people now to move from welfare to work. That's what I say.

This is going to be a good thing for the country. We're going to monitor it and we're going to fix whatever is wrong with it.

Also, when did clinton send troops to Iraq & Afghanistan? I only remember him ordering troops to Haiti & Kosovo.

I didn't say Clinton sent troops there, I said his military did a good job there.

[AUloggerhead 2,268]

Really?

Yes, really. You "remembered" in this thread that it was "clinton's" welfare reform bill, right? Even though it was a Republican-sponsored bill receiving 99% of the House & 100% of the Senate Republicans voting for it. Even though it would not have mattered one iota if he had signed it into law or vetoed it for a 3rd time. It cost him ZERO political capital to pose for pictures & hand out pens after signing the bill. The bill would have become law with or without any action or even effort on his part. Because he signed it, he takes all the public credit for it. Image over substance -- a recurring clintonian theme.

I didn't say clinton sent troops there, I said his military did a good job there.

Speaking of taking credit for not having any input: clinton had absolutely nothing to do with troops being sent to Afghanistan/Iraq nor with how they performed when they got there. You're missing a salient point in thinking clinton was commanding them. In fact, his legacy is it was much easier for him to lob cruise missiles than to send any troops. To even insinuate that it was "his military" is a pretty sad commentary on someone desperate enough to try to bolster the pathetic image of the worst Commander-in-Chief in US history.

[Donutboy 0]

9-11, the dot.com bubble and the war for oil in Iraq have nothing to do with the projected budget shortfall of a half trillion dollars in 2004. It's called a reduction in revenue and a raise in expenditures.

9-11 had no economic impact on the US economy?

The war on terror had no impact on the US economy?

the war for oil in Iraq

If it was a war for oil as you say, why has the US not received any oil from Iraq?

September 11th, 2001...... Please explain how that translates into a half trillion dollar deficit in 2004 and beyond. Estimated costs of rebuilding the WTC are $330 million. Libeskind estimates it will cost 330 million dollars That would amount to .000066% of ONE half trillion dollar deficit, leaving 99.999934% of ONE half trillion dollar deficit. The estimated cost of Bush's war for oil, using government estimates is $95 billion dollars. U.S. Increases Estimated Cost Of War in Iraq That would leave $404.999934 billion dollars unaccounted for in this budget when you discount the 9/11/2001 and the costs of war. That's a turnaround of 3/4 trillion dollars from Clinton's last budget with a $250 billion surplus to Bush's half trillion dollar deficit.

Bush has no fiscal responsibility. All h understands is spending money for political gain, from giving cash money included in Medicare reform and energy bills, to promising to put a man on Mars, d*mn the costs, even while we're swimming in red ink!! Price tag a big 'if' for space policy

Why haven't we benefitted from Iraqi oil yet? The Bush administration underestimated the insurgency and didn't take into account they might keep destroying the pipelines that carry the oil to the refineries.

Remember this quote from Paul O'Neill? Based on his interviews with O'Neill and several other officials at the meetings, Suskind writes that the planning envisioned peacekeeping troops, war crimes tribunals, and even divvying up Iraq's oil wealth.

divvying up Iraq's oil wealth

[Tigermike 3,078]

Bush has no fiscal responsibility. All h understands is spending money for political gain, from giving cash money included in Medicare reform and energy bills, to promising to put a man on Mars, d*mn the costs, even while we're swimming in red ink!!

Sounds like a Democrat, I suppose now you will be voting for him.

[Donutboy 0]

Bush has no fiscal responsibility. All h understands is spending money for political gain, from giving cash money included in Medicare reform and energy bills, to promising to put a man on Mars, d*mn the costs, even while we're swimming in red ink!!

Sounds like a Democrat, I suppose now you will be voting for him.

No, a Democrat believes in paying as you go, not running up deficits. Bush believes that the deficits will magically disappear and that we have an unlimited supply of money for new, expensive space ventures.

[War Eagle 96 10]

Bush believes that the deficits will magically disappear

They will if people with your philosophy will get out of people with my philosophy's way.