Singing the deficit blues
Over at Time‘s web site, Perry Bacon Jr. declares a pox on both Bush and Kerry when it comes to deficit reduction: The problem, experts say, is that neither candidate truly has a plan to rein in America’s burgeoning budget deficit which currently sits at more than $400 billion. Both campaigns offer budget plans that ...
Over at Time's web site, Perry Bacon Jr. declares a pox on both Bush and Kerry when it comes to deficit reduction:
Over at Time‘s web site, Perry Bacon Jr. declares a pox on both Bush and Kerry when it comes to deficit reduction:
The problem, experts say, is that neither candidate truly has a plan to rein in America’s burgeoning budget deficit which currently sits at more than $400 billion. Both campaigns offer budget plans that hide costs or assume savings that are unlikely to occur, while adding more than $1 trillion of new spending. And while each candidate promises to cut the deficit in half over the next four years, the issue ranks low on their priority list…. In his campaign, Bush rarely discusses deficit reduction as an issue, choosing to say that America has had more important priorities over the last four years: improving the economy through tax cuts and fighting the wars. He has pledged to cut the deficit by half over the next four years, mainly with increased economic growth bringing in more tax revenues and holding down spending, except for homeland security and defense. But Bush’s chief campaign promise is to make permanent all the tax cuts he has signed as president, many of which are set to expire over the next decade. That won’t be cheap; it will cost an estimated $1.2 trillion, and budget experts say Bush’s projections don’t include many costs, such as continued spending on the wars and assume Congress will hold down costs on many other domestic programs like education…. Despite the right advisers and phrases, Kerry’s budget doesn’t show the discipline of his talk. Kerry advisers propose a health plan of more than $900 billion dollars, but say more than $300 in cost reductions will result in a slimmer $650 billion tab. Experts question whether the Kerry campaign can truly save $300 billion by changes such as improved medical technology. Other Kerry plans require cuts in “corporate welfare” that aren’t spelled out specifically. Kerry proposes to roll back tax cuts for people who make over $200,000 each, which would raise an estimated $800 billion that Kerry could spend on education and health care. But Kerry also supports more than $400 billion in tax cuts, keeping Bush’s tax reductions on middle class Americans, and throwing in new ones, such as a $4,000 tuition tax credit for families sending a child to college. And Kerry doesn’t apply his “pay-go” rule to his support of the Bush middle-class tax cuts. Like Bush, Kerry spends about $1.2 trillion dollars and doesn’t include costs for the war and other likely expenses. “What he’s saying is that even though I’m criticizing Bush, I’ve got the same goal he does,” says Robert Bixby, executive director of the Concord Coalition, a non-partisan Washington group that focuses on deficit reduction. “Kerry does a good job explaining why deficits matter, but I think the actual numbers he’s putting out don’t necessarily match the rhetoric.”
This mirrors a point Steve Chapman made last week in the Chicago Tribune:
The budget surplus is gone, federal spending is out of control and the government is swimming in debt. But, to coin a phrase, help is on the way. President Bush and Sen. John Kerry both promise that in the next four years, they will cut this year’s $445 billion federal budget deficit in half. To which serious students of the budget reply: Big, fat, hairy deal. The vow is only slightly more risky than promising that four years from now, everyone will be four years older. All the next president needs to do to cut the deficit in half, you see, is … nothing. Leave existing laws and policies in place, without changing a thing, and the deficit would dwindle to a mere $228 billion. For that, we don’t need a president. Kerry and Bush, to be fair, do not propose to do nothing. They have all sorts of plans to shower citizens with new spending programs and tax cuts, even though we can’t pay for the ones we’ve got. But they insist they can hand out these goodies while making big advances against the deficit–Bush by cracking down on new spending, Kerry by repealing tax cuts for the rich. To assume they’ll actually attack the deficit requires a suspension of disbelief. The Bush who says he’ll hold down domestic outlays, after all, is the same Bush who has never vetoed a spending bill, or any other bill–the first president with that dubious distinction since James Garfield, who had the excuse of being mortally wounded by an assassin after only four months in office…. Kerry is more believable only because he doesn’t even feign interest in spending discipline. The National Taxpayers Union Foundation estimates that all his promises would raise annual federal outlays by $226 billion a year. Some of this would be paid for by repealing some of the Bush tax cuts, but much of it would come from piling up debt for our children and grandchildren. The anti-deficit Concord Coalition figures that based on their public commitments, either Bush or Kerry would enlarge the projected deficit over the next 10 years by about $1.3 trillion. Even their meager promise to halve the deficit rests on the sort of accounting that got Enron in trouble. Bush’s blueprint doesn’t include the $50 billion he plans to request for the occupation of Iraq over the next year–and it assumes we won’t spend anything in Iraq after that. Kerry, in a show of bipartisanship, makes the same convenient but ridiculous assumption.
I’ve said it before and I’ll say it again — I’ve never been more underwhelmed with my choice of major party candidates. If I haven’t depressed you already, go check out the Concord Coalition’s latest report on fiscal responsibility. The quick summary:
The budget deficit continues to ratchet upward and there is no consensus on what, if anything, to do about it. At best, Washington policymakers seem content to tread water in the rising tide of red ink. At worst, they are cynically professing concern about the deficit while pursuing tax and spending policies they know will only dig the fiscal hole deeper. One thing is clear: specific plans to actually reduce the deficit are not on the agenda. Such complacency is not warranted…. Earlier this year, the Congressional Budget Office (CBO) projected a fiscal year 2004 deficit of $477 billion. Since then, however, revenue growth has been stronger than expected and the actual deficit for 2004 will likely be closer to the $445 billion deficit that the Bush administration (OMB) now projects. Does that mean that current policies are bringing the deficit down? No. For one thing, the deficit is going up, not down. It is true that when CBO issues its next forecast, the projected deficit will be lower than it was–just as the OMB’s projected deficit has declined since February. What matters, however, is the bottom line and there can be no denying that a deficit of $445 billion, or close to it, is considerably larger than last year’s deficit of $375 billion…. Fiscal policy this year has featured wishful thinking and creative accounting rather than actions to control the deficit.
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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