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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: yard_man who wrote (6365)	1/28/2004 5:57:11 PM
From: mishedlo	Read Replies (1) of 110194

The cut-taxes-and-spend Bush administration and Republican leaders in Congress are engaging in serious economic malpractice. The latest evidence of this was provided on Monday by the nonpartisan Congressional Budget Office, which now expects the federal deficit to amount to $477 billion this year. That's an alarming 4.2 percent of gross domestic product and $100 billion more than last year's deficit, and the agency expects the government's debt to increase by $1.9 trillion over the next decade. Despite this warning from an office run by a conservative former White House economist, Douglas Holtz-Eakin, the administration remains in denial. Not only does President Bush insist — as he did a trillion dollars of red ink ago — that the deficit is manageable, but he also wants to make his tax cuts permanent, even though many of them were passed with an expiration date to keep their cost down. That would cost the Treasury an additional $2 trillion over the next decade, the budget office says. President Bush and Republican Congressional leaders, who have backed both huge tax cuts and huge spending increases with little regard for the consequences, will be tempted to disregard the agency's report, as they have brushed off similar credible warnings. That is one reason Alan Greenspan, the chairman of the Federal Reserve Board, must insert himself into the debate. The Fed chairman is said to be extremely worried about Mr. Bush's deficits, and his ostensible independence is no excuse for remaining silent about one of the biggest looming threats to the American economy. The recent book about former Treasury Secretary Paul O'Neill makes it clear that Mr. Greenspan even had qualms about the extent of the administration's first round of tax cuts in early 2001. Mr. Greenspan can no longer keep his worries to himself. Whether he musters the full authority of his office to sound the alarm — and urges the president and Congress to reconcile federal revenues and spending — will help determine Mr. Greenspan's legacy as Fed chairman. He will have a good chance next month, when he is scheduled to testify before Congress on the state of the economy. nytimes.com

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