Stolen from another thread:
The bottom line on voodoo BS "economics" and I use the term loosely:
Perhaps the biggest issue for future generations is the third big item on Mr. Bush's economic agenda: fiscal discipline and deficit reduction. Federal debt ballooned by about $1.8 trillion during his first term, as the federal budget swung from a surplus of $127 billion in 2001 to a record deficit of $413 billion in 2004.
Mr. Bush has vowed to reduce the deficit by half by 2009, but many analysts predict that the federal debt will swell by at least an additional $2 trillion and possibly by $4 trillion over the next decade. Among the long list of looming bills are these:
Nearly $1 trillion over the next 10 years to make Mr. Bush's tax cuts permanent.
More than $500 billion to prevent an increase in the alternative minimum tax, which was enacted in 1969 to ensure that the wealthy could not avoid paying income taxes by taking large deductions.
More than $500 billion for the new Medicare prescription drug program, which takes full effect in 2006.
As much as $100 billion for war costs in Iraq in 2005, and additional costs likely in the future.
White House officials are confident that they can still halve the deficit by 2009, but that is not much of a goal because many of Mr. Bush's most expensive ideas - Medicare expansion, the extension of tax cuts and his plans for Social Security - will not hit the bottom line until after 2009.
To reduce the deficit, administration officials are essentially freezing spending for domestic discretionary programs for the second year in a row. After allowing for inflation and rising salaries, that means real cuts for everything from housing assistance to airport construction.
BUT those programs account for only about 17 percent of the $2.3 trillion federal budget. About two-thirds of the budget is in "mandatory" spending - either entitlement programs like Social Security and Medicare, which Mr. Bush is not cutting - or unavoidable obligations like interest on the federal debt. An additional 15 percent of the budget goes to military and domestic security, which Mr. Bush wants to increase.
The president is counting on faster economic growth to generate higher tax revenue, and he has already received some help in that area: tax revenues jumped by about $100 billion, or 5.5 percent, last year.
But many major tax cuts do not take effect until later in the decade. These include elimination of inheritance taxes in 2010, and about $40 billion of tax cuts for multinational corporations that were part of a tax bill that Congress passed in the fall.
Taken together, the upshot is a big government on low taxes. Federal responsibilities under Mr. Bush are bigger and more global than ever. But tax revenues account for a smaller share of the gross domestic product - 16.2 percent last year - than at any time since the early 1950's." |
