Bush’s Fiscal Meltdown
The Effects of Big Budget Deficits on
Family Finances
January 14, 2004
A new bipartisan report by former Treasury Secretary Robert Rubin, Brookings
Institution Senior Fellow Peter Orszag, and CEO and Chief Global Economist of
Decision Economics, Inc., Allen Sinai, warns that the Bush Administration’s
record deficits will have “severe adverse consequences” for all Americans. “The
U.S. federal budget is on an unsustainable path,” they write, adding, “In the
absence of significant policy changes, federal government deficits are expected
to total around $5 trillion over the next decade.” What does this mean for
hard-working American families and individuals?
When the Bush check comes due, younger generations can expect a
weaker job market, fewer public services, and a declining standard of
living. To put the deficits in perspective, five years from now the
average family’s share of the national debt will be more than $84,000,
compared to a projected $500 per family when Bush took office. The
picture for America’s children is grim. Large, sustained deficits
eventually suck up national savings, meaning less money for education
and training of young people and workers and lower investment in other
economic sectors. As deficits continue, huge chunks of taxpayer dollars
will be diverted from education and health programs to service the
national debt. Interest rates will rise and living standards will decline.
Big deficits today affect family budgets tomorrow. As the Rubin report
shows, Bush Administration economic policies are sharply increasing the
chance of financial chaos. “Taken to the extreme, such a path could
result in an economic crisis. Foreign investors could stop investing in
U.S. securities, the exchange value of the dollar could plunge, interest
rates could climb, consumer prices could shoot up, or the economy
could contract sharply,” according to a 2003 Congressional Budget
Office report. Just last week, the IMF issued a strong warning about U.S.
fiscal policies stating, “large U.S. fiscal deficits also pose significant
risks for the rest of the world.”
We can change course – the President’s tax cuts for the very
wealthiest must be repealed now. The Bush Administration believes
spending cuts alone will cure its ballooning deficits but economists
agree that’s wishful thinking. By repealing the tax cuts for the top 1
percent of earners, and letting other tax cuts expire, the U.S. can begin
restoring fiscal discipline and begin preparing for the huge expenses of
the coming Baby Boomer retirement.
For more about tax cuts and fiscal responsibility, see these reports
(click here and here) from the Center for American Progress.
Daily Talking Points is a product of the Center for American Progress, a
non-partisan research and educational institute committed to progressive
principles for a strong, just and free America.
americanprogress.org |
