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To: ~digs who wrote (663)	12/18/2002 11:13:37 AM
From: stockman_scott	Respond to of 1296

Bill Maher takes on Bowling for Columbine's Michael Moore on the issues of guns, politics, the media, and America's culture of fear wga.org

To: ~digs who wrote (663)	12/18/2002 11:33:18 AM
From: stockman_scott	Read Replies (1) \| Respond to of 1296

Message 18349272

To: ~digs who wrote (663)	1/1/2003 5:13:03 PM
From: stockman_scott	Respond to of 1296

Dangerous deficiencies in Bush's budget deficits By JEFFREY D. SACHS DEC 31, 2002 UNITED States President George W. Bush seems poised to wreck America's budget for years to come. When Mr Bush came into office, the outlook was for budget surpluses as far as the eye could see. Today, through a combination of irresponsible Republican-led tax cuts, a slowing economy, the bursting of the stock market bubble and a massive increase in defence spending, huge deficits dominate the fiscal horizon. Worse is coming, because the Bush administration and the Republican-led Congress are preparing to deepen the fiscal mess. The damage they will do will likely weaken the US and add instability to the world economy. Traditionally, the Republican Party stood for balanced budgets. This changed with the Reagan administration, when conservative Republicans favoured tax cuts even at the cost of large budget deficits. Then president Ronald Reagan told the American people that they could enjoy tax cuts, a military build-up and continuation of their favourite spending programmes, all at the same time. The result was a series of vast budget deficits that took years to clean up. Both president George Bush Sr and president Bill Clinton had to raise taxes to clean up the Reagan-era mess. Those tax increases probably contributed to president Bush Sr's defeat by Mr Clinton in 1992. Yet, Mr Clinton bravely decided to complete the process of restoring fiscal balance. When he left office in 2000, the budget situation was the best in decades. Then, along came President Bush Jr to replay Mr Reagan: large tax cuts, a big increase in military spending, and continuation or even expansion of popular spending programmes. The result was predictable. In January last year, the cumulative budget outcome for the years 2002-2011 was projected to be US$5.6 trillion (S$9.7 trillion) in surplus. By the middle of this year, those projected surpluses had vanished. In view of these changed economic conditions, and the shadow of war in Iraq, you might expect the Bush administration and the Republican-led Congress to be cautious in advocating new tax cuts. But no, their highest priority is to enact more tax cuts that will benefit mainly the rich. At the same time, the administration is calling for big increases in military spending. With the November 2004 presidential election now coming into view, you can be certain that no meaningful cuts in non-military spending programmes will be made. So massive budget deficits seem here to stay. If domestic spending simply stays constant as a fraction of national income, the cumulative budget outcome for the next 10 years will be a combined deficit of US$1.5 trillion. Why are Republicans so unconcerned about this mess? Some Republicans care more about tax cuts for the rich than they do about almost anything else. Others believe that deficits will force major cuts in domestic government spending, thus shrinking the state, which is their heart's desire. A more intriguing question is why do Americans vote for such policies, when they should know that trouble will probably result. One answer is that many voters do not see the looming budget troubles. A better answer is that most Americans did not actually vote for these policies. Voter turnout in this year's election was only around 40 per cent, of which around half went to the Republicans. Of course, the outlook need not be so bleak. War in Iraq may be avoided. Proposed tax cuts may be watered down or abandoned. But I predict large budget deficits for years to come, and a growing sense of unease within the US and abroad about America's macroeconomic situation. Foreign investors may decide to cut back financing America's budget and current account deficits on favourable terms. The US dollar may weaken, and fears of inflation may become more pronounced. All of this will make US policy-makers less confident and less flexible in their responses to economic shocks. The poor could suffer the most, as Mr Bush and Congress tell Americans and the world that, due to the large budget deficits, there is no money available to address problems of poverty, disease and education. Unless ordinary Americans wake up to these fiscal risks, the rich may walk away with another multi-billion-dollar gift as the country and the world bear the harsh consequences for years to come. __________________________________________________ The writer is professor of economics at Columbia University. Copyright: Project Syndicate. straitstimes.asia1.com.sg