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Monday, February 04, 2008

These Clowns Aren't Very Funny

Brad DeLong comments on the Bush Budget:

The Bush Budget Clown Show, by Brad DeLong: Roger Runningen and Brian Faler of Bloomberg report on the Bushies' proposed budget for fiscal 2009:

Bloomberg.com.S.: President George W. Bush sent Congress a $3.1 trillion federal budget that trims Medicare and health care programs, boosts military spending and projects the deficit this year and next will hit near-record levels. The spending blueprint for fiscal 2009... would slow the rate of growth in spending for entitlement programs such as Medicare for savings of $208 billion over five years. Pentagon spending would rise 7.5 percent to $515 billion, the 11th consecutive year of increases....

Bush's spending plan stands little chance of being adopted. Criticism came today from Republicans as well as Democrats. "There's a lot of games, smoke, mirrors, incomplete numbers, basically there's not much realism" in the budget, Senator Judd Gregg, the top Republican on the Budget Committee, said in an interview. "They're playing the usual games."... The budget deficit is projected to reach $410 billion this year. That is up from $162 billion in 2007, reflecting a slower economy generating fewer corporate tax receipts, the cost of a $146 billion economic stimulus measure and spending on the wars in Iraq and Afghanistan. The deficit is forecast at $407 billion in 2009... 2.9 percent of the $13.2 trillion U.S. economy....

Bush, after meeting with his Cabinet this morning at the White House, called it a "good, solid budget" that puts a priority on national security and keeps spending in check. "Congress needs to pass it," he said. Lawmakers took a different view. House Budget Committee Chairman John Spratt, a South Carolina Democrat, said it "bears all the hallmarks of the Bush legacy -- it leads to more deficits, more debt, more tax cuts, more cutbacks in critical services"...

Their reference to "near-record levels" of the deficit doesn't give a full and fair account of the magnitude of what can only be called a clown show.

The headline deficit number ought to be $738 billion--we have a $331 billion Social Security surplus for 2009, and an honest and honorable administration would be using that surplus to pay down the government debt in order to get ready for the challenges that our aging population will pose for the federal budget over the next two generations. The headline number shouldn't be 2.7% of GDP; it should be 4.8% of GDP. That is how far Bush fiscal policy is from what a prudent and responsible fiscal policy should be.

Now that we have an actual Bush administration proposal in print--one that Republican senator Judd Gregg doesn't think much of--it is time for an accountability moment. The Bush administration and its flacks and flunkies have long promised that the administration was going to "cut the deficit in half" by the time in left office in fiscal 2009. The press by and large reported this straight--not pointing out that the "cut in half" was from a highballed projected peak deficit number that was artificially inflated in order to set the bar artificially low, not pointing out that such a deficit still left fiscal policy far from where it ought to be, and not pointing out that the Bushies' policies would produce such a reduction only if everything broke right and we had four uninterrupted years of macroeconomic good news. Republican economists who cared more about pleasing White House communications than in informing their audience chimed in--why, I get 100 hits on Google for Greg Mankiw saying both when he was under and since he came out from under message discipline that George W. Bush's proposals were projected to reduce the deficit by half by 2009.  Not under any projection that I would recognize as straight.

Among Republican economists Andrew Samwick has sounded the alarm about Bush administration fiscal policy. Bruce Bartlett has sounded the alarm. Damned few others. Among center and center-right commentators Stan Collender has told the story straight, and in context. Damn few others. Those three deserve to have their reputations and authority substantially boosted--because they have shown that they are more in the information than in the pleasing-White-House-communications business.

We want to run a budget that is in surplus during boom, in deficit during recession, that borrows in order to fund investments that benefit the future, and that runs surpluses and pays down debt in order to fund future expenditures that benefit today's taxpayers. The Bushies have not done that.

Just watch the press and the pundits play along with the "Democrats will tax and spend you to death if they win the election" narrative rather than telling the true story of what has happened to our budget position under Bush and Republican leadership. Brad is right to complain, and if I have any problem with what Brad has written, it is that this time he is not shrill enough nor hard enough on those who allow these games to be played.

    Posted by on Monday, February 4, 2008 at 01:37 PM in Budget Deficit, Economics, Politics | Permalink  TrackBack (0)  Comments (52)

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