zimv20
Sep 15, 2003, 05:44 AM
http://www.msnbc.com/news/959467.asp
YOU MAY REMEMBER something about a projected $1.4 trillion deficit over the next 10 years and dismissive remarks from the White House about how the numbers are unreliable. And there were reassurances from various gurus that these deficits aren’t very big relative to the size of our economy. A fiscal food fight that seems strictly Yawn City. Pass the suntan lotion, dear, let’s roll over and bake our other side.
_ _ _ _ But I’ve been back at work for more than a week now. So I read the whole report instead of just the summary. By law, the budget office has to assume that existing laws expire as planned, and that no new programs are added or subtracted. But this report includes numbers that you can use to adjust for political reality. Which I did. First, I counted the $2.4 trillion Social Security surplus, which the Treasury uses to offset its cash shortfall. Then I figured that the last three years of tax cuts will become permanent; that Congress will pass a Medicare prescription-drug package and will also stop the dreaded alternative minimum tax from hitting 30 million taxpayers. These changes add $3.6 trillion to the deficit. So by the time you’re done, the total projected deficit is more than five times the aforementioned $1.4 trillion. Call it $7.4 trillion. And I’m being generous, assuming we spend nothing in Iraq starting Oct. 1, 2005.
What’s especially distressing is how the government would presumably cover this deficit. As I said, about a third of the money—$2.4 trillion—comes from the Treasury’s borrowing the Social Security surplus, spending the money and replacing it with IOUs. So a decade from now, the government will owe Social Security about $4 trillion, just as baby boomers begin retiring en masse. I don’t see how that debt can be honored without huge borrowings from outside investors that would send rates to the moon, or huge cuts in other programs.
For fiscal 2004, which starts in about 4 weeks, the budget office projects a $644 billion deficit. This would be 5.8 percent of the U.S. gross domestic product, which approaches the 6 percent record set by Ronald Reagan’s 1983 budget deficit. Reagan’s deficits set off alarm bells in Washington, he signed onto a huge tax increase and fiscal sanity made a comeback in Washington.
YOU MAY REMEMBER something about a projected $1.4 trillion deficit over the next 10 years and dismissive remarks from the White House about how the numbers are unreliable. And there were reassurances from various gurus that these deficits aren’t very big relative to the size of our economy. A fiscal food fight that seems strictly Yawn City. Pass the suntan lotion, dear, let’s roll over and bake our other side.
_ _ _ _ But I’ve been back at work for more than a week now. So I read the whole report instead of just the summary. By law, the budget office has to assume that existing laws expire as planned, and that no new programs are added or subtracted. But this report includes numbers that you can use to adjust for political reality. Which I did. First, I counted the $2.4 trillion Social Security surplus, which the Treasury uses to offset its cash shortfall. Then I figured that the last three years of tax cuts will become permanent; that Congress will pass a Medicare prescription-drug package and will also stop the dreaded alternative minimum tax from hitting 30 million taxpayers. These changes add $3.6 trillion to the deficit. So by the time you’re done, the total projected deficit is more than five times the aforementioned $1.4 trillion. Call it $7.4 trillion. And I’m being generous, assuming we spend nothing in Iraq starting Oct. 1, 2005.
What’s especially distressing is how the government would presumably cover this deficit. As I said, about a third of the money—$2.4 trillion—comes from the Treasury’s borrowing the Social Security surplus, spending the money and replacing it with IOUs. So a decade from now, the government will owe Social Security about $4 trillion, just as baby boomers begin retiring en masse. I don’t see how that debt can be honored without huge borrowings from outside investors that would send rates to the moon, or huge cuts in other programs.
For fiscal 2004, which starts in about 4 weeks, the budget office projects a $644 billion deficit. This would be 5.8 percent of the U.S. gross domestic product, which approaches the 6 percent record set by Ronald Reagan’s 1983 budget deficit. Reagan’s deficits set off alarm bells in Washington, he signed onto a huge tax increase and fiscal sanity made a comeback in Washington.
