Bush's Deficit Plan Is All in the Math

[papau]

http://www.latimes.com/news/nationworld/nation/la-na-budget7feb07.story
Bush's Deficit Plan Is All in the Math
The budget strategy to halve the shortfall by 2009 relies on how and what things are counted.
By Joel Havemann
Times Staff Writer

February 7, 2005

WASHINGTON — The budget President Bush will present to Congress today will show the federal deficit cut in half by the time he leaves office in four years.<snip>

But students of the budget say that the president will find it nearly impossible to steer the government along the course that the budget will map out between now and 2009.

"It doesn't quite compute," said Isabel V. Sawhill, director of economic studies at the Brookings Institution think tank, who foresees a shortfall slightly larger in 2009 than now.

It is the 2004 deficit that Bush is promising to cut in half, but he's not starting with the actual 2004 deficit of $412 billion.

Instead, his benchmark is the projected $521-billion deficit that his Office of Management and Budget estimated a year ago, when the fiscal year was four months old. Using half of that figure, Bush's goal is to reach a deficit of $260.5 billion.<snip>

The 2004 deficit was 4.5% of the economy. So in fiscal 2009 it must be 2.2% or less. That is exactly the average share of the last 43 years, according to the Congressional Budget Office.

Finally, the budget that the president will send to Congress will, like his past budgets, omit some major deficit-raising items.

It will, as Vice President Dick Cheney said on "Fox News Sunday," be "the tightest budget that has been submitted since we got here." It will hold the growth in domestic programs whose spending levels are set in annual appropriations bills to less than inflation.

But these programs, because they exclude defense and giant benefit programs such as Social Security, account for about $1 of every $5 the government spends.

Most of the cost of the Iraq and Afghanistan wars will not be included in the budget. Instead, it will be sent to Congress as a supplemental budget request for 2006, just as the administration recently announced an $80-billion supplemental request for the current fiscal year.

Nor will the cost of introducing private investment accounts to Social Security — $754 billion over the first 10 years alone — be found in the budget, according to administration officials.<snip>

On the tax side, the budget is not expected to show the effect of its proposal to curb the alternative minimum tax, which is likely to win congressional approval.<snip>

But as a share of the nation's economic output, tax payments to the government fell to 16.3% last year, the lowest level since 1959. And in 1959, the government was not paying for Medicare (which cost $297 billion in 2004), Medicaid ($176 billion), food stamps ($29 billion) or the space program ($15 billion).<snip>

Deficits, Sawhill and Rivlin argue, drain money from the economy that could otherwise be used for private investment, thus inhibiting economic growth and forcing interest rates upward. Deficits force the government to set aside a growing share of tax revenue for the payment of interest on the national debt, and "they impose enormous burdens on future generations."

[pansypoo53219]

1. can you say

fuzzy math?

[ArmHayseed]

2. Can you make money by creating a Recession?

I get the feeling that another recession is in our immediate future, (A Republican in the White House is cause enough), but the rich just seem to get richer rain or shine. It makes me wonder if we who are in the lower 90% aren’t playing against house rules and a shaved deck!

I see ads on late night TV touting stock playing systems that ‘make money whether the market goes up or down’. If it’s possible to make money on a down market, is it possible to make money on a recession other than selling the market short? In particular:

Is it possible for someone to increase their wealth BECAUSE of a recession without being involved in the market?

Is there any group that would get disproportionately large benefits from steps taken to cure a recession?

Is there any individual/organization/group that has a disproportionate influence on if and when a recession occurs?

Are there any clues that the ‘smart money’ is betting that a recession is imminent?