|November 27, 2004||Posted by Staff under The Progress Report|
Here is a news update from Taxpayers for Common Sense. TCS is the best organization that monitors excessive government spending, corruption and corporate welfare.
Deficit Disorder Every single American would have to fork over more than $1,560 to balance this year’s budget. Paying it back $1 million per day would take more than a millennium. If you set the dollar bills needed to pay for it end-to-end, they would stretch around the Earth more than 1,700 times. For most of us, it’s a struggle to comprehend the meaning of a number as large as the current federal budget deficit, yet the Bush administration claims it’s “manageable.”
The Bush administration announced that it expects the current year’s budget deficit will be a record-setting $455 billion, and next year’s will grow to $475 billion, obliterating the $290 billion record set by George Bush Sr. in 1992. But that’s not the worst news. The most frightening budget numbers come from Goldman Sachs — who says the massive deficits will not be a two-year blip, but rather a sustained deficit that will grow to $4.5 trillion over the coming decade (causing a two-thirds increase in the national debt).
Just two years ago this year’s budget was projected to have a $334 billion surplus. Tax cuts, increased spending on homeland security and other anti-terrorism measures, and a large recession have caused a $789 billion flip. The projected deficit was increased by $150 billion just since this winter, and now it vastly exceeds what is reasonable even during a recession.
The massive deficits will drown our country in a flood of interest payments. Just this year, interest on the national debt cost taxpayers $156 billion, which is more than 20 times the $7.6 billion taxpayers spent to fund the entire Environmental Protection Agency. And it will only get worse: Once the economy recovers and interest rates go back up, the interest payments on the debt will skyrocket.
As these debts increase, politicians will keep digging a deeper and deeper hole that will be impossible to escape. Deficits lead to more deficits because we need to pay interest on the growing debt. And when the baby boom leaves the work force-simultaneously paying less payroll and income taxes while requiring more government services-the challenge to balance the budget will be even greater.
Obviously a record-setting deficit is a bad thing, but Bush administration officials note (according to the Keynesian theory that Ronald Reagan and other Republicans deplored) that sound fiscal policy calls for running deficits during recessions. Yet with the current situation, this argument flies in the face of logic. By its own numbers, the administration says that the budget will remain in deficit as far as their calculations go (2008), even though they also claim that the recession ended in late 2001. The tax cuts, coming without the accompaniment of major spending cuts, have plunged America into a structural deficit that will cause revenue to fall short of expenditures every year in the foreseeable future.
Defenders of Bush’s budget claim that higher priority should be placed on national defense than on balancing the budget. But this is to miss the point. Within a budget there are priorities: Defense, Education, etc. And in the creation of the budget there is an important principle to follow: Don’t spend more than you make. It’s possible to have your priorities (military spending) while still following the principle (keeping the budget balanced). It just requires hard choices — like making smaller tax cuts or shrinking other spending programs-and, unfortunately, the President and Congress don’t have the political spines to do the right thing.
Politicians and budget officials who make the excuse that the record-setting budgets are a temporary response to extraordinary events are missing the point, if not simply lying. By cutting taxes, without cutting a corresponding amount of other spending, lawmakers have tied bricks to the budget’s feet and thrown it in the ocean. So now Congress and the President have to remove some of these bricks by repealing some of the tax cuts, actually allowing them to sunset, or making major spending cuts.
The makers of the deficit will tell you that the budget will bob right up in a few years, and that it can hold its breath during that time. But their numbers will tell you that’s not true. Unless we do something about it, the budget will drown-and it’ll take future social security and Medicare payments with it.
For more information, contact Keith Ashdown at (202)-546-8500 ext. 110 or by email at email@example.com
TCS is at www.taxpayer.net
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