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Tuesday, July 11, 2006
OMB Releases Myopic Mid-Session Budget Review
The Office of Management and Budget released their Mid-Session Budget Review today, and has revised down by $127 billion the projected FY 2006 budget deficit from $423 billion estimated earlier this year to $296 billion.
Despite the rhetoric coming out of the administration, this short-term improvement is not the good news they would like it to be. Most of the improvement stems from the horrific job the OMB did earlier this year estimating the budget deficit. Over the last several years, OMB has developed a consistent and dishonest strategy of predicting drastically over-inflated deficits early in the year so that the reality gives the appearance of improvement by the end of the year. This latest review is no different.
Furthermore, claims by the president that the increased tax receipts show a robust economy where all Americans are prospering are seriously off the mark. The mid-session review showed increased tax receipts, mostly from corporations - which rose 19 percent, and individual taxes that were not withheld from paychecks. This type of federal revenues are almost always from executive bonuses and stock market gains - income typically reserved for the most well-off.
Checking the average income growth so far this year underscores this point. Even as the upper end of the income scale is doing well, average wages for workers have not kept pace with inflation, lagging more than 1 percent behind inflation over the last year, adding to a growing income disparity in our society.
The federal budget is on an unsustainable track and the long-term fiscal outlook of the nation is not bright and growing dimmer. Although OMB and the president will trumpet the positive news about short-term budget prospects, several important facts are either obscured or outright hidden in this discussion of the deficit. The current policies creating structural deficits will endanger the ability of the government to repay its obligations, both now and especially in the future. The longer this administration puts off straight talk about the budget and the deficit, the more daunting the challenges of the future will become.
Posted by Adam Hughes
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