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Wednesday, October 11, 2006
Bush Celebrates $250 Billion Deficit
President Bush on the Treasury's announcement that the FY 2006 budget deficit is $248 billion:
First, I want to briefly mention that today we've released the
actual budget numbers for the fiscal year that ended on September the
30th. These numbers show that we have now achieved our goal of
cutting the federal budget deficit in half, and we've done it three
years ahead of schedule.
1) The deficit has not yet been cut in half. The President promised during the 2004 campaign to cut the deficit in half in four years. The deficit reached $412 billion in 2004, and this year's deficit is $248 billion. That's not 1/2.
The baseline from which the President thinks the deficit has been cut was merely his own estimate. That OMB estimate -$521 billion- was wildly off the mark, and not because of policy changes that OMB could not take into account. It has no place in a serious discussion. "They've cherry-picked a high point that never actually occurred," said Robert Greenstein of the Center on Budget and Policy Priorities in CongressDaily ($$).
2) Cutting the deficit in half, as Dana has written, is not good enough. The deficit is still very large, and nothing has been done to address the structural factors that are estimated to produce larger deficits next year and the year after.
3) What's happening here is the President is trying to manage public expectations. He wants the voting public to think he has made the best out of a bad situation. That way, people won't think it's so bad that the Administration’s current deficit is nearly half a trillion worse than when Bush took office, or that the national debt is up by about $3 trillion, to a total of $8.5 trillion.
I doubt this will happen. People still have high expectations, because I don't think anyone has forgotten the budget surpluses of only 5 years ago. And the deficit may be beginning to negatively affect ordinary people. In the final analysis, the fiscal policies of this Congress and the President will be seen as nothing more than the failures they are.
Posted by Matt Lewis
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