"Bush Celebrates Fourth Largest Deficit in History"
That's the title of a post from Think Progress, and it comes at a time when conservatives are boasting about the magic of the Bush economy and supply-side economics. The preznit even held a press conference to congratulate himself on an economic policy that's now only putting us $300 billion in the hole every year. While that's certainly an improvement over the $400 billion deficit of 2004, only in the world of Republican true believers is a $300 billion increase in debt a great victory.
The New Republic recently featured an excellent editorial that gives the lie to these recent claims of economic success:
In 2004, the Bush administration released a suspiciously high deficit projection for 2004. Every other sentient budget analyst at the time said the number was inflated. (The Center on Budget and Policy Priorities, for instance, wrote, "The Administration appears to have noticeably overstated the deficit for the current year, 2004.") Why would it inflate the number? So that when the real figure came in below its phony prediction, it could claim progress. The trick was utterly obvious at the time.
Yet now, the administration and its supporters are celebrating the deficit's fall from a number it never reached and that no honest person thought it would reach. National Review says this is "vindicatory of the central claim of supply-side theory." In fact, it's vindicatory of the theory that no number emanating from the Bush administration should be taken at face value.
It is true that tax revenue is growing. Tax revenue always rises during an economic expansion. But it's rising from a staggeringly low level. In 2003, income-tax revenue fell to its lowest point as a share of the economy since before the United States entered World War II. The fact that the deficit is going to drop to somewhere around $300 billion a year--with the economy red-hot--is not good news. It is a sign that our tax and spending policies are producing a large structural deficit. When the business cycle cools down again, the deficit is going to explode.
The New Republic recently featured an excellent editorial that gives the lie to these recent claims of economic success:
In 2004, the Bush administration released a suspiciously high deficit projection for 2004. Every other sentient budget analyst at the time said the number was inflated. (The Center on Budget and Policy Priorities, for instance, wrote, "The Administration appears to have noticeably overstated the deficit for the current year, 2004.") Why would it inflate the number? So that when the real figure came in below its phony prediction, it could claim progress. The trick was utterly obvious at the time.
Yet now, the administration and its supporters are celebrating the deficit's fall from a number it never reached and that no honest person thought it would reach. National Review says this is "vindicatory of the central claim of supply-side theory." In fact, it's vindicatory of the theory that no number emanating from the Bush administration should be taken at face value.
It is true that tax revenue is growing. Tax revenue always rises during an economic expansion. But it's rising from a staggeringly low level. In 2003, income-tax revenue fell to its lowest point as a share of the economy since before the United States entered World War II. The fact that the deficit is going to drop to somewhere around $300 billion a year--with the economy red-hot--is not good news. It is a sign that our tax and spending policies are producing a large structural deficit. When the business cycle cools down again, the deficit is going to explode.
Highly recommended reading. Although they might have pointed out that American workers aren't sharing in this boom-- real wages are still down under this administration.
posted by Matt Sandwich | 9:40 AM
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