Brad DeLong, professor of economics at the University of California, Berkeley and former Deputy Assistant Secretary of the Treasury in the Clinton Administration, who worked on the 93 budget has some scathing criticism of the proposed Bush budget. First as background and a comparison, let's look at the 1993 budget (Clinton's first)..
In a joint session of Congress on February 17, 1993, President Clinton unveiled his budget proposal that included deep spending cuts, but which relied overwhelmingly on tax increases (mainly to the rich), to bring the deficit downward. At the same time, Clinton proposed to quickly boost short-term job creation by pumping billions of dollars into new spending programs. Clinton's deficit-cutting plan was the largest in history, proposing to save nearly $500 billion over four years.
In the end, (with Alan Greenspan pushing it) Clinton's economic plan emerged victorious, though just barely.(without a single Republican vote) The Omnibus Budget Reconciliation Act was approved in August 1993 (without a single Republican vote in either chamber): it passed 218-217 in the House and 51-50 in the Senate with Vice-President Al Gore making the tie-breaking vote.
It succeeded and ignited a bond rally as Wall Street realized that unlike the two previous presidents, Reagan and Bush 41, Clinton was serious about deficit reduction. The Clinton market strategy worked and it fueled economic growth which led to successive budget surpluses, that ironically worried Greenspan about how America would manage with continued balance surpluses when Bush 43, won the presidency. He didn't have to worry for very long.
Fast forward to February, 2008 and Bloomberg has the details of Bush's last and final budget he presented to Congress on Monday:
The budget deficit is projected to reach $410 billion this year. That is up from $162 billion in 2007, reflecting a slower economy generating fewer corporate tax receipts, the cost of a $146 billion economic stimulus measure and spending on the wars in Iraq and Afghanistan. The deficit is forecast at $407 billion in 2009... 2.9 percent of the $13.2 trillion U.S. economy....
Bush, after meeting with his Cabinet this morning at the White House, called it a "good, solid budget" that puts a priority on national security and keeps spending in check. "Congress needs to pass it," he said. Lawmakers took a different view. House Budget Committee Chairman John Spratt, a South Carolina Democrat, said it "bears all the hallmarks of the Bush legacy -- it leads to more deficits, more debt, more tax cuts, more cutbacks in critical services"
DeLong points out the sleight of hand Bush uses to arrive at the deficit of 410 billion a year.
Their reference to "near-record levels" of the deficit doesn't give a full and fair account of the magnitude of what can only be called a clown show. The headline deficit number ought to be $738 billion--we have a $331 billion Social Security surplus for 2009, and an honest and honorable administration would be using that surplus to pay down the government debt in order to get ready for the challenges that our aging population will pose for the federal budget over the next two generations. The headline number shouldn't be 2.7% of GDP; it should be 4.8% of GDP. That is how far Bush fiscal policy is from what a prudent and responsible fiscal policy should be....
Now that we have an actual Bush administration proposal in print--one that Republican senator Judd Gregg doesn't think much of--it is time for an accountability moment. The Bush administration and its flacks and flunkies have long promised that the administration was going to "cut the deficit in half" by the time in left office in fiscal 2009. The press by and large reported this straight--not pointing out that the "cut in half" was from a highballed projected peak deficit number that was artificially inflated in order to set the bar artificially low, not pointing out that such a deficit still left fiscal policy far from where it ought to be, and not pointing out that the Bushies' policies would produce such a reduction only if everything broke right and we had four uninterrupted years of macroeconomic good news
Delong's morning coffee video on the same web page is worth checking out and highlights the Bush budget clown show.
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