Republican Debt and Deficits: 'Mission Accomplished' or More of the Same?

[one...two...tree 2,762]

Before President Bush took office, the largest deficit in our nation's history had been $290 billion in 1992, and under President Clinton the nation had since begun to run large budget surpluses. At the beginning of his Administration, President Bush projected that in Fiscal Year 2006 we would be running a unified budget surplus of $516 billion. (President Bush's Budget for Fiscal Year 2002, A Blueprint for New Beginnings, 2/28/01). This week, though, President Bush and Washington Republicans are congratulating themselves not for maintaining a surplus, but for running a projected 2006 deficit, of $296 billion – which would be the fourth largest deficit in history, and larger than any deficit before President Bush took office. Meanwhile, our nation's debt continues to rise dramatically, debt to foreigners already has more than doubled, and the President's plan for our long-term fiscal problems is to provide more special interest handouts that will make matters even worse.

In 2001, President Bush promised not to burden future generations with debt: "Future generations shouldn't be forced to pay back money that we have borrowed. We owe this kind of responsibility to our children and grandchildren." (President George W. Bush, Radio Address, 3/3/01) Unfortunately, Bush Republicans have broken that promise and millions of middle-class Americans will be paying the price for years to come. As a former economist in the Bush White House put it: "'the long-term outlook is such a deep well of sorrow that I can't get much happiness out of this year." (Douglas Holtz-Eakin, former director of the Congressional Budget Office and former White House economist under President Bush, New York Times, 7/9/06) It's no wonder Americans trust Democrats more than Republicans to do a better job of handling the federal budget by a 54 percent to 34 percent margin. (Washington Post/ABC News poll, 5/15/06)

President Bush is the most fiscally irresponsible president in history. President Bush inherited a unified budget surplus of $236 billion from President Clinton, the largest surplus in American history. Budget surpluses were expected to continue for another ten years when President Bush took office in 2001. In February 2001, President Bush projected $5.6 trillion in federal budget surpluses for Fiscal Years 2002-2011. (President Bush's Budget for Fiscal Year 2002, A Blueprint for New Beginnings, 2/28/01) By 2002, however, the unified federal budget had returned to a deficit of $158 billion, and has reached historically high levels ever since:

· 2003: -$378 billion (2^nd largest deficit in U.S. history)

· 2004: -$413 billion (largest deficit in U.S. history)

· 2005: -$318 billion (3^rd largest deficit in U.S. history)

· 2006: -$296 billion (4^th largest deficit in U.S. history and

larger than any deficit prior to the Bush

presidency)

President Bush is the first President in American history to oversee three consecutive years of record unified budget deficits. The President's new forecast for 2006 amounts to more of the same: another deficit that will be among the largest in American history. (Office of Management and Budget; Congressional Budget Office).

Some Republicans falsely suggest that the deficit is low as a share of the economy, at 2.3 percent of Gross Domestic Product (GDP). However, the average deficit throughout U.S. history – including wartime and the Great Depression – has been about half the current level, 1.2 percent. Excluding wartime and the Great Depression, the average deficit has been 0.3 percent of GDP. (Center on Budget and Policy Priorities, A "Mere" $300 Billion, 7/10/06) In other words, though we are well into an economic recovery, our deficit as a share of the economy is now almost eight times larger than the normal peacetime average.

Washington Republicans, addicted to borrowing, increased the national debt by $3 trillion. President Bush has presided over the largest explosion of debt in our nation's history. At the end of President Bush's first year in office, the total national debt was $5.8 trillion. Yet for four years in a row, President Bush has asked Congress to increase the debt limit, resulting in a $3 trillion, or 54 percent, increase in the national debt. By 2006, the national debt is expected to reach $8.6 trillion, and by the end of 2011 that figure is projected to be $11.8 trillion – an increase of 103 percent. (Congressional Budget Office; Senate Budget Committee, Democratic staff)

· 2002: $450 billion increase in the debt limit

· 2003: $984 billion increase in the debt limit (largest debt

increase in U.S. history)

· 2004: $800 billion increase in the debt limit (third largest debt

increase in U.S. history)

· 2006: $781 billion increase in the debt limit (fourth largest debt

increase in U.S. history)

Debt owed to foreigners has more than doubled, making Americans more vulnerable to actions of overseas governments such as China and Japan. In order to finance record budget deficits, the United States has had to borrow at unprecedented rates from foreigners. During President Bush's tenure, the United States has incurred more debt to foreigners, approximately $1.1 trillion, more than the $1 trillion this country had accumulated before the Bush presidency. It took 42 American Presidents and 224 years to build up that amount of foreign-held debt. By contrast, during the last three years of the Clinton Administration, the United States paid off more than $200 billion in debt to foreigners. (U.S. Treasury Department, Major Foreign Holders of Treasury Securities; Federal Reserve Board)

Middle-class families pay higher interest rates because of Republican debt and deficits. When President Bush took office in 2001, interest payments on the federal debt were expected to cost $622 billion over the 10-year period 2002-2011. Now, federal interest payments are expected to cost $2.4 trillion over the same time period—a $1.8 trillion, or 300 percent, increase. The federal net interest burden for a family of four in 2005 was $2,464. (House Budget Committee Democratic staff, 8/15/05) Not only are Americans paying more in interest payments on the debt, but rising Republican debt already has contributed to rising interest rates that reduce economic growth: "There is no question that as deficits go up, contrary to what some have said, it does affect long-term interest rates. It does have a negative impact on the economy…" (Alan Greenspan, Testimony Before the Senate Banking Committee, 2003) This means that middle-class families, who are already squeezed by soaring costs for energy, health care, and tuition, are paying higher interest rates to borrow money for mortgages, and on credit card bills, car payments, and student loans.

Middle-class families face lower living standards and reduced prosperity because of Republican deficits and debt. "By holding down the growth of national saving and real capital accumulation, the prospective increase in the budget deficit will place at risk future living standards of our country." (Federal Reserve Chairman Ben Bernanke, response to written questions received in connection with a hearing before the Committee on Banking, Housing, and Urban Affairs, 2/16/06)

By contrast, Clinton-era deficit reduction lowered interest rates by two percentage points. An analysis by Goldman Sachs attributed lower interest rates to the Clinton Administration's deficit reduction policies: "According to the model, the swing in the federal budget position from a deficit of $290 billion in 1992 to a surplus of $124 billion in 1999—roughly matching the improvement in the general government position—has lowered equilibrium bond yields by a full 200 basis points." (Goldman Sachs, GSWIRE, Undistorted by the Budget Surplus, 4/14/00)

The recent revenue increases indicate a concentration of economic benefits going to corporations, CEO's, and multi-millionaire investors instead of middle-class workers. "Among the fastest-growing types of revenue were corporate income taxes, which rose 26 percent in the nine months ending June 30, according to the CBO. Fueling that growth were skyrocketing corporate profits, which on a pretax basis reached 12.7 percent of GDP in the first quarter of 2006, the highest level since 1950, said Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. Another major source of revenue growth were taxes that are not withheld from paychecks, typically capital gains and year-end bonuses for Wall Streeters and other upper-income people. Revenue from those types of taxes has risen 20 percent, compared with 8 percent for taxes withheld from the paychecks of salaried employees." (Washington Post, 7/11/06)

This indicates that "corporate profits have captured an unusually large share of the total economic gains during the current recovery, while wages and salaries have captured an unusually small share. Wages and salaries have grown more slowly during the current recovery than in any comparable post-World War II period." (Center on Budget and Policy Priorities, The Recent Upturn in Revenues and OMB's Mid-Session Review, 7/10/06)

<h2 style="text-align: left;" align="left">More of the Same Republican Spin and Distortion </h2>

"The White House will be claiming it has cut the deficit in half from an imaginary level that never existed." (Stanley Collender, budget specialist for Qorvis Communications, National Journal, 6/27/06)

Republicans mislead the public about the budget deficit for election-year gain. "But the apparent good news will not strike some economists as surprising: This will be the third year in a row that the administration put forth relatively gloomy deficit forecasts early on, only to announce months later that things had turned out better than expected…it's beginning to look like an economic version of the old 'expectations' game…the administration has borrowed a gambit favored by political candidates, who commonly try to lower expectations about how they will fare to magnify the apparent size of their victory if they win. In the case of the budget, they say, the administration has begun to low-ball its revenue estimates at the beginning of a budget cycle to set up good news a few months later...not only will today's numbers look better than February's, but they will leave room for further improvement when the administration announces the actual totals for fiscal 2006 just before the November congressional elections." (Los Angeles Times, 7/11/06)

Washington Republicans are more interested in scoring political points than in generating real improvements in the budget deficit. "The White House had been among the most pessimistic, projecting a deficit of $423 billion in February, compared with the CBO's projection of $371 billion. The administration's estimate was widely derided at the time; budget experts said aides to President Bush were overestimating the red ink so they could claim credit later when the actual figures came in below forecast." (Washington Post, 7/11/06)

Republican expectations game is irresponsible. "'Our problem is our large long-term deficit, and the sooner we deal with that the better,' said Comptroller General David M. Walker. Walker, who is head of Congress' Government Accountability Office, warned of 'a false sense of security.' We're in much worse shape fiscally today than we were a few years ago.'" (Los Angeles Times, 7/11/06)

http://dpc.senate.gov/dpc-new.cfm?doc_name=fs-109-2-99

[w¡n9Nµ7 §£@¥€r 123]

Damn you, Republicans!

[one...two...tree 2,762]

Damn you, Republicans!

You've got to wonder how many voters are aware of these facts?

[w¡n9Nµ7 §£@¥€r 123]

Damn you, Republicans!

You've got to wonder how many voters are aware of these facts?

Feeling all alone out there?

[one...two...tree 2,762]

Feeling all alone out there?

Oh, there's the die-hards who won't listen the truth if you beat them over the head with it...but I'd like to believe that if enough voters really knew the score....this would be whole different ballgame.

Edited August 21, 2008 by Jabberwocky

[Dan J 277]

Damn you, Republicans!

You've got to wonder how many voters are aware of these facts?

Feeling all alone out there?

Ironically most Republicans would not run their own finances as poorly as they have run the country's

[natty bumppo 297]

post about foxnews ... bush ... now this ... dude .. I sense a hard on about one a certain topic ...

[IAMX 3,055]

Damn you, Republicans!

You've got to wonder how many voters are aware of these facts?

I'm sure most Democrats do. I'll give them credit for that. The ones who aren't voting that just because "it's not McCain". If you're voting Republican it's probably to stop the evil taxes, stop the evil gay marriages, and protect Israel from the forthcoming apocalypse. I doubt the future of the country's economy is of any real importance. And it can't be for morals (Mark Foley?), or fiscal responsibility (Bush?) -- that ship has now sailed. Unless people suddenly have amnesia.

[HAL 9000 96]

Feeling all alone out there?

Oh, there's the die-hards who won't listen the truth if you beat them over the head with it...but I'd like to believe that if enough voters really knew the score....this would be whole different ballgame.

At some point even "I told you so" won't quite be enough. Oh well. We'll deserve it if we allow it.

[w¡n9Nµ7 §£@¥€r 123]

We'll deserve it if we allow it.

Then don't sit back and just allow it. Do what little you can. Donate!

[HAL 9000 96]

We'll deserve it if we allow it.

Then don't sit back and just allow it. Do what little you can. Donate!

Oh I'm voting. [And have donated already ]

[w¡n9Nµ7 §£@¥€r 123]

We'll deserve it if we allow it.

Then don't sit back and just allow it. Do what little you can. Donate!

Oh I'm voting. [And have donated already ]

More, more!

[Ban Hammer 13,352]

[symbiosis 0]

It's strange though, after decades of decrying the debt and deficit as the nearest thing possible to pure evil, all of a sudden I hear Republicans saying it doesn't matter.

The big change seemed to be when CLINTON balanced the budget.

curious, ain't it?

[HAL 9000 96]

It's strange though, after decades of decrying the debt and deficit as the nearest thing possible to pure evil, all of a sudden I hear Republicans saying it doesn't matter.

The big change seemed to be when CLINTON balanced the budget.

curious, ain't it?

Some folks will find a way to credit Reaganomics with that too. Trickle trickle... sound like that drip drip of some old radio commercial about nasal infections.