Projected Surplus Supports Tax Cut, Bush Says (flashback to 02/2001)

[웃 910]

Projected Surplus Supports Tax Cut, Bush Says

February 25th, 2001

WASHINGTON — President Bush, previewing the budget he will send to Capitol Hill in three days, said Saturday that a projected 10-year surplus of $5.6 trillion is enough to support modest boosts in spending and still pay for his cherished tax cut.

The projection of a decade of black ink, still a novelty in federal budget cycles, relies on the bipartisan Congressional Budget Office, which this month predicted the surplus--$1 trillion higher than any previous estimate--if tax and spending levels remain unchanged.

But there is virtually no possibility that the no-change assumptions underlying those projections will be met. Bush reiterated his call for a $1.6-trillion tax cut over 10 years, and said his budget for the coming fiscal year will increase spending by 4%, slightly more than the expected rate of inflation.

Democrats also are proposing a tax cut, although about half as large as the Bush plan and targeted to the less affluent.

In dueling Saturday radio addresses that set the parameters for the year's budget and tax debate, Bush and Iowa Gov. Tom Vilsack, a Democrat, disagreed about the reliability of the surplus forecasts and about how to spend the money.

"The federal budget is a document about the size of a big-city phone book and about as hard to read from cover to cover," Bush said.

"The blueprint I submit this week contains many numbers. But there is one that probably counts more than any other: $5.6 trillion. That is the surplus the federal government expects to collect over the next 10 years, money left over after we have met our obligations to Social Security, Medicare, health care, education, defense and other priorities," the president said.

Asserting that a surplus means "taxpayers have been overcharged," Bush said that his plan "returns about one out of every four dollars of the surplus to the American taxpayers."

Bush plans to send a summary of his $1.9-trillion budget to Capitol Hill on Wednesday following his Tuesday night address to a joint session of Congress.

Despite Bush's wry description of the size of his budget, administration officials say the document he will submit Wednesday is a slim volume that sets priorities but lacks details, which the new administration has not had time to develop. Bush expects to send the massive budget books to Capitol Hill in April.

While Bush described the 10-year surplus projection as the key number in the budget, Vilsack's response for the Democrats said it would be dangerous to assume that the money will materialize.

Sounding a bit like Republican budget-watchers of years past, Vilsak said, "Fiscal responsibility dictates we should be somewhat cautious about relying on [surplus projections] in making decisions, because those figures are estimates for a 10-year period. . . . If we overcommit on tax cuts, what happens if we have a recession? Do we want to risk going back to the days of record deficits, like those during the Reagan-Bush years, which led to a growing national debt?"

But Bush said there is plenty of money available to do all that he thinks the government should do.

"My budget blueprint will restrain spending yet meet growing needs . . . ," the president said. "After paying the bills, my plan reduces the national debt and fast--so fast, in fact, that economists worry that we are going to run out of debt to retire. That would be a good worry to have."

http://articles.lati...5/news/mn-30111

Edited October 8, 2011 by Lord Infamous

[웃 910]

Bump.

I know the past is the past. But does anyone else find the article interesting? The highlighted quotes from President Bush? For example:

"My budget blueprint will restrain spending yet meet growing needs . . . ," the president said. "After paying the bills, my plan reduces the national debt and fast--so fast, in fact, that economists worry that we are going to run out of debt to retire. That would be a good worry to have."

The fact that he was given a golden economy with a projected $5.6 trillion in deficits surpluses covering his term (10 year projections)? If anyone had a perfect opportunity it was him. When Obama came into office what was the economy like? What did the CBO project over the next decade when Obama came in?

[scandal 951]

Clinton the Socialist nearly wrecked this country with those enormous surpluses. The way he was going we would have erased the debt and ANNIHILATED THE US TREASURY AS A BENCHMARK FOR OUR FINANCIAL SYSTEM had the Clinton surpluses continued (see article below for a sample analysis of the era).

Thankfully, the American patriot George Bush reintroduced massive deficits as part of his tax-cuts for the wealthy. As a result, the dangerous topsy-turvy word of Clinton surpluses has been restored to deficits as far as the eye can see, while our millionaires enjoy their comfortable lifestyle at the expense of the middle class and poor. All is right with America again. Thank you , George W. Bush.

Oct, 2000

Life Without Treasury Securities

by Albert M. Wojnilower

PORTFOLIO MANAGEMENT AND THE NATURE OF FINANCIAL CRISES WOULD BE PROFOUNDLY DIFFERENT.

The U.S. Treasury debt may soon be paid off. However, Treasury securities perform vital and difficult-to-replace roles: as riskless assets in portfolios; benchmarks in the pricing of private securities; reliable hedges for marketmakers in debt securities and derivatives; safe havens for funds; and, as was formerly the case with gold, the chief international money. If and when Treasury debt is paid off, the loss of Treasuries in these roles means that securities markets will shrink, while banking-type intermediaries gain. The perceived probability of governmental bail-out for various kinds of debt in case of trouble will determine winners and losers among candidates for replacements, with foreign central banks making the pivotal choices. Retirement of Treasuries--especially short-term bills--is monetary destruction. What instruments take their place and how completely and smoothly, will have profound worldwide repercussions. Thus, the U.S. Treasury should maintain some debt, despite the budget surplus.

During the year 2013, according to the new Federal Budget, the U.S. Government will have retired the public debt. The privately owned and marketable debt--which excludes obligations that are nonmarketable or owned by official institutions (including the Federal Reserve and foreign central banks)--could be extinguished much sooner.

These predictions, of course, are to be taken with a grain of salt. In addition, technical measures are afoot to enhance the tradability of whatever marketable debt remains at any time--to try to make it seem larger. All the same, a meaningful reduction in the privately-held marketable debt is well under way, from a peak of $2.6 trillion three years ago to about $2.1 trillion currently, and perhaps $1.9 trillion by year end. Already the shrinkage in long-term bond issuance has seriously disrupted the bond market, enough to make headlines in the popular press. A bit of conjecture seems justified, therefore, as to how a financial universe lacking a reliably vast stock of easily-traded "Treasuries" might differ from the one to which we have become accustomed.

The existence of a huge and actively traded federal debt has profoundly influenced not merely the shape of our securities markets, but of our entire financial and monetary system. As is beginning to be appreciated, even a substantial slowing in rollover issuance, not to speak of a major reduction in the amount outstanding, causes a major change in the financial landscape. Although the market will adapt or develop other instruments to substitute for Treasuries, financial life will be different. The changes will include greater riskiness of the credit structure, an economy more vulnerable to financial panic, and a reduced role for securities markets in favor of giant financial intermediaries.

Treasury securities and their market have developed into an important public good. Their atrophy has costs that ought to be reckoned, regardless of how large the net benefit from the retirement of the national debt. There may even be a case for expedients that would preserve the debt in the face of budget surpluses.

[dalegg 143]

http://www.youtube.com/watch?v=wneHFnqKQN4