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The Budget's A Time Bomb
A lot of attention so far has focused on the extent to which the Bush budgets will not, in fact, meet the target goal of halving the deficit by 2009 and the extent to which the Bush target is not, in fact, "halving the deficit by 2009" by any sensible metric. Today, Jonathan Weisman and Peter Baker take note of a deeper problem: The budget's a time bomb, that produces the 2009 number through a lot of complicated phase-ins and so forth. Once everything's in place, it will explode during the next president's term forcing a financial crisis. The sinister political logic is easy enough to see here, but since Republican legislators presumably intend to stick around in 2010 and beyond, it's a little hard to see why they've been so eager to go along with it. As the song says, "it's just the ability to reason that wears so thin," I guess. Or the ability to add.
February 14, 2005 | Permalink
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Comments
2 words: Jeb 2012
Just a thought.
Posted by: Finny | Feb 14, 2005 12:56:21 PM
We need to cut taxes for 'em most successful members of our society to unleash American creativity again. And ban frivolous lawsuits hindering our economy. Oh, and reduce government regulations. As if you didn't know all that, you America-hating elitist.
Posted by: abb1 | Feb 14, 2005 1:13:19 PM
I have been thinking">thinking about this problem for a while now in response to a very interesting post at Left of Center and I can not really figure out what the end game is beyond "starve the beast" and "Blame the Democrats." I think that the Republican Party believes economics don't matter any more, good governance does not matter any more, but instead, they can win elections based on cultural wedge issues and running aggressive and effective campaigns. The ideal Democratic President for the GOP is a responsible mess-cleaner (see Clinton's '93 budget deal) who is forced to reduce spending, raise taxes and pull back on foreign adventures started by Republicans. It plays into the archtypes that the GOP wants to play with.
Posted by: fester | Feb 14, 2005 1:38:53 PM
I don't know how one reconciles the Rovian "no Democrat elected anywhere to anything forever and ever" strategy with such a deliberate plan for fiscal disaster. As far as I can tell, the GOP isn't planning to lose in 2008, so the only explanation that seems reasonable is that they actually welcome the policy consequences of a defecit that balloons so, and are equally confident in their media machine's ability to spin events and therefore anticipate putting those damn Dimmycrats on the defensive over...something else.
Now, Congress may have to raise taxes on the middle class and cut every federal program other than abstinance education and, as Matt always says, "guard duty in Qom," but if you thought Humvees were under armored before, watch out.
Posted by: SamAm | Feb 14, 2005 1:45:57 PM
I've been thinking that some sharp young feller with time on his hands like Matthew Yglesias should write an article on the following theme:
Over the past 30 years the Republicans plotted and schemed and fundraised their way to a position of political strength. They now own the White House, the Senate, the House of Representatives, the mainstream media, and they have a good piece of the judiciary system. But apparently it never occurred to them that they might succeed, and would actually be faced with the responsibility of governing. From a policy perspective, the GOP agenda is a fucking disaster in every respect-- it is not sustainable, financially or politically.
Posted by: peter jung | Feb 14, 2005 1:47:01 PM
the GOP agenda is a fucking disaster in every respect
Nonsense, it's a huge success. It's all about the money, winning elections is only a means to an end. They want the money now, apres moi deluge. Texas oil producers have made probably trillions in the last few years - while it was economically impossible for them sell oil during the 8 years of Clinton at all (except maybe the last few month of 2000). Hundreds or probably even thousands of the Republican main constituency made millions and billions of dollars each - how is this a disaster? It's a stunning success.
Posted by: abb1 | Feb 14, 2005 1:59:41 PM
I'm with abb1. Republican policies can be totally predicted from the postulate "Get the most money the fastest". This is the "MBA administration", after all. I seriously doubt that any strategy beyond 2006 is being considered right now.
Posted by: Tim H. | Feb 14, 2005 2:18:29 PM
As Friedman concluded yesterday, "The president's priorities are totally nuts."
If all this is true and we're headed for disaster, I think my disillusionment with politics just reached an all-time high.
Posted by: Adrock | Feb 14, 2005 2:41:00 PM
"I seriously doubt that any strategy beyond 2006 is being considered right now."...wrong
1)With Republicans in control of the WH and Congress and the officer corps, when they get in trouble, starting a war is always an option. "We have no troops"....but we have an airforce and navy sitting idle and as the economy tanks cannon fodder will become more available. Democrats really are no where near countering this, majority disapproval of Iraq translated into what political gains?
2) Republicans won't mind bankruptcy. The 300-400 billion in discretionary is never what they were aiming at. In a bankrupt state we will be eliminating SS, Medicare, Medicaid. The alternative will be something like tripling tax rates on people $50k up...ain't gonna happen. The marginal revenue eaten by debt financing is what is killing us. What $150 billion? 100 billion for programs and $50 for debt reduction and we are fine. Presuming Clinton era tax levels.
3) How was FDR elected and the New Deal passed? The solid Democratic South. The Red State demographic is a permanent factor in American politics. Thought-experiment:what would have happened 30-33 with a solid Republican South. Rove is thinking about it. Whatever you think of those people, a "lost-cause" romanticism or an atttraction to a politics of victimization or a tendency toward feudalism....another Great Depression will likely not turn them into Democrats.
No, this is a very long-term plan, one of the ugliest political efforts in the history of mankind. A fifty-year, 100-year plan. Hitler was a joke, who lost everything in 15 years. These guys plan on never losing.
Posted by: bob mcmanus | Feb 14, 2005 2:49:27 PM
Well, the extent to which this is the "real" plan is beyond my ability to judge, but what isn't so hard to judge is that there is nothing secret about the fiscal crisis, and yet, it gets next to no attention, either politically or within the media.
This is why i continue to say that the Dem response on social security is a very simple one: when bush and delay solve the general fund crisis that they have created, we can talk about something else, like social security. Until they solve it (either by going ahead and cutting spending down to 17-18% of GDP or by increasing taxes on the upper 2% of households by income and restoring the inheritance tax above $5M), there is absolutely nothing else to talk about.
In this sense, of course, the social security "crisis/bankruptcy" fraud that bush et al are trying to sell is not only part of a long-term gop plan to gut social security, it's an excellent way to suck up all the oxygen in the room.
Posted by: howard | Feb 14, 2005 3:25:18 PM
Shouldn't the Democrats be having a field day with this?
President Bush has presented us with a clear difference between Republican control and Democratic control. Under Clinton we we had slightly higher taxes, a better economy, and Social Security was secure. Under Bush we have slightly lower taxes, a recession and weak recovery, lack of a stable employment picture and an attempt to pay for it by destroying Social Security.
Something along the lines of:
Bush is trying to pay for his tax cuts by taking away all of the money you paid into Social Security -- it is the only way he can balance his reckless control of the books.
Posted by: theCoach | Feb 14, 2005 3:43:49 PM
I've added up the total dream list of the Administration.
We could be dealing with deficits in excess of $1 trillion per year after 2010.
Just imagine that...
Posted by: Movie Guy | Feb 14, 2005 4:18:42 PM
If things are as bad a disaster as we think they are going to be (and the disasters may start before 2009), especially by 2008--and we will be able to tell by the size of the deficit and debt, along with interest rates and a few other indicators, we really ought to think about abdicating the next election to the Republicans so that the Republican party will be finished off for the next century, with no help from us. Why should we keep cleaning up after their messes? They don't get potty-trained that way. If they can mismanage the national economy with impunity, knowing that another one-term Democrat will try to impose fiscal sanity out of a sense of good government obligation, get beaten because of the general pain fiscal disciplline imposes on everyone, and then get beaten because of it, allowking the Republicans to make a mess of things again, why try? Let them bear the responsibility of the policy results of their messes one time, making it crystal clear whose fault it is. Repubs for disaster in '08, I say.
Charles
Posted by: charles | Feb 14, 2005 4:38:52 PM
Bush in my mind is a sadistic, outlaw personality, and this fiscal time bomb almost suggests that the entire nation has now become the object of his sadism.
I have read that the national debt will nearly double under Bush, even excluding SS privatization costs. The Republicans would have us believe that 19 hijackers caused the largest economy on earth to double its national debt, evidently.
Posted by: Bob H | Feb 14, 2005 5:05:26 PM
peter jung: the GOP agenda is a fucking disaster in every respect
abb1: Nonsense, it's a huge success.
Yup. Success is when the pinata breaks open scattering goodies for you and your buddies.
Posted by: Paul Callahan | Feb 14, 2005 5:06:03 PM
"Let them bear the responsibility of the policy results of their messes one time, making it crystal clear whose fault it is."
It may get weird much sooner. Maybe by this summer, as the budget gets disastrous, and the deficit explodes, and the dollar starts to crash, and the economy tanks...and Bush refuses to consider tax cuts...Dems like Feinstein and Reid will start to look at SS. I will bet on it.
Ok, you are a responsible Democrat. For the good of the country what would you do if we start sliding into recession? Deficits could hit a trllion dollars much sooner than '08.
Posted by: bob mcmanus | Feb 14, 2005 5:40:58 PM
The two biggest pieces of political capital that the GOP has traditionally held are the notion that they are the party of fiscal responsibility, and that they can be trusted with national security issues. Bush is in danger of squandering both of those political advantages-- monster deficits and a reckless foreign policy can't be sustained indefinitely.
Posted by: peter jung | Feb 14, 2005 5:41:50 PM
Simply put, a large faction of the Republican party, currently in dominance, has decided that fiscal discipline is political suicide. That ballancing budgets, and paying down the debt, might be sound fiscal policy, but what's the point in having sound fiscal policies if it means the other guy is in office?
If the American electorate is fiscally irresponsible, (Look at credit card debt, bankruptcies, other measures; That they are IS a defensible claim.) then we ARE going to have fiscally irresponsible government, and the only question is which party is going to supply it, and thus get the chance to enact it's other priorities.
Personally, I think it's bull, and that it ought to be possible to be fiscally responsible, AND get reelected, if you're willing to put a lot of work into publicly defending your policies. But, hey, what do I know? It's not like any candidate I actually LIKED ever won an election...
Posted by: Brett Bellmore | Feb 14, 2005 6:42:44 PM
No Economist Left Behind
Brad Plumer thinks he sees the plan.
"Maguire's solution seems very plausible to me, depending as it does on increasingly high shares of corporate revenue going towards profits; real wages dropping as labor protections are gutted; and taxes on savings continue to be rolled back"
What happens when the dollar is devalued? Besides theoretical increased exports,which is a good thing...what price is paid, and who pays it?
Posted by: bob mcmanus | Feb 14, 2005 7:13:28 PM
If you really do want to put an end to this country going through perpetual bulimic cycles of fiscal binging and purging from now on (with the responsible presidents always left holding the bag), I think the only conceivable way to do it is to pass a balanced-budget Constitutional amendment with teeth -- and Clinton's decisive opposition to that possibility when we had a chance to get it (and while liberals like Sen. Paul Simon and Michael Kinsley backed it) was, in my opinion, his second biggest mistake. (His biggest was failing to prevent North Korea and Pakistan from getting the Bomb by any, and I do mean any, means necessary. Well, there was Monica, but I still rank her Number Three.)
Posted by: Bruce Moomaw | Feb 14, 2005 7:57:11 PM
The binging I've noticed, but if there's been any purging it's been pretty well concealed. More like "binging and burping", if you ask me.
Posted by: Brett Bellmore | Feb 14, 2005 8:36:01 PM
"Purging" in the sense of actually raising taxes and/or lowering spending, Brett. Bush Sr. and Clinton did at least a little of the former.
If the people want to support a massive degree of government spending by supporting a massive degree of taxation -- e.g., a massive redistribution of money to the less wealthy from the wealthy (who can afford it, and will still be making more post-tax and post-benefit income for a comparable amount of work effort than the non-wealthy do) -- that's their right. What they should NOT be allowed to do is raise benefits for themselves and try to shuffle off the burden of paying for those onto future voters in general -- which they now seem determined to do if the Constitution continues to allow them to do it.
Posted by: Bruce Moomaw | Feb 14, 2005 9:26:13 PM
The Social Security "overhaul" has to happen one way or another. It could also come from just doing nothing, and letting the general fund pay off SS Trust Fund bonds.
The Medicare Prescription Drug plan is a budget killer. Let's abolish it!
Posted by: Mr. Econotarian | Feb 14, 2005 9:39:45 PM
I knew what you meant by it, Bruce, and I still say we've seen very little of it. Clinton barely dipped into the black for a couple years, and that with Republicans controlling Congress, (Which at least means some fiscal discipline when there's a Democratic President, just from sheer partisanship.) AND a bubble driving federal revenues to unrealistic heights.
Binging and burping, not purging. I don't think we're ever going to see a change to that, barring either major financial collapse, or some huge alteration in the dynamics in Washington, such as a ballanced budget amendment. And you're not going to get the supermajority vote needed to get THAT out of a Congress that still wants to deficit spend.
I'm actually starting to think that a constitutional convention might be worth the risk.
Posted by: Brett Bellmore | Feb 15, 2005 5:33:14 AM
615211: Hey, does anyone know where I can find a list of gas stations with low prices in my area?
Posted by: Debra Riley | Oct 18, 2005 9:29:15 AM
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