Back to the deficits

So check this out. After a $127 billion surplus last year, Bush has brought back the oceans of red ink -- to the tune of a $159 billion deficit. And that's including the $160 billion social security surplus. (So much for the "lock box".)

"Republicans are responsible for the biggest fiscal reversal in history," said Thomas Kahn, Democratic staff director of the House Budget Committee. "The $5.6 trillion surplus has vanished."

That was a reference to a January 2001 projection by the Congressional Budget Office (news - web sites) that surpluses would total $5.6 trillion over the decade running from 2002 through 2011. By last August, CBO had whittled that unprecedented bundle of projected federal cash to $336 billion, citing the recession, the costs of terrorism and the tax cut.

Both the White House and the Congressional Budget Office say they expect annual surpluses to return in a few years. Many analysts say those projections are optimistic because they assume that future federal spending will grow by only about the rate of inflation, much less than it has in recent years.

"The real problem occurs in future years, when the expensive provisions of the Bush tax cut kick in," said Senate Budget Committee Chairman Kent Conrad, D-N.D. "It's the cost of these provisions that will keep us deep in deficit, right as the baby boom generation begins to retire."

To hear the administration talk, the tax cut didn't have a single thing to do with the deficit -- it was all bad economy and the "war on terror". Yet the bulk of Bush's tax cut has yet to take effect, which will only exacerbate the situation.

Don't expect this to be an issue November 5, but it should have salience in 2004.

Posted October 25, 2002 08:39 AM | Comments (3)