Politicians trumpeted last week's Senate budget bill as one that slashes spending, helping Congress free itself from its addiction to debt. The nation's comptroller, David Walker, has a different view, asserting that the fiscal reality "is worse than advertised... The facts are not partisan and they're not ideological." He asserted that the nation has a "leadership deficit" when it comes to the budget. "The nation's unfunded liabilities and commitments ... have risen from $20 trillion in 2000 to approximately $50 trillion today — equivalent to the entire net worth of all Americans."
Other experts — in a nonpartisan chorus — echo Walker's warning and paint a different story from the White House line. They remind us that Republicans (who are the dominant party in both houses and the executive branch) plan to make permanent $70 billion in tax cuts later this session (reducing income through 2010) — further adding to our red ink. In fiscal 2003 and 2004, Congress spent about $1.42 for every $1 of its own income tax revenue. Our total debt is currently around $50 trillion — about $166,000 for every man, woman and child. For context, the median price of a house in the US was about $187,500 earlier this year.
Even Alan Greenspan, outgoing Fed chief, is starting to raise the alarm: "Unless the situation is reversed, at some point, these budget trends will cause serious economic disruptions." What kind of disruptions?
The Medicaid drug benefit plan, if left unchanged, would consume all federal revenues in 75 years, according to the Knight-Ridder story. Oh, yeah, and K-R, which has broken lots of bad news lately, is now under pressure from its largest stockholders (investment firms) to break itself into bits and sell off assets (32 newspapers).
From the Houston Chronicle:
Congress has outspent its own income in 45 of the last 50 years, thereby running up deficits by over $5 trillion. But $4 trillion of those deficits were in just the past 20 years. And then President Bush's budget submission this past February projected $3 trillion more of deficits in just the next 6 years. That is how much Congress itself actually spends in excess of its own income tax revenue. In government lingo, those are the real "on-budget" numbers.
That clearly isn't something Congress wants everyone to know about. So it disguises what it is doing. How? In three simple steps: It takes out all the (really "off-budget") excess money coming into the Social Security retirement fund, that is supposed to be saved for future retirees' checks; considers it as "income" for Congress and uses it all to pay Congress' own bills; and then subtracts that "income" from Congress' own losses and reports only the total to the public as "the" budget.
Article comments
1 - Ruvy in Jerusalem
The first paragraph of your piece says it all. Your country is busted. So the simple question is - when does your economy tank? And how many planets do I need to be away from Earth to escape the consequences?
2 - Bliffle
Ruvy is right. I'm trying to plan my own exodus from the impending economic disaster, but the effects of the US collapse will be so widespread that all of us, no matter where we are, will be engulfed. Thus illustrating the error of concentrating power, whether military, economic, cultural, or whatever in a few hands. The rest of the world trusted us to have a rational economic policy as a reference for others, and we failed. We are become a Banana republic. Our child-leaders have too much power and too many Big Bombs.
3 - Dave Nalle
The economy doesn't tank so long as the GDP continues to grow at the strong rate it is. As a percentage of GDP the deficit is smaller than it was in most of the administrations in the last 30 years. It's big, but it's not unmanageable despite what the doom and gloomers are saying.
Of course, if you want a crash, just elect a Democrat to the White House in 2008 and hike taxes again.
Dave
4 - alienboy
Dave, your previous comment reveals the lie you keep putting out about being neither pro right or left.
I'm certain a rententive fact freak like yourself is perfectly well aware that the previous American administration, you know, the Bill Clinton Democrat presidency, left the US with a record surplus when it left office; a surplus the current administration has since squandered on a variety of ill-judged policy moves.
5 - Dave Nalle
Alienboy, I never said a single word about the Clinton surplus. But the facts remain the facts as far as the deficit goes in comparison to prior deficits. Clinton didn't have a deficit.
And I'm pretty sure that being pro-prosperity doesn't automatically make me biased to the right or left. I'm certainly against those who want to manufacture and promote economic failure. If the democrats are against economic growth and prosperity that's their failure, not mine.
dave
6 - alienboy
Mr Nalle, I didn't say that you said anything about the Clinton surplus - that's just another one of your "confuse and overwhelm" tactics you like to use.
You didn't say anything except imply that Democrats would ruin the economy, but the fact is that they handed over a sound economy and this Republican regime has squandered it and more.
You then move on to another of your riffs, the presumption that your views are pro-prosperity and those of the Democrats are against it. You just make this stuff up out of serious prejudice and then try to claim the moral, neutral high ground.
Frankly, it's as offensive from you as it is when Fox News claims to be presenting "fair and balanced reporting. Both claims are completely and totally incorrect and neither you nor Fox would recognise an objective informed viewpoint.
The objective facts are that the last Democratic government was one of the best the USA has had and the Right, and it's fellow travellers like you, are doing your best to obscure that fact and drive this once great country aground. It fair pains my heart to see it - and pains my brain to decode all the doublespeak you generate.
George Orwell would spin in his grave...
7 - Dave Nalle
"Mr Nalle, I didn't say that you said anything about the Clinton surplus - that's just another one of your "confuse and overwhelm" tactics you like to use."
I wasn't aware of these tactics. Not even sure how to apply them. I prefer to just stick with plain straightforward truth.
"You didn't say anything except imply that Democrats would ruin the economy,"
I hope I didn't imply this. I meant to state it definitively. Typical democrat economic policies (raising taxes and spending) in the current economic situation would lead directly to a disastrous recession.
"but the fact is that they handed over a sound economy and this Republican regime has squandered it and more. "
When did they do that? Clinton handed over an accelerating recession. His boom was definitively over by the end of his term in office.
"You then move on to another of your riffs, the presumption that your views are pro-prosperity and those of the Democrats are against it. You just make this stuff up out of serious prejudice and then try to claim the moral, neutral high ground."
My views are pro-prosperity. Past democrat practices have been anti-prosperity. What they may do in the future remains to be seen. John F. Kennedy was the last democrat with truly sound economic ideas.
"Frankly, it's as offensive from you as it is when Fox News claims to be presenting "fair and balanced reporting. Both claims are completely and totally incorrect and neither you nor Fox would recognise an objective informed viewpoint."
Just because my opinion doesn't match yours that doesn't make me wrong. Facts support my beliefs about the economy, while yours are based almost entirely on supposition.
"The objective facts are that the last Democratic government was one of the best the USA has had"
The last democrat administration was relatively competent, over taxed to the point of generating an undesirable surplus and then left the next administration holding the bag when the inevitable recession resulted.
"and the Right, and it's fellow travellers like you, are doing your best to obscure that fact and drive this once great country aground. It fair pains my heart to see it - and pains my brain to decode all the doublespeak you generate."
Which is lovely, except that, again, it's not supported by fact. The economy is NOT running aground, it's booming. If the boom continues it will make it possible to deal with the deficit much faster than anticipated. Already economic growth cut the projected deficit by more than 80 billion dollars, and if that trend continues we'll be in fine shape by 2008.
Dave
8 - alienboy
First of all, please STOP using that double arrowhead quoting technique of yours, it buggers up the MT.
Then, on to the er, substance of your comment:-
I know you think you stick to the plain truth and I understand how the thought that you do is very comforting. Alas though David, you don't; you just have your own take on things, just like everyone else. Alas, this certainty that you are telling the truth is, ironically, warping your perception in a subtle but pervasive way. So, yes, you do try to confuse people and overwhelm them with the myriad "facts" you marshal.
I'd rebut every single one of your other "reality edits" but the answer is the same every time. Get back to us when you wake from the dreamtime, dave.
9 - Dave Nalle
The double arrowhead is a conservative plot, right? It does nothing to MT. It's entirely HTML neutral.
So providing a lot of factual support is a bad thing? It overwhelms people? Too much fact is confusing?
Give me a break.
Dave
10 - Kathy
Dave -- you wrote:
Perhaps you misunderstood -- the focus of this article is not the deficit, but the DEBT. Total Debt is about 75% (off the top of my head) the size of the ENTIRE GDP, and it's growing.
GAO is non-partisan.
The criticism about the growing DEBT is non-partisan. It is on an exponential increase -- which is not sustainable.
Kathy
11 - Kathy
Hi, Dave, you said:
To which I reply, dryly, it seems you prefer to increase spending and decrease revenue simultaneously, since that has been the policy of this administration.
We either pay now (balance income and outgo) or we pay later (go bankrupt).
It's really that simple, if our current policies continue.
Kathy
12 - alienboy
Dave, as always, it's just like I told you. DON'T use the double arrows please. You can trust your comments editor on this or be a wacko and go play in the edit tool yourself. I don't care which, just stop.
And yeah, overwhelming is one of your tactics. And it makes for boring reading. Wrong and dull.
13 - Bennett
Great post, Kathy! I know you've been here a month with some other valuable posts to your name, but this is my first gander at your writing...
Bravo!!!
More please.
14 - Kathy
Thanks, Bennett. :)
15 - Dave Nalle
(this is just for alienboy)
[Comment Editor's note: This text is copied from Comment # 11 by Kathy.]According to the CBO, which is responsible for monitoring these things, the current spending and revenue raising pattern, combined with the current growth rate in the economy will result in a transition from deficit to surplus in about 8 years. Any greater growth in the economy or reduction in spending during that period will accelerate this transition enormously - the kind of rapid reversal we saw as a result of the tech boom under Clinton.
In addition, the administration has been talking very seriously about spending cuts. The problem is that they may lack the political capital to wring those cuts out of congress. Why do they lack that capital? Because of the Iraq War and the constant harassment they're getting from the left. There are two solutions to this problem if the administration is serious about spending cuts. One is to make a deal of some sort with the democrats, which would almost certainly involve them laying off the administration and voting for spending cuts in exchange for some sort of major concession on one of their issues. Or alternatively making a deal with the far right, giving them real support on one of their issues - like banning abortion - in exchange for serious backing on cutting spending. Neither option is terribly attractive.
As for me, my position is as I've stated before. We should cut spending as much as possible, give the president a line item veto to cut the pork amendments out of bills like the highway bill, cut taxes as well to stimulate spending. And put a HUGE tax on gasoline to make up the difference.
Dave
16 - alienboy
Dave, I've corrected your use of large red type as it added nothing to your post.
As to the rest of it, it was so off topic and so dull, I almost died half way through. Thanks for that...
You're going to have to try WAY harder than this to get anywhere.
17 - troll
when I read Dave's last I thought - 'All this comment needs is some large red type to communicate its' point'....
I distrust the judgement of certain BC editors - slashing peoples' writing should be maintained as a higher cortical function
troll
18 - alienboy
Troll, nobody's writing has been slashed, we really don't do that unless certain lines, mostly summarised in the BC Comments Policy, are crossed.
The judgement of all BC editors is almost certainly flawed, they are only human after all, and also volunteers to a man, woman or monkey.
19 - Dave Nalle
alienboy, replacing my big red type with nothing to offset the quote at all is not an improvement. And if you gratuitously edit my comments again I'll start editing yours.
dave
20 - alienboy
Dave, you really are getting giddy.
I didn't recognise the words you put in red as a quote cos, guess what, I didn't say them!
After reading through the entire thread, I see that you quoted Kathy's words from comment # 11, so what that has to do with me or my perfectly respectable observation - which is that your pose as a neutral observer of the great game, based solidly on just the facts, is completely bogus.
It just isn't within human nature to do that. You carry just as much intellectual and cultural conditioning as anybody else and it is just not possible to escape that.
As to editing your comment by returning the font size and colour to the normal format, as long as I am the Comments Editor, I'll make the last call on what is acceptable here.
Your use of large red lettering is not generally available to commenters here and, as I said, it didn't add anything to your sloppy, off topic remarks so my decision to standardize it was not gratuitous. I did not remove any of your written text and anybody else would have received the same treatment.
I will however put some quotation marks around your extract of Kathy's remarks. Then I'll add the attribution you omitted.
Finally, please refrain from making silly remarks like your final sentence. It looks bad for a member of the editorial team to set this kind of example at a time when we are trying to promote higher standards around here.
21 - Ruvy in Jerusalem
Shavua Tov - may you all have a good week.
Kathy, I see that people who wish to have an argument will have an argument, and they aren't going to allow the facts or the good sense of the author to get in their way.
I've seen this before.
My recommendation to anyone reading this is to buy some gold coins and put them in a safe place (NOT IN A BANK!!).
Basically, what Kathy has said is that the US is busted. It is only a matter of time before that fact sinks in. In 1787, a French accountant said this to the king there and it took a whole two years before the sans-coullottes there rioted. The French didn't have an internet.
The issue she raises is DEBT, not the deficits of the federal budget. At some point, the debt issue will have a strangling effect on the activity that keeps the American economy appearing to churn, consumer purchases.
Given that I don't keep my finger on the pulse of the American economy, how or where this will occur is something I don't even dare to predict.
But this I will say from my roost in Armon haNetziv. If I had the money to follow my own advice, I would. When your economy tanks, the economy here will follow suit shortly after.
22 - Kathy
can you two go find a room somewhere and take this tit-for-tat stuff offLine?
kathy