Friday, February 10, 2006
The Federal Budget is a disaster
Via
Professor Delong, I see that Paul Krugman, liberal economist and NYT columnist, is very harsh
today, but you be the judge:
[W]e've had six years to grow accustomed to Bush budget chicanery... the sheer childishness of the administration's denials and deceptions.... [I]n 2001... Bush... insisted that its tax-cut plans wouldn't endanger the budget surplus.... [T]he Senate demanded a cap on the tax cut.... The administration met this requirement... by "sunsetting" the tax cut, making the whole thing expire at the end of 2010.
This was obviously silly... the law as written... no federal tax on the estates of wealthy people who die in 2010... estate tax will return in 2011.... I suggested, back in 2001, that the legislation be renamed the Throw Momma From the Train Act.
It was also obvious that the administration... would try to eliminate the sunset clause and make the tax cuts permanent. But it quickly became clear that the budget forecasts... were wildly overoptimistic.... Making the tax cut permanent would greatly worsen those future deficits. What were budget officials to do? You almost have to admire their brazenness: they made the future disappear. Clinton-era budgets offered 10-year projections of spending and revenues. But the Bush administration slashed the budget horizon to five years... since budget analyses no longer covered the years after 2010, the revenue losses from extending the tax cut became invisible.
But now it's 2006, and even a five-year projection covers the period from 2007 to 2011, which means including a year in which making the Bush tax cuts permanent will cost a lot of revenue -- $119.7 billion... a standard table titled "Impact of Budget Policy"... this year, that table is missing....
The administration has no idea how to make its tax cuts feasible in the long run. Yet it has never, as far as I can tell, allowed unfavorable facts to affect its determination... it has devoted all its efforts to hiding those awkward facts from public view. (Any resemblance to, say, its Iraq strategy is no coincidence.)
At this point the administration's budget strategy seems to be simply to ignore reality. The 2007 budget makes it clear, once and for all, that the tax cuts can't be offset with spending cuts. But Bush officials have decided to ignore that unpleasant fact, and let some future administration deal with the mess they have created.
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