Tuesday, June 20, 2006

Can Bush fulfill his 2004 promise to cut the deficit in half by 2009?

Let me shake my magic 8-ball here... "All signs point to yes"

And on top of that he might even be able to get it done three years early. (Thanks to Ace for the heads up)

National Review - More than two years ago, when President Bush announced his aim to cut the federal budget deficit in half by 2009, many critics guffawed. They called the goal an impossibility, a naïve and futile effort that would be undermined by the fat-cat Republican tax cuts. A Boston Globe headline declared, “Bush’s plan to halve federal deficit seen as unlikely; Higher spending, lower taxes don’t mix, analysts say.” An Associated Press story went out on the wire with the headline, “Bush goal of halving federal deficits draws skepticism, derision.” In that AP article, Sen. Kent Conrad, the top Democrat on the Senate Budget Committee, was quoted deriding Bush’s plan: “It’s like so much with this administration in respect to fiscal matters, it’s all spin, all the time.” Former Congressional Budget Office director Robert Reischauer called the proposal “fanciful.” To Democrats, the AP reported, Bush’s goal was simply “laughable.”

But the critics are no longer laughing. Driven by a surging national economy, tax revenues are increasing and the deficit is rapidly shrinking. The president’s deficit-reduction plan looks like it will not only succeed, but will do so years ahead of schedule.

The country was facing the largest projected deficit in history when Bush promised to halve it as a percentage of GDP by 2009. Due to high wartime spending and the residual effects of the 2000–01 recession, the White House expected the 2004 deficit to reach $521 billion, or 4.5 percent of GDP. Bush’s goal was to reduce this to 2.25 percent by 2009.

After all the beans were finally counted, the 2004 deficit came in at $413 billion—roughly 3.5 percent of GDP. The economy had begun expanding, partly in response to Bush’s tax cuts, creating jobs and boosting revenue. This trend continued into the next year, pushing the deficit down to $319 billion in 2005.

This year, the projections look even better. Through the first eight months of this budget year, the deficit is $227 billion—16.7 percent lower than this time last year. That’s largely because government revenues in these eight months have reached $1.545 trillion, up 12.9 percent from last year.

Those are some shocking numbers. Now I agree with Ace, that I'd prefer he'd done a little more slash and burn through the tremndous bureaucratic fat in the budget as opposed to just relying on the strong economy and revenues from the tax cuts. But it's still working. Many of you, I'm sure will take that with a grain of salt. It is from the National Review, and that's a right of center publication. But Investor's Business Daily isn't. And they don't think it's a farfetched idea either.

Some on the left are debunking the "half" claim for two reasons. One, it's good news for Bush and they just can't let that happen. And two, the starting point was based on the 2004 projected deficit. Well, 2004 totals came back better than forecast. So if you're on the left, that means Bush was lying about what the deficit was going to be in 2004 so that he could reach his claim of half by 2009 (seems a bit farfetched to me, but that's never stopped the left before). If you're on the right it means Bush's economic policies helped jumpstart the economy quicker than expected. And if you're in the middle, who friggin' cares?! The deficit is still shrinking!

Interestingly enough I received a Democratic mailer from Barack Obama today who did much moaning and wailing about the Republicans politics of fear and interestingly enough, tax cuts.

This November, these efforts will culminate in a historic opportunity to bring back the America we dream of. When Democrats retake the Senate, we will show that we don't have to settle for the Republican agenda of fear and division anymore.

We don't have to settle for a Republican agenda that tells us we can find the money to give Paris Hilton more tax cuts, but we can't find enough to protect our ports or our railroads or our chemical plants or our borders.

First off, I don't feel afraid or divided, so I've no clue what he's talking about there. But more importantly, I can't speak for Paris Hilton and whether she got a tax cut or not, and honestly she probably couldn't either. She probably couldn't find the spot on an IRS form to fill in her name, to be perfectly honest. But that's why she has a tax team the size of Guatamala's army doing her taxes for her. I've got just one guy and his office staff of 2 who managed to find me enough to get me a nice chunk of change back from the gevernment. The point here is, tax cuts work. They give the people more of their money back, that they end up putting back into the economy. Then the government gets more money in sales taxes and taxable revenues of the large corporations that the left loves to hate.

IBD does still urge a cautionary note though... that "long-term growth in Social Security, Medicare and Medicaid 'threaten to force either European-style tax increases, unprecedented spending cuts or unprecedented debt,' said Heritage Foundation budget expert Brian Riedl. 'There's no growing out of the long-term budget problems.'"

So let's get to fixing that social security debacle before it gets out of control, m-kay?