Economists more afraid of Bush\'s fiscal policy than terrorists.

Published in the Atlanta Journal/Constitution
Fiscal folly continues
White House, Congress ignore caution lights about gap between tax revenue and spending

Published on: 03/24/05

The Bush administration and Congress keep ignoring warning lights on the budget, most notably from Federal Reserve Chairman Alan Greenspan. He has called the current borrow-and-spend trend "unsustainable." Budget deficits have become so serious an issue that a national organization of economists is now more afraid of them than of terrorism, a danger signal if there ever was one.

The economists\' concern should be shared by everyone. As fear about the damage terrorists could do to the economy has receded among the organization\'s economists, they\'ve reassessed the threat of budget deficits. And it worries them.

More than a quarter of its members surveyed by the National Association for Business Economics consider government spending beyond its means to be the chief short-term threat to the nation\'s economy. Long term — beyond two years — the economists judge government red ink the third biggest peril, just behind the cost of health care and the aging U.S. population.

The federal government is nearly $7.8 trillion in the hole and counting. President Bush\'s budget proposal for fiscal 2006 would produce a $390 billion deficit and further boost the public debt. His budget number does not include the expense of the fighting in Iraq and Afghanistan or of privatizing Social Security.

The NABE members — from business, government and higher education — are fairly optimistic about the economy but worry that increasing federal borrowing will trigger higher interest rates. That affects borrowers ranging from home buyers to the government. On top of that, on Tuesday the Federal Reserve\'s policy-makers raised short-term interest rates for the seventh time since last June. The Fed members voiced concern that inflation is running hotter than they would like, signaling that even higher interest rates are in store.

There are no painless ways to address the budget problem. In a survey last summer, 51 percent of NABE\'s members favored spending cuts to deal with the deficit; 32 percent recommended raising taxes.

The U.S. Senate could have benefited last week from the economists\' insight, which was announced Monday. The Senate not only rejected $14 billion in Medicaid trims, but it also went beyond what the president suggested in embracing more revenue-reducing tax cuts. Bush is pushing for tax cut extensions that would reduce federal revenue by $100 billion over the next five years.

The Senate, voting on how much the government should spend in fiscal 2006, added more than $60 billion in tax breaks over five years for well-off retirees by voting to repeal the higher tax rate on some Social Security benefits. That was on top of about $70 billion in lost revenue the Senate accepted to extend lower tax rates on dividends and capital gains.

The U.S. House hewed closer to the Bush plan, proposing roughly $106 billion in tax cut extensions, so a compromise between the two spending plans will have to be worked out. A good starting point would be for the Senate to recognize that giving the wealthy more tax breaks makes us all poorer.

[SirMystiq]

You know Americans. It\'s going to take a major disaster in order for some action to be taken. Doesn\'t matter how many warnings.

[clips]

please do you think anybody in the administration is worried about this?...nope..alot of these politicians are set for life and their grandkids are set as well...let me tell you the mindset of many businessmen today..it\'s sort of like your average drug dealer...make your money as fast as you can then bounce.

only these idiots are leaving record deficits for you and I and our kids to clean up...just like those at enron and other companies..they want to make thier money and leave and screw all of their employees..s**t the only way out is gonna be for you to hit the lottery, and you have a better chance at getting struck by lightning that hittin\' that....