Bush adm leaves a record $482 billion deficit

[haz]

If it were Olympics in dept, Bush wins.

source: http://www.nytimes.com/2008/07/29/wa...ss&oref=slogin

WASHINGTON — The White House predicted Monday that President Bush would leave a record $482 billion deficit to his successor, a sobering turnabout in the nation’s fiscal condition from 2001, when Mr. Bush took office after three consecutive years of budget surpluses.
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Times Topics: Federal Budget (US)

The worst may be yet to come. The deficit announced by Jim Nussle, the White House budget director, does not reflect the full cost of military operations in Iraq and Afghanistan, the potential $50 billion cost of another economic stimulus package, or the possibility of steeper losses in tax revenues if individual income or corporate profits decline.

The new deficit numbers also do not account for any drains on the national treasury that might result from further declines in the housing market.

The White House forecast was prepared before passage of the huge housing assistance package that Mr. Bush has promised to sign. That legislation would put taxpayer money at risk in numerous ways, especially if housing prices continue to decline.

Mr. Nussle predicted Monday that the deficit would more than double in the current 2008 fiscal year — to $389 billion, from $162 billion in 2007 — before shooting up to $482 billion in the 2009 fiscal year, which begins in about two months.

The deficit projected for 2009 would be the largest in absolute terms, easily surpassing the record of $413 billion in 2004. The White House and many economists prefer to measure the deficit as a share of the economy. The projected 2009 deficit would be 3.3 percent of the economy. That is the largest share since 2004, but well below the percentages recorded in the 1980s and early 1990s. In 1983, the deficit was 6 percent of the overall economy.

The bleak outlook for the budget will crimp the ability of the next president to carry out ambitious spending plans. And it adds to fiscal pressures that were already building because of the growth of Medicare and Social Security.

Senator John McCain of Arizona, the presumptive Republican presidential nomination, said the new report showed “the dire fiscal condition of the federal government.”

“There is no more striking reminder of the need to reverse the profligate spending that has characterized this administration’s fiscal policy,” Mr. McCain said.

Jason Furman, the economic policy director for the campaign of Senator Barack Obama of Illinois, the presumptive Democratic nominee, said Mr. Obama would cut wasteful spending, close corporate tax loopholes and roll back tax cuts for the wealthiest Americans, “while making health care affordable and putting a middle-class tax cut in the pocket of 95 percent of workers and their families.”

Mr. Furman said Mr. McCain was “proposing to continue the same Bush economic policies that put our economy on this dangerous path.”

The new estimate of the 2009 deficit was $74 billion higher than Mr. Bush and Mr. Nussle had predicted in the president’s budget just six months ago.

Mr. Nussle said the deterioration of the fiscal outlook resulted from “a softening of the economy,” and a reduction in anticipated revenue. He attacked Congressional Democrats, saying they had allowed spending to grow out of control.

Representative John M. Spratt Jr., Democrat of South Carolina and chairman of the House Budget Committee, said the new deficit figures confirmed “the dismal legacy of the Bush administration.”

“Under its policies,” Mr. Spratt said, “the largest surpluses in history have been converted into the largest deficits in history.”

The recently passed housing bill authorizes the Treasury Department to spend virtually unlimited amounts to rescue the nation’s two mortgage finance giants, Fannie Mae and Freddie Mac, should they be at risk of collapse. The Congressional Budget Office estimated the new rescue authority could add a total of $25 billion to the deficit in the next two years.

The budget office said there was a better than even chance the rescue authority would not be used, so there would be no cost. On the other hand, it said there was a 5 percent chance that one or both of the mortgage giants would need such assistance to cover as-yet-unrecognized losses greater than $100 billion.

Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan budget watchdog group, said of the federal commitment: “It may not cost anything. But if it costs a little bit, it may begin to cost a lot. You start to deal with market psychology here. It all adds up to a pretty scary picture.”

On Monday, the Bush administration announced a new program that could reduce some of taxpayers’ huge exposure to Fannie Mae and Freddie Mac and, at the same time, reduce the dominance of the companies.

Treasury Secretary Henry M. Paulson Jr. said that four of the nation’s largest banks had endorsed an administration effort to create a new market in a financial instrument that could be used to finance mortgages. The instrument, known as covered bonds, could provide a new source of cash for lending institutions.

When Mr. Bush took office, he predicted that federal debt held by the public — the amount borrowed by the government to pay for past deficits — would shrink to just 8 percent of the gross domestic product in 2009. He now estimates that it will amount to 40 percent.

Senator Kent Conrad, Democrat of North Dakota and chairman of the Senate Budget Committee, said, “President Bush will be remembered as the most fiscally irresponsible president in our nation’s history.”

Mr. Nussle bristled when asked about the Democrats’ suggestion that Mr. Bush had transformed a surplus into deficit.

“There is much more to the book than the first page and the last page,” Mr. Nussle said. “There are many, many pages and chapters in between. Democrats seem to have not read all of them.”

Mr. Nussle asserted that Mr. Bush had inherited a recession and had to make up for years of inadequate spending on the military, intelligence and homeland security under President Bill Clinton.

The new White House report also includes these predictions:

¶Total federal revenues will decline slightly from 2007 to 2008.

¶In 2008 and in each of the next three years, corporate income tax collections will be lower than the amount collected in 2007.

¶Federal spending will increase nearly 8 percent this year and then 6.5 percent in 2009. In 2009, federal spending will be equivalent to 21.1 percent of the economy, the largest share since 1993.

The White House now predicts that the economy will grow 1.6 percent this year, after accounting for inflation, compared with its estimate of 2.7 percent in February. The estimate of growth for 2009 was also lowered, to 2.2 percent, from 3 percent.

Edward P. Lazear, chairman of the president’s Council of Economic Advisers, pointed to oil prices as a culprit. “Every time oil prices go up, it takes off some growth from our economy,” Mr. Lazear said.

Spending on some domestic programs — like veterans’ medical care, unemployment benefits and food and nutrition assistance — is growing faster than in the comparable period last year.

Another factor adding to the deficit is the distribution of tax rebates to individuals under the economic stimulus package signed into law by Mr. Bush in February. About $79 billion has been paid out through June.

Stephen Labaton contributed reporting.

[Jacobfox]

This seems a bit low actually. I think the correct number was close to the trillions of dollars.

[Lilleput]

Originally Posted by Jacobfox

This seems a bit low actually. I think the correct number was close to the trillions of dollars.

Isn't that just what was spend on the War?

[Gatecrasher]

Well I'm stoked.

[Labcoatguy]

It's all inflation. Just look at the article, it even admits that in real terms this "record" is meaningless. Of all the things to nail Bush on they can do so much better than that.

[RUU-CHAMA]

Wait four more years. I have a slight hunch that the deficit will be much worse, but that will also be blamed on Bush, who will be four years gone already.

[ESPNSTI]

If you don't have the money, then don't spend it.

Evidently that's too difficult for the professional ostrich brigade.

[nist7]

Originally Posted by Jacobfox

This seems a bit low actually. I think the correct number was close to the trillions of dollars.

The national debt of the USA as a whole is about 9.5 trillion dollars

(9,540,689,536,562 dollars and 79 cents as of 07/25/2008 according to http://www.treasurydirect.gov/NP/BPD...application=np)

The debt incurred by the Bush administration on top of the national debt is 482 billion dollars, according to this article.

[Censport]

Originally Posted by ESPNSTI

If you don't have the money, then don't spend it.

Evidently that's too difficult for the professional ostrich brigade.

Oh yeah, no country, prior to the current U.S. adminstration, has ever had trouble with that.

"The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled." -Cicero. 106-43 B.C.

We've had both debt and deficit constantly since the 1940's. Anybody who thinks it's new or exclusive to the Bush administration, or caused or even aggravated primarily by our actions in Iraq, needs to understand a few things:

- Congress does the spending.

- Clinton eliminated neither the debt nor the deficit. He once signed a budget submitted by a GOP-majority congress that created no new debt. That's the "surplus" Democrats hail Clinton for.

- Our expenses in Iraq make up less than 7% of the national budget. Our spending on entitlement programs (welfare, etc.) makes up 60%.

- Even in the short time Obama has been a senator, he requested $740,000,000 in earmarked spending alone. McCain? $0. You want to cut needless spending and reduce the deficit? You'll need more than undefined promises of hope and change.

- The U.S. budget deficit will not be eliminated in our lifetimes, or anyone else's. It will just continue until the country collapses. How it's managed will determine how long the country lasts.

[jayhawk]

That is a great post, but many will skip over what you have typed; they see the word Bush and red mist descends over their eyes, and logic takes a backseat to passion and emotion.

[tigger]

Originally Posted by Censport

- Congress does the spending.

The president can veto bills.

Originally Posted by Censport

- Clinton eliminated neither the debt nor the deficit. He once signed a budget submitted by a GOP-majority congress that created no new debt. That's the "surplus" Democrats hail Clinton for.

Wow, I sure wish republicans were still budget conscious.

Originally Posted by Censport

- Our expenses in Iraq make up less than 7% of the national budget. Our spending on entitlement programs (welfare, etc.) makes up 60%.

And the president continues to propose not budget cuts, but tax cuts. Tax cuts biased towards those who need it the least and were it has a lesser effect on the economy.

Originally Posted by Censport

- Even in the short time Obama has been a senator, he requested $740,000,000 in earmarked spending alone. McCain? $0. You want to cut needless spending and reduce the deficit? You'll need more than undefined promises of hope and change.

Well, it's undefined promises of hope and change and other assorted BS, or a senile republican pandering to the christian right. I don't like either.

Originally Posted by Censport

- The U.S. budget deficit will not be eliminated in our lifetimes, or anyone else's. It will just continue until the country collapses. How it's managed will determine how long the country lasts.

Now that's cynical, even by my standards. To be sure, we couldn't hope to continue at our current pace and repay the debt. And if we do go under, at least we had one hell of a time .

I'm not solely blaming Bush for the budget deficit, that would just be silly. But to just blow it off isn't any smarter. It's just one more screwed up thing that happened under his watch.

[haz]

continue

[Censport]

Originally Posted by tigger

The president can veto bills.

Yes, and Congress can over-ride vetoes. Both have happened.

What happens is that Congress takes crucial spending bills -funding necessary for the government to function- and attaches all sorts of frivolous earmark spending to them. The president doesn’t have the option of a line-item veto (and Congress refuses to grant him that power, for the obvious reasons) so he can’t veto the frivolous spending without vetoing the crucial funding. He can send the budget back for revision, but he also has a time frame to work in.

Remember during Clinton, when the president and the Gingrich-led Congress couldn’t agree on a budget, and the media went into a tizzy that the federal government would shut down if a budget wasn’t signed in time? Well, Congress refused to budge and the federal government did indeed shut down for a bit. Gingrich called Clinton’s bluff, and Clinton ended up signing the submitted budget.

So yes, the president can veto spending bills, but not individually. The president needs the line-item veto option if spending is to ever be controlled.

Wow, I sure wish republicans were still budget conscious.

Me too! I miss the those days. I guess if one stays in Congress long enough, one ends up becoming a liberal.

And the president continues to propose not budget cuts, but tax cuts. Tax cuts biased towards those who need it the least and were it has a lesser effect on the economy.

Yes, this president needs to do more to decrease spending. But as I've noted before, the majority of the government's spending is on entitlement programs. The democrats have made sure that any cuts (or even increases that are reduced from previous proposals) are vilified, and anyone suggesting such cuts gets painted as a big meanie who hates old people, poor people, black people... you get the idea.

Here’s a lesson about trying to “stick it to the rich” by raising their taxes. Back in the 90’s we had a luxury tax on expensive cars, planes, boats and jewelry. The threshold on cars was $30,000. At the time, I was working at a Porsche dealership.

Basically, wealthy people stopped buying new Porsches. Dealerships lost revenue. I had fewer cars to work on. We sold fewer parts. People got laid off. Before the luxury tax, America was 60% of Porsche’s worldwide market. When America stopped buying Porsches, their sales plummeted to 6,000 cars (they sold 36,680 cars here last year). Since Porsche lost revenue, laid off workers as well, and even restructured the business, including how the cars were built. This also affected Porsche’s budget for designing and releasing new models. Middle-class workers both in America and Germany lost their jobs because envious liberals wanted to “stick it to the rich”. The rich, of course, remained rich, and only “suffered” by not having the latest Porsche in their garage.

Want to know what happened when the tax was lifted?


The boat industry was hit even harder domestically, laying off almost 1/3 of their workforce. By contrast to my experience at the car dealership, many boat owners simply had their boats built in other countries, such as Finland, and made the purchase from overseas accounts to avoid the U.S. tax.

So the rich, you see, don’t have a “lesser effect” on the economy. The top 5% of wage earners pay 60% of all federal income taxes. They also account for the bulk of investment capital, which is what fuels business, research and employment. I don’t know about you, but when I look for a job, I go to rich people, not poor people. Rich people are where the jobs are.

Speaking of tax cuts, did you get your “stimulus check”? Lots of people did, and they spent the money, which –gasp- stimulated the economy. So that tax cut is good, but tax cuts for investors are bad?

We need a tax system that is not based on envy and jealousy.

Well, it's undefined promises of hope and change and other assorted BS, or a senile republican pandering to the christian right. I don't like either.

I'm not a fan of McCain, but I haven't seen him pandering to the "Christian Right" much. But hey, what about the "Christian Left"? Like my sister, the pro-gay-marriage Episcopalian heterosexual?

And I would hardly call McCain senile. He has a better grasp on things than Obama. Obama, for example, stated that -as president- he would call the Joint Chiefs of Staff into his office and tell them to end the war in Iraq quickly. Not only is that not how the JCoS function, but we're already withdrawing our troops and have been below pre-surge levels for a few months now.

Now that's cynical, even by my standards. To be sure, we couldn't hope to continue at our current pace and repay the debt. And if we do go under, at least we had one hell of a time .

Okay, I'm cynical. And yes, we'll have to cut the budget drastically, and stop spending money on projects that only make us feel better about ourselves. No more bailouts, no more subsidizing generations of able-bodied, lazy people. And no more tax shelters, such as the Kennedy family's $500,000,000 in Fuji accounts, managed by Senator Teddy "stick it to the rich" Kennedy.

I'm not solely blaming Bush for the budget deficit, that would just be silly. But to just blow it off isn't any smarter. It's just one more screwed up thing that happened under his watch.

[Gatecrasher]

Originally Posted by jayhawk

That is a great post, but many will skip over what you have typed; they see the word Bush and red mist descends over their eyes, and logic takes a backseat to passion and emotion.

Because logically its really a great administration that has done inconceivable good for America, right?

[Symbotic]

According to the Tax Foundation, the top 1% of wage-earners in this country pays nearly 40% of the burden (an 11% INCREASE over 1999, when WHO was President? Oh that's right...Bill Clinton). Not fair? Well, you may be saying, 'that's because they have ALL the wealth!' Wrong again. The top 1% of earners account for just 21% of the total adjusted gross income. Hmm. Come to think of it...you're RIGHT! That really isn't fair. They're paying DOUBLE what they should be. By the way, the top 10% of earners pay 70% of the load. When you get all the way down to the top 50% of earners, they account for 96.4% of the entire tax burden. The next 10% pays 3.6%. And the bottom 40% of wage earners...pay NOTHING. That's right, nothing. In fact, they pay nothing, and then often get a "refund" (handout) at years end.

[Labcoatguy]

Originally Posted by Symbotic

Not fair? Well, you may be saying, 'that's because they have ALL the wealth!' Wrong again. The top 1% of earners account for just 21% of the total adjusted gross income.

Careful, wealth != income. How much of this calculation for income includes dividends, capital gains, etc etc on top of salary and wages? I'm highly skeptical of any proclamation of any statistic calculated by an organization with an agenda unless I can see the calculations behind it, especially when it's so easy to leave things out, like in this case.

[Symbotic]

The IRS releases income tax data every year. The Tax Foundation just analysisis it.


http://www.taxfoundation.org/taxdata/show/23408.html

[Censport]

Originally Posted by Labcoatguy

Careful, wealth != income. How much of this calculation for income includes dividends, capital gains, etc etc on top of salary and wages? I'm highly skeptical of any proclamat