GOP: PARTY OF FISCAL IRRESPONSIBILITY
Awash in red ink:
The U.S. government has been running up bills -- notably the promises of pensions and health-care benefits for military veterans and millions of other retirees -- without putting the obligations on the books.
That is what is really scary about the financial report. It contains page after page of graphs showing the probable future course of income and expenditures for Social Security and Medicare. In each chart, the dotted line for spending climbs far faster than the solid line for revenue. Beginning a decade from now, the shortfalls explode in what Cooper calls "a perfect storm" of fiscal ruin.
Cooper is not alone in this worry. David Walker, the head of the Government Accountability Office, official bookkeeper for Congress, said at a briefing last week that the $760 billion accrual deficit "amounts to $156,000 of debt for every man, woman and child in America. For a family, it's like having a $750,000 mortgage -- and no house."
Walker, who has been traveling the country trying to spread the alarm, said flatly that if the tax cuts now in effect are made permanent, as President Bush is requesting, and spending continues to rise at the current rate, "the system blows up. More than half our debt is now financed by foreign countries, and they will exact a price."
Digging out of this mess "will take 20 years," Walker said, but the first step is simply to reassert the budget controls -- spending caps and a "pay-go" rule that requires offsets for any new tax cuts or spending increases.
The Republicans who let those lapse in 2002 refused once again this year to put them back in the budget resolution.
Just TRY, you Rethuglicans, to run on the "fiscal responsibility" plank. I dare you.
Tags: fiscal policy, Republicans, Bush administration, federal budget
posted by Motherlode at 5:43 PM
5 Comments:
What is the deficit as a percentage of GNP?
How does that percentage compare to other eras in American history?
The debt as a percent of GDP is more or less irrelevant. The more important number is the percentage of tax revenue that goes to paying interest. This is what directly effects our ability to pay back the debt and in the long term will effect the value (or lack of) of the debt and our interest rates. That said the debt as percent of GDP is somewhere in the 60%-70% range and I think the deficit as a percent of GDP is around 5%. Check out my efforts to fight the debt and what you can do to help. Even something small like putting a link to this site will help. http://www.payyourshare.blogspot.com/
The debt and deficit in other areas of history have been higher but, there where several fundamental diffrences between then and now. The three biggest being that the spending was largely one time emergency spending, the economy was booming, and tax rates where higher.
"The debt as a percent of GDP is more or less irrelevant."
I prefer the measure of GNP to GDP, but either way the percentage is entirely relevant. That measure allows us to view the deficit in *historical* terms rather than merely referring to illusionary rhetoric (typically phrases like "if you stacked $100 bills from here to the moon...").
My point is that its quite easy to get worked up about the "record deficit", but when viewed in relation to other measures of economic performance, perhaps the sky *isn't* falling.
young activist:
I visited your site and read your suggestions in relation to eliminating the deficit. Were we to adopt your strategy, we'd CRATER the US economy in no time at all. Go back to your "Econ 101" notes and review the expected behavior of businesses in free market economies when faced with the prospect of (significant) increases in the costs of doing business. The layers of taxes that you suggest would cause massive layoffs, reduce capital expenditures, and bring the economy to a standstill. That's not going to help you raise tax revenues--they'll be no "profits" to tax (nor will the laid-off workers be paying income taxes).
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