Bush: We Can Balance The Budget And Not Raise Taxes
In his seventh State of the Union speech, President Bush asserted that we can balance the budget without raising taxes (just control spending) and -- almost in the next breath -- that we can simultaneously make Medicare and Social Security "permanently sound."
And no, he didn't talk about the CEO global warming challenge.
But are these two bald assertions realistic, achievable?
Not according to
the Comptroller General, David M. Walker. On 10 January, he told an audience in Columbus, OH that Medicare, Medicaid and Social Security account for 40 percent of the 2006 budget; interest is 9 percent; defense is 20 percent. "All other spending" is 32 percent of the budget - compared to 29 percent 20 years ago. Explicit liabilities -- publicly held debt, military and civilian pensions and retiree health and "other" -- have increased 52 percent since 2000. All "major fiscal exposures" have increased 147 percent since 2000 .... and yet President Bush asserts that we can solve these problems simply by reducing spending?
Walker does not seem to think so, at least not without major restructuring of government:
GAO's simulations show that balancing the budget in 2040 could require actions as large as
- Cutting total federal spending by 60 percent or
- Raising federal taxes to 2 times today's level
In addition, he said, in his Powerpoint presentation:
"Closing the current long-term fiscal gap based on reasonable assumptions would require real average annual economic growth in the double digit range every year for the next 75.
Who are you going to believe? An elected politician ... or the nation's chief financial officer?
Walker closes with a screaming headline: "On selected [OECD] key economic, social and environmental indicators, on average, the US Ranks 16 out of 28."
This is not a "new" speech. In October, Walker called our current fiscal policy "unsustainable." In late 2004, he said that the nation has a "leadership deficit" when it comes to budget matters, illustrated by these data:
Congress has outspent its own income in 45 of the last 50 years, thereby running up deficits by over $5 trillion. But $4 trillion of those deficits were in just the past 20 years. And then President Bush's budget submission this past February projected $3 trillion more of deficits in just the next 6 years. That is how much Congress itself actually spends in excess of its own income tax revenue. In government lingo, those are the real "on-budget" numbers.
Who do you believe, Bush or Walker?
(updated)
Bush On Gasoline
Last year the President talked about our "addiction" to oil -- and this year he's calling on the addict not to moderate consumption but to change the nature of his fix: "Let us build on the work we've done and reduce gasoline usage in the United States by 20 percent in the next 10 years."
No sacrifices for US citizens here. Boost alternative fuel use and (finally) do something significant with CAFE standards for cars. In 2005, the Bush Administration did little to promote improved fuel efficiency for trucks and SUVs:
Under the Bush proposal, only one-quarter of the light truck fleet will have to meet or exceed the current 2008 standard. And almost half the fleet (47 percent) escape the 2011 standard. [This assumes that the ratio of small-to-large vehicles does not change in the next six years.]
And despite having a Congress controlled by his party, the President failed to stimulate Congressional leadership to act on CAFE standards for automobiles. Congress froze the standards from 1995-2001. Until 2008, Republicans have controlled both Houses of Congress since 1995, with the exception of the Senate in 2001-2002. The standard for cars, almost 20 years old, is 27.5 mpg.
Year-to-year, our demand for gasoline increases about 1.5 percent, according to the Energy Administration. To break even in 10 years, we have to first stop the year-to-year increase. In 2004, DOE thought we'd increase daily consumption from 2005 to 2015 by about 3 million barrels per day.
How are we going to reduce consumption? Incentives to businesses for telecommuting? Improved mass transit? No details. [The speech was, as most of these are, short on details... where the devil lives, donja know.]
But as long as the price at the pump reflects a crude price of about 18 cents or so per pint ... it's unlikely most of us will make major changes in our transportation habits (assuming we have the power to make a change.)
Aside: Why is he going to talk to us AGAIN next week on the state of the economy? Three speeches in as many weeks? What's up with that?
Also, see:
- The Loneliest Job In America
- House Tax Cuts: Election Year Pandering
- Sobering Budget News: "Spending Our Way to Financial Ruin"
- CAFE (Fuel Efficiency) Standards for Passenger Cars and Light Trucks
- Proposed Mileage Standards for SUVs, Minivans and Pickups
- Bush Asks Congress For Improved CAFE Standards
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