The latest installment of the CBO’s Budget Outlook for the US government was released yesterday. The headline figure being reported is an estimate of a 2005 budget deficit of $368bn, not including funding for Iraq and Afghanistan.
But the more troubling part of the report is the prospect for little improvement in the budget any time in the next 10 years, at least under the Bush administration’s stated policy aims. Bush is on record as wanting to reform the AMT, to make permanent the tax cuts that are set to expire in coming years, and to continue to fully fund military operations in Iraq and Afghanistan. If we amend the CBO’s estimates to include this Bush administration wish list, this is what we find. For the budget deficit:
And for the stock of federal government debt:
Note that these are the projections for the deficit and debt assuming that all discretionary spending is completely frozen in real terms, assuming healthy and steady economic growth continually over the next 10 years, and assuming that there is no additional borrowing done to finance any changes to the Social Security Insurance program. Needless to say, amending those possibly unrealistic assumptions would render the budget numbers even worse, perhaps by a lot.
When we look back at the Bush presidency in 10 or 20 years, I feel confident that this massive run-up in government debt – and the negative side-effects that it will visit on the US economy – will be one of Bush’s most enduring legacies.