The National Review never ceases to disappoint:
The country was facing the largest projected deficit in history when Bush promised to halve it as a percentage of GDP by 2009. Due to high wartime spending and the residual effects of the 2000–01 recession, the White House expected the 2004 deficit to reach $521 billion, or 4.5 percent of GDP. Bush’s goal was to reduce this to 2.25 percent by 2009. After all the beans were finally counted, the 2004 deficit came in at $413 billion—roughly 3.5 percent of GDP. The economy had begun expanding, partly in response to Bush’s tax cuts, creating jobs and boosting revenue. This trend continued into the next year, pushing the deficit down to $319 billion in 2005. This year, the projections look even better.
I admit to being an odd bear as I don’t like hot weather and yet I live in Los Angeles. It was so hot yesterday that I quipped the highs today will top 100 degrees. I’m happy to report that the temperatures are in the 80’s. But no – I’m not wearing a sweater.
The National Review is talking about the unified deficit not the much larger General Fund deficit and maybe they did not get the memo – but that 4.5% forecast was seen as bogus at the time. Table B-79 of the 2006 Economic Report of the President shows that the unified deficit was 3.6% of GDP in 2004 – which was higher than any level observed since 1993. Contrast that to the unified surplus equal to 2.4% of GDP observed in 2000.
We should also note that the forecast for 2006 is for the deficit to hit 3.2% of GDP. Of course, this is also a bogus forecast which we will likely beat. It is true that economic growth over the past couple of years has been better than the pathetic growth rates observed during 2001 and 2002, but then recessions come and go even without tax cuts.
Update: Thanks to AB reader Howard for noting that the National Review thinks that the recession began in 2000. The NBER begs to differ.