Everyone should agree that the most immediate fiscal problem is the structural General Fund deficit. Excluding future health care costs, the structural deficit is around 4% to 4.5% of GDP. This serious problem has been caused almost exclusively by Bush’s policies. And imagine if the economy slows next year, as many people expect, adding a cyclical deficit on top of the huge Bush structural deficit. So isn’t it reasonable to suggest that Mr. Bush and the GOP fix the structural deficit first, before addressing other long-term issues? Of course.
Andrew Samwick agrees:
the appropriate target for the General Fund deficit is for it to average to zero over a business cycle. A corollary to that is that the General Fund should be in surplus during the non-recessionary parts of that business cycle. (A slightly weaker target that I would also accept is that the Debt/GDP ratio not trend upward over time.) This Administration seems to have no problem submitting budgets that don’t conform to this target. Certainly the Congress doesn’t aspire to a higher standard. So as much as I would like to see the looming financial crises with entitlement programs averted, CR’s requirement of the current leadership in the White House and the Capitol is a reasonable one to impose as a precondition for agreeing to a bipartisan effort to address what will be the most immediate budget issues in a decade or two.
And thanks to Dean Baker for pointing out the Trojan Horse embedded in the Kerrey-Rudman proposal:
In addition to conflating Social Security and Medicare as “entitlements” that will pose problems, the column also has a few other standard scare tactics.
One explanation for President Bush’s fiscal insanity is that he really wishes to impose what I have dubbed backdoor employment tax increases by slashing Social Security benefits by more than any reductions in payroll “contributions”. Dr. Samwick and I have what I think is a basic agreement on the Social Security Trust Fund debate – that we should address its long-term solvency problems but that we should not use the current surpluses to bail out the General Fund mess. If that is the Bush plan, shame of Kerry and Rudman for playing along with it. And shame on me for not getting this right away. My thanks to my fellow Angrybears and especially to the always delightful Dean Baker who unloaded this critique of the Washington Post:
The fact that the Post prints this stuff would not be so bad if they would occasionally allow an opposing view. They don’t. The Taliban Times will run a picture of the prophet Muhammad in a compromising position before the Post ever runs a column explaining that there is no “entitlement crisis,” just a broken U.S. health care system.