Joel Havermann reports:
President Bush can balance the budget within five years, or he can get Congress to extend his tax cuts beyond their scheduled expiration, the Congressional Budget Office reported Wednesday – but probably not both. Bush has said otherwise, committing himself in Tuesday’s State of the Union address, as he did earlier this month, to providing Congress on Feb. 5 with spending and tax proposals for fiscal 2008 that would put the budget on a path toward balance by 2012. “We must balance the federal budget,” Bush said Tuesday night. “We can do so without raising taxes.” The nonpartisan CBO, in its annual report on where current spending and tax policies would take the budget over the next 10 years, did not contradict Bush in so many words. But its tables painted an unmistakable picture of a budget that needed an extra infusion of cash or a sharp reduction in outlays if revenue were ever to exceed spending. And even if the budget could be balanced by 2012, said Peter R. Orszag, the CBO’s director, the retirement of the baby-boom generation could quickly unbalance it
When President Bush promises to avoid a tax increase, the faithful hear him saying that the “scheduled expiration” of the currently low tax rates will not occur. Schedule expiration to them is a tax increase. That the CBO is saying that without this scheduled expiration – the unified deficit will not fall to zero should not be surprising to anyone. But let’s say we did get this reversal of the Bush tax cuts and the unified deficit does fall to zero in 2012. That would still mean we have a general fund deficit. As Peter Orszag notes, the embezzlement of our Social Security reserves might continue. But it would seem such embezzlement is what some in the GOP have in mind:
“Congress is within reach of balancing the budget without raising taxes if significant entitlement reforms are enacted within the next five years,” said Rep. Paul D. Ryan of Wisconsin, the top Republican on the House Budget Committee.
Update: AB reader CoRev recommends we check out The Looting of Social Security: How the Government Is Draining Americas Retirement Account. From the review by Publishers Weekly:
Because he’s so hopping mad, everything’s a matter of hyperbole. Former president George Bush pursued “one of the most irresponsible fiscal policies in the nation’s history,” while Bill Clinton’s “outrageous deliberate lie” about budget surplus projections was his “greatest sin,” and after the current President Bush’s first State of the Union address, “perhaps never before in American history had the people been played for such fools.”
George H. W. Bush was less fiscally irresponsible than Ronald Reagan, but I would agree that the (ab)use of the unified surplus during the 1990’s opened the door for George W. Bush to play the American people for fools.