Bush supporters credit the President with cutting taxes (and, mumble mumble, boosting spending) in order to stimulate economic growth and dig us out of recession. "Works every time!" they say.
Well, duh. Borrowing $1.9 trillion and injecting it into the economy should certainly provide some stimulus. The real question is: does the extra economic growth justify the debt incurred? How long will it take to pay that debt?
To answer that question I've put together a spreadsheet that (hopefully) is downloadable via this link. It lets you input relevant variables and see the effect on the deficit, the debt Bush has incurred during his term, and the total national debt.
(If the link doesn't work, please e-mail me and I'll fix it.)
I start with FY2005. The numbers come from Treasury Department data.
For instance, Bush has incurred about $1.9 trillion in debt through the end of FY2005. If we assume that inflation averages 2.2%, revenue grows a fairly robust 2% above inflation, and spending grows a relatively restrained 1% above inflation, we see three things:
- It will take until 2021 to run a budget surplus;
- It will take until 2033 to pay off the Bush debt;
- It will take until 2041 to pay off the national debt.
It is therefore doubly irresponsible to borrow huge amounts of money in order to stimulate the economy. First, because the debt will take so long to pay off; and second, because we lack the fiscal discipline to avoid spending the eventual largesse.
For those of you praising Bush for cutting taxes without cutting spending: think fondly of him in 2020, when you're still paying off the debt he rang up on your behalf.
economy, Bush, tax cuts, deficit, budget, politics, midtopia
4 comments:
You might find the book Empire of Debt by Addison Wiggin and Bill Bonner to be interesting...
You are absolutely right about spending. I wonder how much of that was the prescription drug benefit.
IIRC, the drug benefit was about $400 billion over 10 years and paid for entirely by borrowing.
I don't have a philosophical problem with providing a drug benefit, but the clauses that prevent it from actually controlling costs, and the failure to pay for it, make it a horrible piece of legislation, a pure pander to retirees.
Douglas, I'll check the book out; a few quick searches look intersting. I don't really explicitly connect the debt to neo-conservatism, but that's an interesting thesis.
But wait, the prescription drug benefit was estimated to cost around $535 billion just after it was signed. And now, (from the same office that made the earlier two estimates) it is up to $740 billion.
Another difficulty with all of the budget calculations is that the closest we have come to a surplus was in 2000, with a reported surplus of 230 billion. However, when you realize that receipts from the social security tax exceeded outlays by exactly that much, you realize that this "surplus" was a fictitious Clintonian accounting trick. This money was collected for the purpose of paying out social security benefits, but instead, the social security accounts got a quarter-of-a-trillion IOU from the federal government. And, to top it off, Bush comes into office and proceeds to gives us back the same money (and more!)
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