After Adjustment for Political Reality, Deficit Projections Get Scary ....

After Adjustment for Political Reality, Deficit Projections Get Scary

By Allan Sloan
Tuesday, September 2, 2003; Page E03


Okay, fans. Summer's over, and it's back to school or work for almost all of us, alas. And what better way to tune up our post-vacation brains than to deal with some numbers? Big, important, scary ones. So, to get those synapses snapping, let's look at the figures that emanated from the Congressional Budget Office last week but seemingly vanished into the haze of late August.

You may remember something about a projected $1.4 trillion deficit over the next 10 years and dismissive remarks from the White House about how the numbers are unreliable. And there were reassurances from various gurus that these deficits aren't very big relative to the size of our economy. A fiscal food fight that seems strictly Yawn City. Pass the suntan lotion, dear, let's roll over and bake our other side.

But I've been back at work for more than a week now. So I read the whole report instead of just the summary. By law, the budget office has to assume that existing laws expire as planned, and that no new programs are added or subtracted. This report, however, includes numbers that you can use to adjust for political reality. Which I did. First, I counted the $2.4 trillion Social Security surplus, which the Treasury uses to offset its cash shortfall. Then I figured that the last three years of tax cuts will become permanent and that Congress will pass a Medicare prescription-drug package and stop the dreaded alternative minimum tax from hitting 30 million taxpayers. These changes add $3.6 trillion to the deficit. So by the time you're done, the total projected deficit is more than five times the aforementioned $1.4 trillion. Call it $7.4 trillion. And I'm being generous, assuming we spend nothing in Iraq starting Oct. 1, 2005.
snip...

http://www.washingtonpost.com/wp-dyn/articles/A12314-2003Sep1.html

just brilliant -- there are folk hee who have said much the same thing -- long before this piece came out.
and while i'm no good at math -- it's relatively easy to see that at least the deficit this year -- and 04 -- was going to be worse than predicted.
now, my question is, why were deficits bad x number of years ago and now they are good? and do we have it in writing that these deficits won't raise interests rates on the folk who can least afford it?
repukes always try to have their bread buttered on both sides.

Long-term rates have bottomed-out and started to climb.

agenda. And assuming we spend nothing in Iraq starting Oct. 1, 2005 might indeed be generous. At least the most affluent in our society will be able to enjoy that $2.4 trillion Social Security surplus in the near-term, money that now will not be available down the road. But there I go being cynical, for surely all those who benefit most from the recent tax cuts will help stock the pantry as the baby-boomer generation begins to stand in soup lines.

Iran, Syria, North Korea, et. al. Really, when are people going to wake up and smell our economy burning in the rubbish bin?