The Blue State

2006 deficit 81% higher than originally thought

After he was reelected as president in 2004, George W. Bush laid out a plan that he said would cut the federal deficit in half by 2008.  However, a new report released by the Treasury Department shows that the deficit is actually larger than expected, making Bush's goal even more unrealistic:

The federal deficit for 2006 would have been 81 percent higher than the$247.7 billion that was reported two months ago if thegovernment had to use the same accounting methods as private companies.

The report, released by the Treasury Department and the president'sOffice of Management and Budget, found that under the accrual method ofaccounting, the deficit for 2006 would have totaled $449.5 billion, not the widely reported $247.7 billion incurred under the cash system of accounting.

Under the accrual method, expenses are recorded when they areincurred rather than when they are paid. That tends to raise costs forliabilities such as pensions and health insurance.

Ten years ago, Congress ordered the government to start issuingannual reports using the accrual method of accounting in an effort toshow the finances in a way that was comparable with the private sector.

Until now, the trick has been to use any method possible that makes the deficit look less than what it really is.  And when that doesn't work, then just don't include certain expenditures, such as the Iraq war, in the budget.

Budget priorities have not been, well, a priority

Just in case you are wondering what kind of an impact the Republican-occupied Legislative and Executive branches have had on our National Debt, a study by the Center on Budget and Policy Priorities finds that the effect has been significant.  Between 2001 and 2006, GOP spending has raised the National Debt by almost $2.3 trillion.  It turns out that 51% of the debt was due to the Bush tax cuts -- which means that almost 20% of all the debt over the last six years came as a result of tax cuts for the richest 1% (since 1/3 of all the Bush tax cuts go to the top-1%). 

So, our children and grandchildren will face sky-rocketing interest rates, all because President Bush wanted Paris Hilton to get a tax break every single year.

This is just one of the many studies on the CBPP web site.

TABLE 1 Effect on the debt of legislation enacted over the last six years
	In 2006	Cumulative 2001-2006
	billions	billions	% of total
Tax cuts	$252	$1,159	51%
Defense, international and homeland security, incl. wars in Iraq and Afghanistan	238	767	33%
Entitlements, incl. flood insurance	75	229	10%
Domestic discretionary programs, incl. Katrina relief	68	139	6%
Total	633	2,294	100%
* All amounts include both direct costs and the resulting increases in interest on the debt.

Payback is sweet

Remember all those spending bills that the Republicans decided not to fund before Congress adjourned last week?  They were obviously passing them along to the Democratic Congress in order to bog Reid and Pelosi down, giving the Democrats less time to spend on their own agenda.

Well, the Democrats are giving the retiring GOP majority a taste of their own medicine.  Those bills that the GOP failed to pass actually contain billions of dollars worth of unnecessary earmarks (pet projects) for Republican Congressmen.  Rep. David Obey (D-WI) and Sen. Robert Byrd (D-WV), who will be the new Appropriations Committee Chairmen in the two chambers of Congress starting in January, have vowed to gut all the earmarks from those bills.  So, in the end, the GOP will pay a political price for not passing those bills on time:

"It is important that we clear the decks quickly so that we can getto work on the American people's priorities, the President'santicipated war funding request and a new budget," Obey and Byrd said.

Nonetheless, White House Budget Director Rob Portman called the Democrats' announcement disappointing.

"There are still more than nine months remaining in the fiscal year,and we believe we should be working on the remaining bills to achievethe best results possible for the American people," he said. He addedthat the administration wants to "maintain fiscal discipline and avoidgimmicks and unwarranted emergency spending."

The very fact that the White House would oppose what the Democrats did only proves how Republicans are now the party of big government.

John Spratt: balanced budget within five years

In 2004, President Bush pledged to cut the yearly deficit in half within five years.  Just two years later, we are continuing to spend more than we take in.  Democratic Congressman John Spratt (SC), who is expected to become the new Chairman of the House Budget-Writing Committee, says he will work to take us out of the red, in terms of our yearly deficit, within five years:

    Rep. John Spratt, the South Carolina Democrat who is expected to head the Budget Committee in next year's Democratically-controlled House, also said that any new spending initiatives his party will seek would not be allowed to add to budget deficits in the near-term.

    "We would simply like to go in a measured way toward deficit reduction and a balanced budget within the next five years," Spratt said in a telephone interview with Reuters.

Rule #1 in politics: don't make promises you can't keep.  He has now put his own job on the line, and assumed responsibility for any failure that the Democrats have in clamping down on wasteful spending in the near future.

It's nice to see someone put themselves on the chopping block like this.  We should all hold him to his word.

Social Security on the line this November

Right before the 2004 election, Democratic presidential candidate John Kerry was accused of scaring seniors into thinking President Bush wanted to privatize Social Security.  Unless you missed all of 2005, Kerry's prediction turned out to be accurate, although the GOP failed to get it passed.

Many believe that after November, the GOP will renew its push to privatize the system -- This privatization scheme would cut guaranteed benefits for seniors and add $2 trillion to the National Debt in transition costs (National Debt = Birth Tax).  According to the Center on Budget and Policy Priorities, a sudden spike in the National Debt beyond what it already is today would lead to higher interest rates.

The only way to assure that this privatization scheme does not pass the House and Senate is by voting blue.  Politics is usually complex.  But that reality is quite simple.

Some tax cuts, huh?

President Bush recently credited his tax cuts as the reason why the U.S. economy is growing.  But as the following two charts from the Center on Budget and Policy Priorities show, the economic expansion is slower than average, and since 2001 a large portion of the tax cuts have gone to the most wealthy.

Chart one: the kind of economy the tax cuts have caused.

Chart two: which income bracket has benefited the most.

I am not trying to engage in class warfare.  Someday I hope to be up there in income.  But if you believe there is a difference between needs and wants, and that hard work ought to be rewarded, then you can't say that it is alright for wages and salaries to be this low.

Another thing: tax cuts are special -- there is no other way of putting it.  If you want to argue for a regressive or flat tax, then fine be my guest.  But tax cuts are supposed to go to the income group that is most likely to spend it so the circular economic flow can continue.  This is basic macroeconomics.  Any money that gets removed from the circular flow of economic activity prevents the overall economy from growing to its potential.  An example of this is when money is saved instead of spent.  But the more money that is spent, the more money that is out there to help businesses, especially those smaller ones. 

When I say circular flow, this is what I mean:

The last time I wrote about this sort of thing, which was last spring, I was called a socialist.  But quite the contrary.  We are a consumption based economy.  There are positives and negatives to that economic system, but that is what we are.  The best way to help the economy through tax cuts is by giving tax cuts to individuals most likely to spend that money, not save it.  And the tax cuts for the rich?  Well, how about paying down part of the National Debt?  A locked box doesn't sound like such a bad idea now, does it?

Is this what fiscal conservatism looks like?

Fiscally speaking, there are two things voters need to remember heading into November: money doesn't grow on trees, and no Republican presidential administration has balanced the budget in more than 35 years.

Progressives often get labeled as big spenders.  But as government reports show, federal spending is expected to increase by 9 percent, fittingly the largest increase since under Bush Sr, the last Republican administration.

But even more significant, the National Debt has grown 33%, or $3 trillion, since President Bush got into office.  He did this with a Republican Congress that has been running on a fiscally conservative platform ever since 1980.  And they're calling Democrats fiscally irresponsible?

In responding to the GOP Congress' spending habits, Senator Kent Conrad (D-MT) took issue with the hypocrisy:

"This Republican leadership is in total gridlock -- refusing to act,refusing to compromise, and refusing to govern," said Senate Budgetranking member Kent Conrad, D-N.D.

The worst part about all this is that when today's GOP leadership finally does get exposed for their poor fiscal policies, none of them will be around to admit it.  We're talking about long-term economic consequences that will impact my generation unless Congress can enact a balanced budget amendment.

Bush to privatize Social Security if Dems don't win majority

A lot will be at stake this November -- maybe even more so for seniors and young Americans.  The Wall Street Journal reported this morning that President Bush will restart his push to privatize Social Security in 2007 if Republicans regain control of the House.  John Marshall of TPM Cafe reports:

In an interview published today in The Wall Street Journal (sub.req.),President Bush told editorial page editor Paul Gigot that next year heplans on partially phasing out Social Security and replacing it withprivate accounts, and that he thinks he can do it as long as theRepublicans retain control of Congress, which he thinks they will.

President Bush's Social Security privatization proposal calls for private savings accounts.  The proposed switch from public to private accounts would add $2 trillion to the National Debt over the next ten years due to transition costs.  Ten years after that, the privatized Social Security system would cost $3 trillion, $5 trillion the decade after that, and $5 trillion the decade after that -- most of which would have to be borrowed from foreign banks in China and the Middle East.  All this added debt would be a birth tax on future generations.

Lastly, even more fundamentally, Bush's privatization proposal cuts guaranteed benefits for seniors and future retirees:

According to the Social Security Administration's chief actuary, amiddle-class worker retiring in 2022 would see guaranteed benefits cutby 9.9 percent. By 2042, average monthly benefits for middle- andhigh-income workers would fall by more than a quarter. A retiree in2075 would receive 54 percent of the benefit now promised.

This is what the President and his Republican Congress want to happen next year if they regain control of Congress.  So who are you voting for this November?
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Other sites blogging about Social Security: Digg, Raw Story, TPMCafe, Crimes and Corruptions of the New World, Speaking Truth to Power, The Pennsylvania Progressive, Impolitically Correct, The Opinion Mill, Democrats.com, Mass Eye Opener, Suburban Guerrilla, Running From the Thought Police, News Trash, Celtic Progressive.

Stevens admits he did it

Within the last hour or so, Ted Stevens' office now admits that their boss was indeed holding the bill up.  TPM Muckraker blog once again has the story:

A spokesman forSen. Ted Stevens (R-AK) just confirmed his boss was the man behind thesecret hold on the Coburn/Obama spending database bill, which has captivated  a segment of the political blogging community in recent days.

"Sen. Stevens does have a hold on the bill," said the spokesman, whowould only speak on the condition he not be named. He added that Sen.Tom Coburn's (R-OK) office was notified of the hold after it wasplaced. So Coburn's comments two weeks ago may have been duly informed.

Now this is where Stevens' rationale, if he had any, for holding the bill falls completely apart.  It's as if a teenager tip-toed down to the kitchen in the darkness of night to grab a beer, only to have the kitchen light immediately flipped on by his parents.  He's exposed.  What will be Stevens' next move? Will he chug the beer, or give up and hand it over?  Stay tuned.

Ted Stevens hates transparency

The earmark bandit has been caught!  Yesterday, I suggested that Ted Stevens may have been the annonymous senator who blocked a bipartisan bill that was specifically designed to deter lawmakers from secretly adding pork into their bills.  It would create a national database that monitors every bill on the Senate floor, especially those with earmarks.  The public list would also contain the name of the senators that added the pork and the special interest groups that would benefit.

Due to Stevens' checkered past, it didn't take a genius to guess that he might have had something to do with the roadblock.  As it turns out, according to The Times Record newspaper in Arkansas via TPM Muckraker blog, Stevens has been outed by Tom Coburn (R-OK):

One of the senators most criticized for hispersonal projects, Sen. Ted Stevens, R-Alaska, has a hold of his own onCoburn’s bill to make public the spending patterns of the government.Called the Federal Funding Accountability and Transparency Act, thelegislation calls for the creation of a database open to the publicwhere citizens can track government spending.

“He’s the only senator blocking it,” Coburn said of Stevens.

There you have it!  So one senator, Ted Stevens, is desperate to deter accountability and transparency.  This is not a matter of a clear majority siding with Ted Stevens, or even a small minority for that matter.  Mr. Stevens is on his own, and his Republican Party is too stubborn to put a leash on him.

If you recall, Stevens was the senator who in 2005 secretly inserted $453 million into a budget bill to build a highway in Alaska that connected to two towns: one with a population 8,900, and the other with only 50 people.  As a result of bills like this, Alaska ranks number one in federal per capita spending.

Please e-mail your Senators and ask them to put pressure on Ted Stevens to stop blocking this transparency bill.  The National Debt is a serious problem, and it's about time we exposed those who waste our money.

(It should be noted that Ted Stevens is also the one who, on the Senate floor, said that the internet is "a series of tubes.")

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Other sites blogging about this issue: TPM Muckraker, Public Knowledge, MRDTalk, Bizzy Blog, Reality Well, Porkopolis, Impudent Domain.