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At least the public sees problem with deficits
by Sarah Littman
published October 4, 2005
Making up for his slow start and undoubtedly galvanized by abysmal poll numbers,
President Bush now appears willing to lavish unlimited resources on the Gulf
region: "It's going to cost what it costs." Kind of like Iraq.
Yet as U.S. finances continue to hemorrhage red ink, our fearless (clueless?)
leader insists that taxes will not go up. At least he didn't ask us to read his
lips. Instead, Bush's economic advisers say hurricane recovery costs will be
covered by borrowing.
Pre-Katrina, the Congressional Budget Office estimated the fiscal year 2005
deficit at $331 billion, with a drop to $314 billion for 2006; but that omits
the cost of wars in Iraq and Afghanistan, on which we've already spent $300
billion. And now key congressional leaders, including Senate Budget Committee
Chairman Judd Gregg, R-N.H., say the taxpayers' tab for Katrina may hit $200
billion, which would push next year's deficit to a record $500 billion.
Last week, officials in Washington were playing down remarks by Thierry Breton,
France's finance minister, after a closed-door meeting with Federal Reserve
Chairman Alan Greenspan. Breton quoted Greenspan as saying "we've lost control"
of the budget deficit.
Even Wall Street, traditionally a bastion of GOP support, is worried about the
Bush administration's fiscal profligacy. Barry Ritholtz, chief market strategist
for Maxim Group, a New York investment firm, worries that the budget deficit
will slow down the economy.
"When the government is running an enormous deficit, that has the tendency to
suck up capital that would otherwise wind up in private sector," Ritholtz said.
Not to mention the fact that the countries currently supporting our spending
binge (China and Japan, for starters) will eventually require higher interest
rates in order to make U.S. debt attractive compared with other alternatives.
And businesses (not to mention homeowners) don't like high interest rates.
Economics 101.
With control of both houses of Congress and the executive branch, the GOP can't
blame the scale of the deficit on anyone but themselves. True, there's been the
war and the hurricanes. But for folks who rode into town preaching limited
government and tax cuts, Mr. Bush and friends have been spending rather, uh,
liberally.
Domestic discretionary spending has increased under George W. Bush twice as fast
as under the man conservatives love to hate, Bill Clinton. The Republicans have
adopted the "Tax less, spend more" approach to fiscal discipline as if drunk on
their own unchecked power. With the GOP in control of both houses, the president
has never lost a crucial vote on spending, and he's rewarded Congress with pork
(take last July's transportation bill). Bush hasn't vetoed a single spending
bill in his five years in office.
This government is spending money like a drunken sailor. Unfortunately, it's our
children and grandchildren who'll be waking up with the fiscal hangover.
Those who voted for Bush in the last election because they were worried about
the Democrats' "liberal" spending should consider David Brooks' recent
observation that fiscal profligacy has more to do with being the majority or
minority party than on being a Republican or Democrat. "If you are a majority
party, you try to use dollars to buy votes regardless of what your official
ideology is," Brooks said.
Even a simple mind like mine can work out that this country must cut
expenditures and/or increase income in order to stem the flood of red ink.
So what do "We, The People" think?
A recent Associated Press/Ipsos poll showed that 42 percent of those surveyed
believed we should cut spending in Iraq in order to pay for hurricane relief
(what about "supporting the troops"?); 29 percent felt we should delay or cancel
additional tax cuts, 11 percent favor cutting other domestic spending and only
14 percent said we should add to the federal deficit. A Gallup/CNN poll found 54
percent of respondents wanted to cut Iraq spending, 6 percent to cut domestic
spending, 15 percent to add to deficit and, here's the surprising thing, 17
percent of respondents thought we should raise taxes. A CBS/New York Times poll
found an astonishing 56 percent of those polled were willing to pay higher taxes
to pay for Katrina costs.
I can already hear the supply-siders over at the National Review grinding their
teeth. You guys want tax cuts? Target them to the Gulf region to encourage
investment, rather than cutting taxes across the board.
These polls show Americans aren't afraid to make sacrifices for their country in
times of need. If we have to roll back tax cuts, so be it. Perhaps Mr. Bush
should read our lips.
Sarah Littman, who lives in Greenwich, is author of "Confessions of a Closet
Catholic," published by Dutton Children's Books.
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