Fiscally Unsound, Part II

May 28, 2008 at 6:29 pm 5 comments

2003
Bush budget shows record deficit, billions in tax cuts

  • Vowing to be a good steward of the public’s money, President Bush sent to Capitol Hill Monday a $2.2 trillion 2004 budget that calls for hundreds of billions in tax cuts and shows a record federal deficit of $304 billion
  • The proposed military spending increase is 4.2 percent, or a $15 billion boost to $380 billion. But the budget does not provide any funding for a potential war with Iraq, which has been estimated at $60 billion or higher.
    http://www.cnn.com/2003/ALLPOLITICS/02/03/bush.budget/

2004
White House Predicts 2004 Deficit Of $445 Billion — the Biggest Ever

2005
Record ’05 Deficit Forecast

  • Additional war spending this year will push the federal deficit to a record for fiscal 2005.
  • Bush has pledged to cut the budget deficit in half by 2009.
  • “Having racked up three of the largest deficits in history, the Bush administration is years away from reducing the deficit by half, or by any appreciable amount,” said Rep. John M. Spratt Jr. (S.C.)
  • In a separate briefing, CBO Director Douglas Holtz-Eakin said tax cuts and spending enacted by Congress last year will contribute $504 billion to the government’s overall forecast debt between 2005 and 2014.
    http://www.washingtonpost.com/wp-dyn/articles/A35029-2005Jan25.html

2006
Record US trade deficit in 2006

2007
U.S. trade deficit declined in 2007 after setting records for five consecutive years.

  • The trade deficit with China continued to rise, jumping by 10.2 percent to $256.3 billion. That was the largest gap ever recorded with a single country, as Chinese imports surged despite a string of high-profile recalls of tainted products.
  • Even with the lower overall deficit, the imbalance is still nearly double what it was in 2001, the year Mr. Bush took office.
    http://www.cbsnews.com/stories/2008/02/14/business/main3830222.shtml

2008
Bush Budget Could Shoot Government Spending to $3 Trillion

  • Bush’s submission is already absorbing [criticism] castigating him for inheriting a government in surplus and leaving Washington with a budget deficit that is likely to break the record set four years ago, once war bills and the cost of tax rebate checks are factored in.
  • “The next president is going to inherit a colossal mess because of the fiscal irresponsibility of this president,” Sen. Kent Conrad, D-N.D., chairman of the Budget Committee said Saturday. http://www.foxnews.com/story/0,2933,327887,00.html
  • President Bush will present a budget tomorrow that would slow the growth of Medicare (in the face of retiring Baby Boomers) and cut or eliminate an array of domestic programs but still anticipates a flood of new red ink that will rival the record deficits of his first term, administration officials said.
  • The more than $3 trillion federal budget for 2009 that Bush will unveil is his final opportunity to shape the priorities of the government before leaving office a year from now.
  • The new budget underscores Bush’s inability to get control of spending over the course of his seven-year tenure.
  • Bush inherited a very large surplus, but his legacy from a fiscal point of view is having blown an opportunity to ameliorate the long-run budget deficits.

 

Part I: https://goearth.wordpress.com/2008/05/27/fiscally-unsound/

 
 

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Entry filed under: Money, Politics. Tags: , , , , , , , , , .

Fiscally Unsound, Part I McCain is awesome!

5 Comments Add your own

  • 1. Financial Md » Fiscally Unsound, Part II  |  May 28, 2008 at 6:45 pm

    […] Original post by Go Earth! […]

    Reply
  • 2. vortexoffreedom  |  May 28, 2008 at 7:24 pm

    The problem is not the tax cuts, the problem is spending. Democrats in Congress added spending to Bush’s proposals (which was way too high to begin with.)

    Reply
  • 3. goearth  |  May 29, 2008 at 2:14 pm

    I agree, the bigger problem is the spending. But increasing spending while decreasing income…not good leadership. Ross Perot appeared after Reagan/Bush leadership to explain “Fiscal Responsibility”, maybe he’ll come back again.

    The Federal Budget is sent from the President. Any ammendments require a Majority from Congress(and this is a bill that cannot be filibustered). This fiscal irresponsibility was driven by the spend-spend-spend party and its president (simultaneously cutting taxes exacerbated the GOP spending problem.).

    GOP had a majority of Congress until 2007. In the current Senate, the seats are 49 Democrats and 49 Republicans (2 independents)…its pretty even. In the House 53.6% are members of the fiscally responsible party.

    Reply
  • 4. Pete Murphy  |  May 29, 2008 at 5:49 pm

    Our enormous trade deficit is rightly of growing concern to Americans. Since leading the global drive toward trade liberalization by signing the Global Agreement on Tariffs and Trade in 1947, America has been transformed from the weathiest nation on earth – its preeminent industrial power – into a skid row bum, literally begging the rest of the world for cash to keep us afloat. It’s a disgusting spectacle. Our cumulative trade deficit since 1976, financed by a sell-off of American assets, is now approaching $9 trillion. What will happen when those assets are depleted? Today’s recession may be just a preview of what’s to come.

    Why? The American work force is the most productive on earth. Our product quality, though it may have fallen short at one time, is now on a par with the Japanese. Our workers have labored tirelessly to improve our competitiveness. Yet our deficit continues to grow. Our median wages and net worth have declined for decades. Our debt has soared.

    Clearly, there is something amiss with “free trade.” The concept of free trade is rooted in Ricardo’s principle of comparative advantage. In 1817 Ricardo hypothesized that every nation benefits when it trades what it makes best for products made best by other nations. On the surface, it seems to make sense. But is it possible that this theory is flawed in some way? Is there something that Ricardo didn’t consider?

    At this point, I should introduce myself. I am author of a book titled “Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America.” To make a long story short, as population density rises beyond some optimum level, per capita consumption begins to decline. This occurs because, as people are forced to crowd together and conserve space, it becomes ever more impractical to own many products. Falling per capita consumption, in the face of rising productivity (per capita output, which always rises), inevitably yields rising unemployment and poverty.

    This theory has huge ramifications for U.S. policy toward population management (especially immigration policy) and trade. The implications for population policy may be obvious, but why trade? It’s because these effects of an excessive population density – rising unemployment and poverty – are actually imported when we attempt to engage in free trade in manufactured goods with a nation that is much more densely populated. Our economies combine. The work of manufacturing is spread evenly across the combined labor force. But, while the more densely populated nation gets free access to a healthy market, all we get in return is access to a market emaciated by over-crowding and low per capita consumption. The result is an automatic, irreversible trade deficit and loss of jobs, tantamount to economic suicide.

    One need look no further than the U.S.’s trade data for proof of this effect. Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!

    Our trade deficit with China is getting all of the attention these days. But, when expressed in per capita terms, our deficit with China in manufactured goods is rather unremarkable – nineteenth on the list. Our per capita deficit with other nations such as Japan, Germany, Mexico, Korea and others (all much more densely populated than the U.S.) is worse. In fact, our largest per capita trade deficit in manufactured goods is with Ireland, a nation twice as densely populated as the U.S. Our per capita deficit with Ireland is twenty-five times worse than China’s. My point is not that our deficit with China isn’t a problem, but rather that it’s exactly what we should have expected when we suddenly applied a trade policy that was a proven failure around the world to a country with one sixth of the world’s population.

    Ricardo’s principle of comparative advantage is overly simplistic and flawed because it does not take into consideration this population density effect and what happens when two nations grossly disparate in population density attempt to trade freely in manufactured goods. While free trade in natural resources and free trade in manufactured goods between nations of roughly equal population density is indeed beneficial, just as Ricardo predicts, it’s a sure-fire loser when attempting to trade freely in manufactured goods with a nation with an excessive population density.

    If you‘re interested in learning more about this important new economic theory, then I invite you to visit my web site at OpenWindowPublishingCo.com where you can read the preface for free, join in the blog discussion and, of course, buy the book if you like. (It’s also available at Amazon.com.)

    Pete Murphy
    Author, Five Short Blasts

    Reply
  • 5. Fiscally Irresponsible, Part IV « Go Earth!  |  January 10, 2009 at 8:37 pm

    […] Fiscally Unsound Part II Possibly related posts: (automatically generated)Financial Crisis: Solution?Federal Reserve Board: […]

    Reply

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