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February 12, 2005
Lies, [Fill in the Blank], and Statistics
Nouriel Roubini untangles the Bush budget forecast "statistics":
Nouriel Roubini's Global Economics Blog: Bush Damned Budget Lies and Voodoo Budget Magic: it will be a $600b deficit, not $233b by 2009...and over $1,100b by 2015!: How do they create the false $233b deficit by 2009?
- They assume spending cuts that are, by any historical and political standard, impossible to achieve.
- They assume revenue growth that is altogether wishful thinking and false based on current trends. And they do not consider the long-run costs of making all the Bush tax cuts permanent.
- They do not count the ongoing costs of the continued defense and homeland security spending and of future military and homeland security build-ups.
- They phase-in a budget busting social security privatization (that will cost alone $4.5 trillion in the next 20 years) only starting in 2009.
This is... the most squalid manipulation of budgets ever seen aimed at pretending to achieve a budget figure that is utterly unrealistic and false.... Realistic and sensible assumptions imply that the 2009 deficit will be close to $600b (or 4.0% of GDP)... and the deficit will reach over $1,100b (or about 5.5.% of GDP) by 2015.... So, how do we get the difference between the administration lies and the true figures?
First, note that the administration baseline assumes that all discretionary spending - apart from military and domestic security - will be frozen for the next five years.... How likely is it that such draconian spending cuts in non-defense discretionary spending will be passed even by a Republican Congress? Zero... historically, discretionary spending has grown close to nominal GDP (i.e. by a rate equal to the inflation rate plus real GDP growth)....
Second, note that the official objective of the administration is to make all the 2001-2003 tax cuts permanent.... Add to those costs, the cost of fixing the AMT.... [T]he overestimation of revenues is another farce... voodoo economics plus black magic... only a delirious mind could make such far-fetched forecasts...
Third, add sensible assumptions about the costs of the wars in Iraq, Afghanistan and other military spending....
Fourth, consider the transition costs of Social Security privatization...
[O]ne gets a budget deficit of about $600b (or 4.0% of GDP) by 2009, well above the 2004 level of $412 (3.5% of GDP), well above the fake administration target of $233b (1.5% of GDP) for 2009. Moreover, using again these realistic scenarios, by 2015 - counting the effects of the permanent tax cuts and of the phase-in of Social Security privatization - you get an explosive budget deficit of over $1,100b or 5.5% of GDP....
Posted by DeLong at February 12, 2005 01:45 PM
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Comments
It wont happen unless everyone believes it. Are you going to be the one to wreck the USA?
Posted by: eric bloodaxe at February 12, 2005 01:54 PM
http://www.nytimes.com/2005/02/12/politics/12bush.html?pagewanted=all&position=
Bush Vows Veto of Any Cutback in Drug Benefit
By ROBERT PEAR
WASHINGTON - President Bush threatened on Friday to veto any bill that scales back Medicare's prescription drug benefit, which becomes available in January 2006 to millions of elderly and disabled people.
New estimates showing that the benefit will cost $724 billion over a decade have touched off a furor in Congress, where lawmakers originally believed that it would cost much less. Many members of Congress say they want to revisit the Medicare law this year. Conservatives seek cutbacks in benefits and cost controls. Liberals and some centrists want to require the government to negotiate prices with drug manufacturers.
But on Friday, Mr. Bush said, "I signed Medicare reform proudly, and any attempt to limit the choices of our seniors and to take away their prescription drug coverage under Medicare will meet my veto." ...
Posted by: anne at February 12, 2005 02:01 PM
What? Are you saying Bush is misleading us? Color me surprised.
Posted by: Unstable Isotope at February 12, 2005 04:26 PM
[Fill in the Blank]
Shrubs?
Posted by: ogmb at February 12, 2005 11:11 PM
More Bush Budget:
http://dearkitty.modblog.com/core.mod?show=blogview&blog_id=453610
Posted by: dearkitty at February 13, 2005 10:25 AM
Isn't the $724B figure allowing them to assume some kind of massive and dubious cost-savings? My understanding is that the reality is somewhere between $800B and $1.2T.
Posted by: Auros at February 15, 2005 11:27 AM
[comment spam]
Posted by: at March 1, 2005 10:13 PM