And now, let's do the numbers: Under George W. Bush, the federal government is spending more money than it did in the Clinton years; during the last three years, spending reached about 20 percent of gross domestic product (the measurement economists like to use), compared with about 18.1 percent in the last year of Bill Clinton's presidency. Meanwhile, the government is collecting perhaps less in taxes than ever. In 2001, tax revenues were up to almost 20 percent of GDP. Today, as a consequence of several huge Bush tax cuts, revenues linger at around 16 percent of GDP. Even if you're an English major -- let alone a Harvard MBA -- the math here is not complicated. When spending skyrockets and revenues plunge, there's only one consequence. Deficits. And more deficits. And more ...
Which brings us to today's news. The White House has announced that in 2006, the deficit will climb back to more than $400 billion, or around 3 percent of GDP, "a significantly higher share than last year and high for a country that is expected to experience its fifth straight year of economic growth," as the New York Times puts it. The administration blames Hurricane Katrina for this bad news and still insists, contrary to all objective measurements, that it will reduce the deficit by half by 2009. (That's why they call this a faith-based presidency.)
Blaming a ballooning deficit on a short-term shock like the hurricane is standard operating procedure for this White House. Bush has never acknowledged the fundamental certainty of deficits guaranteed by his policies -- when you spend a lot and cut taxes a lot, you're going to end up owing a lot. Instead, over the years, he has pointed to terrorism, war, corporate scandals and, now, weather as the true culprit behind red ink.
The new deficit projection will make for an interesting political debate in the coming months. Republicans, especially conservative Republicans, are sure to use the numbers to call for more spending cuts in social services programs -- a plan that might not sit well with moderates and the White House, who worry that cutting programs is not a good idea during an election year. Meanwhile, Republicans looking to make Bush's tax cuts permanent may also face an uphill battle. Though we are constantly surprised and astonished by Republicans' willingness to vote for tax cuts despite fiscal pressures, perhaps, finally, that may come to a stop this year.
But the Washington Post warns of one other political outcome stemming from this new projection -- sometime in the middle of next year, the paper says, we should look for the administration to release new, slightly rosier numbers than these, and to claim, then, that its policies are responsible for the improvement. In other words, today's deficit projection is just an attempt to lower your expectations so that, in the future, you'll be OK with a still outrageous, though slightly less enormous, deficit. Don't say you haven't been warned.