ush's economic summit
The Boston Globe Saturday, December 18, 2004
President George W. Bush's two-day economic summit was an exercise in
political propaganda that attempted to hide the underlying economic problem
for the administration over the next four years: The government is spending
far more than it is taking in and needs to raise taxes to make up at least
part of the difference.
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Instead, participants in the summit - dominated by the president's
supporters - focused on proposals to block anti-business lawsuits (a
perennial issue for Republicans) and allow partial privatization of Social
Security (a new favorite of the party). The budget turnaround, from a $236.4
billion surplus to a $413 billion deficit over the last five years, was
mentioned in passing, but only as a way for participants to praise Bush for
pushing tax cuts that supposedly revived the economy.
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A strong case could have been made for a quick stimulus package to pre-empt
a deep recession following the stock market collapse and the 9/11 attacks.
But nobody at the conference made the point that Bush used his narrow
victory in 2000 to destroy the bipartisan consensus of the 1990's that
balanced the budget. His tax cuts, if kept in place, will reduce federal
revenues far into the future without regard to their impact on the
government or the economy as a whole.
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The Congressional Budget Office notes that federal spending, growing at a
3.5 percent rate in the 90's, has soared to a 6 to 7 percent growth rate
under Bush. Much of that can be attributed to the war against terrorism, but
it made no sense to embark on the invasion of Iraq while simultaneously
cutting taxes, as Bush continued to advocate throughout his first term. And
the Medicare drug benefit, which Bush pushed through Congress last year,
will put more pressure on the budget when it takes effect in 2006. The
program lacks the price restraints necessary to keep it under control.
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Instead, the summit participants talked about Social Security as if it were
in crisis, rather than a long-term manageable problem. The president and
Joshua Bolton, his budget director, did suggest that tough spending choices
would be necessarily to reduce the deficit, but no one was ready to offer
specifics. Even if all unnecessary spending were eliminated, essential
federal programs would require more funding than is possible when revenues
shrink to an unreasonably low percentage of the gross domestic product -
16.5 percent, according to the CBO.
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Participants at the summit also barely focused on the decline of the dollar,
but foreign investors' tendency to put their money elsewhere is a sign that
the Bush administration and Congress are pursuing polices that threaten
American economic leadership. Despite Republican rhetoric, Americans are far
from overtaxed. The Bush administration is underperforming in its essential
role as guardian of the U.S. economy.