a. yes. saying there's no money left is a justification for spending
cuts and an obstacle to new spending or to progressive tax cuts.
b. no, Social Security is just fine, as long as Bush doesn't get a
chance to fix it.
c. no. Bush is not driving. He's in the car-seat, playing with his
busy-balls.
mbs
Is this the Reaganite game of running a deficit as an excuse to cut social
programs ( what few are left ) ? Is this a way to destroy Social Security,
the last bastion of the New Deal ? Is Bush running the economy like a five
year old driving a car ? Surely, the news is worse than what is admitted
here. Someone please call 911.
CB
--------------------------------------------
MBS comments on Stevenson, all graphs preceded by **
August 23, 2001 The New York Times
Bush Projections Show Sharp Drop in Budget Surplus
By RICHARD W. STEVENSON
A Shrinking Surplus
WASHINGTON, Aug. 22 — Ending a brief but giddy era of fiscal plenty, the
Bush administration released projections today showing that the federal
budget surpluses outside the Social Security system will dwindle to almost
nothing for the next several years.
**mbs: true, but it is of no economic consequence.
For the current fiscal year, the administration estimated, the government
would run a surplus of about $600 million outside Social Security, an almost
negligible amount in a $1.9 trillion budget and a $10 trillion economy. As
recently as April, the White House projected a surplus of $122 billion in
the non- Social Security system for the fiscal year, which ends on Sept. 30.
Largely because of the tax cut passed by Congress this year and the economic
slowdown, the surpluses outside Social Security will remain tiny for the
next three or four years before beginning to grow again, the White House
said. ( You can trust what they say, right ? - CB)
**mbs: no this is likely to be true, but see above.
The government will continue to run substantial Social Security surpluses,
the administration said, including $157 billion this year. But by agreement
of the two parties, that money is off limits for spending or tax cuts and is
reserved for reducing the national debt or shoring up the retirement system.
The sharp turnabout comes just months after both parties were busily making
plans for allocating what seemed to be an endless bounty from the prosperity
of the late 1990's. It has set up a return to bitter budget battles and
efforts by each party to turn the situation to its political advantage.
White House officials sought to cast the news in the best possible light.
They said that the country was still in sound financial condition and that
an expected economic rebound should put enough money on the table over the
next decade to deal with all the nation's priorities, especially if the
tighter budget encourages Congress to pare wasteful or inefficient spending.
**mbs: first part is true, second part not, since what the Repugs call
"wasteful or ineffecient spending" could help the economy or otherwise
be beneficial.
Despite the economic slowdown, the surplus for this year, including Social
Security, will still be the second largest on record, "a phenomenon that
should strike all Americans as very positive," said Mitchell E. Daniels Jr.,
the White House budget director. The total surplus last year was $236.9
billion, a record.
Democrats responded that the administration had squandered the surplus by
pushing through an irresponsibly large tax cut, putting the government into
such a squeeze that not only Democratic initiatives but Mr. Bush's own
agenda, including a big increase in military spending, would be impossible
to carry out.
**mbs: only if one maintains the fiction that Social Security & medicare
surpluses
are "not real."
"I believe President Bush's campaign promises are unraveling," said Senator
Kent Conrad, Democrat of North Dakota, the chairman of the Senate Budget
Committee. "He claimed we could afford his massive tax cut, a major defense
buildup, more money for education, while paying down the debt and protecting
Social Security and Medicare. He was wrong."
**mbs: no question, bush lies like a rug.
In its midyear review of the budget outlook, the White House projected that
the non-Social Security surplus would be $1 billion to $6 billion for the
next three years before increasing to $19 billion in 2005 and then growing
steadily for the rest of the decade.
**mbs: actually it's a bit less but the Bushies fixed that with some
slippery accounting. The growth after 2002 is real enough.
But the administration was able to show a non-Social Security surplus for
the next few years only by making assumptions and policy changes that
Democrats attacked as gimmicks.
They included a shift in the way the government accounts for Social Security
revenues, economic growth assumptions that Democrats said were too
optimistic and a decision not to include in the calculations the cost of tax
and spending decisions that Congress is all but certain to make in coming
months and years.
The new projections from the White House's Office of Management and Budget
showed that the government would run a total budget surplus for the fiscal
year ending Sept. 30 of $157.8 billion, of which $157.1 billion would come
from Social Security.
The surplus for next year, the administration projected, would be $173
billion, with $1 billion coming from outside Social Security. The total
surplus in 2003 would be $195 billion, with $2 billion coming from outside
Social Security.
If those figures prove correct, it will mean that the government will spend
nearly all of the surplus generated by part of the Medicare system, money
that Democrats and most Republicans in Congress had also sought to put off
limits. The Medicare surplus this year is about $30 billion.
**mbs: note that this surplus comes from general revenue -- income taxes.
The Feds credit this money to the Medicare Trust Fund, which does not
spend all of it right now. The residual is lent back to the Feds, then they
use it
to pay down debt unrelated to Soc Sec or Medicare. The Bushies like to jerk
people off by saying all payroll taxes for Medicare are spent on Medicare,
which
is true. But by law a portion of income taxes are dedicated to Medicare
Part B,
not all of which are needed to finance benefits right now. The rest is
surplus.
The administration projected a gradual improvement in the fiscal outlook
over the rest of the decade. The total surplus for the next decade should be
$3.1 trillion, the White House said, compared with a projection of $5.6
trillion earlier this year, before the tax cut and the economic slowdown.
**mbs: a perfectly reasonable projection, as far as it goes. What the
Administration refuses to do is put numbers on all the things they claim
they want to do and factor these into the projections. That would be
called "budgeting." But the Bushies don't budget. They use up
money by pulling one rabbit after another out of a hat. The first
bunny was the tax cut. The second was the request for a defense
spending increase this fiscal year. Then comes more defense
increases and an inadequate prescription drug benefit. Later comes
missile defense & the Social Security carve-out.
It said the non-Social Security surplus for the next decade should be $575
billion, compared with a projection of $3.1 trillion at the beginning of the
year. The 10-year projection for the Social Security surplus was largely
unchanged, at $2.5 trillion.
The Congressional Budget Office is scheduled to release its own updated
surplus forecast next week. Members of each party said it might show the
government crossing the line into spending Social Security surpluses.
**mbs: probably will, but not by much.
The situation holds opportunity and peril for the administration and
Republicans in Congress.
To some degree, the administration's goal in pursuing the $1.35 trillion tax
cut was to get as much of the surplus as possible out of Washington so that
Congress could not spend it.
Eliminating nearly all of the non- Social Security surplus limits the
ability of Democrats — or Republicans for that matter — to propose big new
spending programs. It also makes it easier for the administration to demand
a re-examination of spending on programs that it opposes on policy grounds
or judges to be ineffective.
**mbs: Word.
"The budget is tight, and that's exactly what we designed and exactly what
we wanted," said Representative Jim Nussle, Republican of Iowa, the chairman
of the House Budget Committee.
But the budget may be so tight that Mr. Bush's own plans will be among the
first to suffer. Mr. Conrad and Senator Robert C. Byrd, Democrat of West
Virginia, the chairman of the Senate Appropriations Committee, said they
would oppose Mr. Bush's request for an $18 billion increase in military
spending next year.
**mbs: we'll see if the Senate Dems have the guts to oppose military
spending on grounds of "fiscal responsibility."
The president's plans for the Pentagon may also face problems in the
Republican-controlled House. Mr. Nussle said he was "very troubled" by the
White House's military spending request because it was not backed up by a
detailed review of the Pentagon's long-term needs.
Members of each party said Mr. Bush might have trouble obtaining money for
his education and energy plans and would find it more difficult to finance
creation of private investment accounts within Social Security.
More broadly, the administration is at risk of being blamed for blowing the
surplus, a contention that Democrats are turning into a battle cry as they
prepare for the the 2002 election.
**mbs: they blew a lot of money because it went to unworthy purposes,
not because it was a lot of money.
The administration is clearly aware of its political vulnerability. In
calculating its new budget projections, it made several policy decisions and
assumptions that had the effect of increasing the surplus and decreasing the
risk of dipping into Social Security money, especially this year and next
year.
It assumed that economic growth next year would rebound to 3.2 percent, at
the high end of what private economists predict. It changed a longtime
accounting convention in Social Security, allocating higher- than-expected
payroll tax revenues to the books for previous fiscal years rather than
counting them toward the results for the year in which they were discovered.
In calculating the current year's non-Social Security surplus, the
administration assumed that corporations would pay $4 billion to $5 billion
of taxes earlier than necessary, raising revenues for this year by that
amount.
Perhaps most important, the White House included in its budget assumptions
all of the nearly $200 billion for increased military spending over the next
decade that Mr. Bush has proposed, but it did not account for the costs of
other programs that are moving through Congress, or for his own plans for a
national missile defense.
The Center on Budget and Policy Priorities, a liberal research group, said
the cost of all the programs now in the legislative pipeline would be at
least $800 billion over 10 years, more than wiping out the $575 billion non-
Social Security surplus that the administration predicted would be available
during that period.
**mbs: Right. The Center is saying we can't have all the spending
increases now being decided in Appropriations committees. We
have to pay off more debt. These are the good guys.
