Alex's Outlook

Thursday, July 17, 2003

The Dividends of Compassionate Conservatism

The US gov't has now"revised" its "estimate" of the deficit. Five months ago, it had estimated this year's deficit to be $307 billion. The new estimate is $455 billion ($455,000,000,000).

That is a lot of money. It is about 4.2 percent of GDP, and comes on top of at least $6.4 trillion (6,400,000,000,000) in debt already. Yet Bush talks about continuing to occupy Iraq (cost: $5 billion a month - $60 billion per year); a prescription drug benefit for the class that already owns 60 percent of America's capital ("estimated" cost: $40 billion a year; real cost: $100 billion per year); he sends troops and aid to Africa while Afghanistan slips back into anarchy; he explodes non-defense discretionary (non-Social Security, non-Medicare, non-Medicaid, non-defense) spending 19% within his first three years in office.

Furthermore, demographic trends will only make the entitlement crisis that much worse. Today's deficits are nothing compared to what they will be like twenty years from now. Presumably Bush still intends to privatize Social Security; but that will take trillions of dollars. The gov't doesn't have that money, but Bush continues to spend, spend and spend. Furthermore his spending increases have dwarfed his tax cuts, and cuts and spending hikes have stretched the deficit at both ends. (Even an economic recovery and erasing the current deficit will not be nearly enough for the next few years, let alone the next two decades.)

The US government continues to hurtle to fiscal armageddon, but nobody in DC is at all aware of that.

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