Gene Honda Civic Posted January 29, 2004 Share Posted January 29, 2004 Too much spending + Tax cuts = Big Deficit Bush Budget Raises Cost of Medicare 2 hours, 30 minutes ago Add Top Stories - AP to My Yahoo! By ALAN FRAM, Associated Press Writer WASHINGTON - President Bush (news - web sites)'s new budget will project that the just-enacted prescription drug program and Medicare overhaul will cost one-third more than previously estimated and will predict a deficit exceeding $500 billion for this year, congressional aides said Thursday. Instead of a $400 billion 10-year price tag, Bush's 2005 budget will estimate the Medicare bill's cost at about $540 billion, said aides who spoke on condition of anonymity. Bush will submit on Monday a federal budget for the fiscal year 2005, which starts next Oct. 1. Bush just signed the Medicare measure into law last month. While it was moving through Congress, Bush, White House officials and congressional Republican leaders had assured doubting conservatives that the bill's costs would stay within the $400 billion estimate. Some conservatives voted against the legislation anyway, and many of them are already angry that Bush has presided over excessive increases in spending and budget deficits. "I'm not the least bit surprised," said conservative Rep. John Shadegg, R-Ariz., who voted against the Medicare bill in November and who said he had heard that the cost estimate would rise. "Historically, our estimates of what these programs will cost have been so far off as to be meaningless." White House budget office spokesman Chad Kolton would not comment on the Medicare figures. But an administration official, speaking on condition of anonymity, acknowledged that the estimate would rise to nearly $540 billion. "Both numbers provide what you can call a reasonable range of possible future costs for Medicare," the official said. "These are complex estimates, based on hundreds of individual programs, decisions and potential actions over an extended period of time." CBO, Congress' nonpartisan fiscal analyst, estimated the bill's 10-year cost at $395 billion. But administration officials repeatedly stood by the $400 billion figure, which Bush had included in the budget he proposed last February. Bush's new budget will also estimate this year's budget deficit at about $520 billion, the congressional sources said. That would easily surpass the $375 billion shortfall of last year, the highest deficit ever in dollar terms. Just Monday, the Congressional Budget Office (news - web sites) projected this year's red ink would total $477 billion. The new estimate comes as Bush braces for a difficult election-season fight with Congress over spending — after a budget year that he can hardly expect to top. Although Bush sends his 2005 budget to Congress next week, lawmakers only last week completed their spending work for 2004. That process saw Bush win virtually all his major priorities including a tax cut, new Medicare prescription drug coverage, funds to fight a war with Iraq (news - web sites), and overall spending restraint. "He wanted a carpet that looked like X, and generally speaking he got a carpet that looked like X," said Richard Kogan, who analyzes the budget for the liberal Center on Budget and Policy Priorities. The Republican-run Congress avoided overt clashes with Bush but did not roll over completely. Lawmakers trimmed his defense plans while boosting funds for highways, Amtrak and veterans. They ignored Bush's plan to make tax cuts permanent, scaled back his proposal to stop taxing corporate dividends, derailed his energy bill and added thousands of home-district projects to spending measures. Even so, the results were a far cry from the "dead on arrival" label applied to the spending blueprints of some of Bush's recent predecessors. Democrats and moderate Republicans often gave that assessment to plans written by the first President Bush and President Reagan, who were forced to accept both tax and spending increases. On the other hand, despite the GOP takeover of Congress two years into his tenure, President Clinton (news - web sites) won frequent spending concessions from lawmakers wary of battling him. Bush has followed a similar pattern. "It would be hard to say he's not getting what he wants," Stan Collender, a senior vice president who follows the budget for the accounting firm Fleischman-Hillard. Bush has yet to cast a veto after three years in office. He often uses the threat of a veto to get his way, issuing 19 as Congress considered the 13 annual spending bills for this year. In the end, lawmakers dropped challenges on issues like administration plans to change overtime pay rules and divert more government work to private contractors. Major priorities Bush proposed last year included: _Tax reductions of $1.3 trillion over 10 years. The bill he signed had $330 billion in tax cuts. That number is expected to grow should lawmakers, as anticipated, make some of its temporary reductions permanent. Congress added $20 billion he did not seek for financially strapped states. _$400 billion over a decade for revamping Medicare and adding prescription drug coverage. Bush last month signed a bill resembling his proposal. _$87 billion this year for wars in Iraq and Afghanistan (news - web sites), $500 million less than he got. The final bill gave him $1.7 billion less than the $18.6 billion he wanted to rebuild Iraq and less flexibility than he wanted for controlling the money. Quote Link to comment Share on other sites More sharing options...
sox4lifeinPA Posted January 29, 2004 Share Posted January 29, 2004 I know that I'm only in econ 101...but isn't a deficit a good thing once a while? not that I really support a republican expanding government. and % GDP this isn't the worst deficit in the last 20 years. so no worries cheat! Quote Link to comment Share on other sites More sharing options...
Gene Honda Civic Posted January 29, 2004 Author Share Posted January 29, 2004 $375 Billion deficit last year $500+ Billion deficit this year... That's an Increase of 33% Now factor that increase against inflation of say 3%... and you've got a deficit that's growing at 11 times the rate of inflation... %GDP it may not be the worst deficit of the last twenty years, but expand this 5 more years and we are looking at one big mess to clean up. Quote Link to comment Share on other sites More sharing options...
sox4lifeinPA Posted January 29, 2004 Share Posted January 29, 2004 $375 Billion deficit last year $500+ Billion deficit this year... That's an Increase of 33% Now factor that increase against inflation of say 3%... and you've got a deficit that's growing at 11 times the rate of inflation... %GDP it may not be the worst deficit of the last twenty years, but expand this 5 more years and we are looking at one big mess to clean up. The CBO projected the deficit to continue to shrink over the next five years. USA today had it on the cover page two days ago... Quote Link to comment Share on other sites More sharing options...
Steff Posted January 29, 2004 Share Posted January 29, 2004 Oye ve!! I come here to get AWAY from work... Quote Link to comment Share on other sites More sharing options...
FlaSoxxJim Posted January 29, 2004 Share Posted January 29, 2004 $375 Billion deficit last year $500+ Billion deficit this year... That's an Increase of 33% Now factor that increase against inflation of say 3%... and you've got a deficit that's growing at 11 times the rate of inflation... %GDP it may not be the worst deficit of the last twenty years, but expand this 5 more years and we are looking at one big mess to clean up. Yeah, but it will be someone else's mess by then... Convenient. Quote Link to comment Share on other sites More sharing options...
Gene Honda Civic Posted January 29, 2004 Author Share Posted January 29, 2004 The CBO projected the deficit to continue to shrink over the next five years. USA today had it on the cover page two days ago... is there a link to that?? cuz I'd like to read that... Quote Link to comment Share on other sites More sharing options...
sox4lifeinPA Posted January 29, 2004 Share Posted January 29, 2004 yeah, I'll get it somehow... my econ prof gave us a handout copy yesterday, that's how I read it. gtg...work is over Quote Link to comment Share on other sites More sharing options...
jasonxctf Posted January 29, 2004 Share Posted January 29, 2004 i believe that a deficit is good sometimes. but when a lot of that deficit money isn't being invested into the US Economy (think Afghanistan and Iraq) it doesnt quite have the same effect. Kerry-Edwards 2004 Quote Link to comment Share on other sites More sharing options...
Chisoxfn Posted January 29, 2004 Share Posted January 29, 2004 is there a link to that?? cuz I'd like to read that... I know I've heard a lot of mention of this working out. The government is expecting the economy to pick up and revnues to increase drastically. I would like to read an article that really sums up exactly how they are figuring the deficit will be being cut, other then predicting the economy to soar cause In my opinion, the economy isn't ready to take off like a rocket ship. Quote Link to comment Share on other sites More sharing options...
sox4lifeinPA Posted January 30, 2004 Share Posted January 30, 2004 precisely Jason. Most Economists aren't looking at this as a huge disaster. no big effort to reduce deficit deficit not the end of the world Congress at work on 2005 budget The first two had infopics/graphs showing a comparison to previous presidencies.... clinton had three years of surplus, GWB had one year of surplus. Reagan, GWB, Clinton, GHB...in that order of highest percentage of GDP for a deficit. hope that helps... Quote Link to comment Share on other sites More sharing options...
southsider2k5 Posted January 30, 2004 Share Posted January 30, 2004 precisely Jason. Most Economists aren't looking at this as a huge disaster. no big effort to reduce deficit deficit not the end of the world Congress at work on 2005 budget The first two had infopics/graphs showing a comparison to previous presidencies.... clinton had three years of surplus, GWB had one year of surplus. Reagan, GWB, Clinton, GHB...in that order of highest percentage of GDP for a deficit. hope that helps... That's because IT ISN'T! The important part is that the deficit doesn't become too big of a percentage of the GDP. And as a percentage of GDP the deficit it is well within typical historical norms. Quote Link to comment Share on other sites More sharing options...
Chisoxfn Posted January 30, 2004 Share Posted January 30, 2004 That's because IT ISN'T! The important part is that the deficit doesn't become too big of a percentage of the GDP. And as a percentage of GDP the deficit it is well within typical historical norms. That was one of the first things I learned in my macro economics class. Its still running at very low numbers. So many people get scared over the deficit, but the deficit isn't something that is going to be pushed on our kids. Now if we went completely ridiculous in spending then it would. I still would love to see the deficit repaid, but sometimes things take a back burner. Quote Link to comment Share on other sites More sharing options...
southsider2k5 Posted January 30, 2004 Share Posted January 30, 2004 That was one of the first things I learned in my macro economics class. Its still running at very low numbers. So many people get scared over the deficit, but the deficit isn't something that is going to be pushed on our kids. Now if we went completely ridiculous in spending then it would. I still would love to see the deficit repaid, but sometimes things take a back burner. And in all reality. Emerging from a recession you should have a deficit to stimulate spending, and also these wars are about $150 billion of that total when you include all of the homeland security stuff. Quote Link to comment Share on other sites More sharing options...
sox4lifeinPA Posted January 30, 2004 Share Posted January 30, 2004 it's like box office records... millions of more people aren't going to the movies...they just charge more per movie, so of course record sales are going to happen. Quote Link to comment Share on other sites More sharing options...
Rex Kickass Posted January 30, 2004 Share Posted January 30, 2004 The problem lies not in the fact that we have a deficit. That would naturally happen in the cyclical recession because tax revenues decrease and spending on social tasks would need to increase slightly. The problem is why we have this deficit and how it looks for the future of Medicare and Social Security. Although as a percentage of GDP, the Bush deficit isn't as high as Reagan's - Reagan's budgets did leave this country in a budget which became a zero sum game. We are creating a huge deficit by making huge tax cuts which will reduce revenue for the government. This isn't an issue of tax rate reductions - which can potentially have a trickle down effect, but dividend and estate tax eliminations - most of which will not get trickled down at all. It seems that the Bush administration is setting the US up for a situation where getting back into a surplus situation will not be easy to do without painful cuts in either defense or social spending, potentially including Social Security and Medicare. Bush claims to want to restrict spending to 2% growth in non-defense needs, but he submits a budget with double the growth. In fact, Clinton only increased his budgets in non-defense needs by 1.5% a year, Bush has averaged nearly 7%. I remember the phrase "tax and spend liberal," maybe a more apt phrase now should be "spend and borrow conservative." Quote Link to comment Share on other sites More sharing options...
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