Bush Budget is "a multi-trillion dollar decade long scam"

by Noriel Roubini
Associate Professor Economics, NYU

02/09/05 -- The dishonesty of the administration about budget deficits has reached levels unheard of. These folks have absolutely no shame. Bush presented a budget that claims that he will achieve his goal of reducing the deficit by half by 2008 (from a false
2004 baseline of $521 billion rather than the actual 2004 deficit of $412b) and will achieve a deficit of "only" $233b by 2009. Even better news, the administration claims: the "halving" of the deficit will be reached by 2008, a year earlier than original 2009 target for it.

Who are these accounting scam artists trying to deceive? Do they think everyone in America and around the world is a mathematically challenged total idiot or an accounting moron?

The reality is, that based on realistic scenarios outlined last week by the non-partisan Congressional Budget Office, the deficit by 2009 will be close to $600b (or 4.0% of GDP) rather than falling to $233b; and the deficit will reach over $1,100b (or 5.5% of GDP) by 2015.

How do they create the false $233b deficit by 2009?

1. They assume spending cuts that are, by any historical and political standard, impossible to achieve.

2. They assume revenue growth that is altogether wishful thinking and false based on current trends. And they do not consider the long-run costs of making all the Bush tax cuts permanent.

3. They do not count the ongoing costs of the continued defense and homeland security spending and of future military and homeland security build-ups.

4. They phase-in a budget busting social security privatization (that will cost alone $4.5 trillion in the next 20 years) only starting in 2009.

This is worse than dishonesty; it is the most squalid manipulation of budgets ever seen aimed at pretending to achieve a budget figure that is utterly unrealistic and false in every possible dimension.

[...]

They may think that they can fool everyone, the taxpayers, the American people, the media, the bond markets, Wall Street and the disappearing bond vigilantes, the world, the central bankers of the world that have financed 90% of our budget deficits in the last four years and who would have to finance 100% of these ballooning budget deficits in the next decade. But they are only fooling themselves. No one is so dumb and idiotic to believe half of the damned lies they have been peddling in their budget. As a Bloomberg headline put it today, in the most understated terms: "Bush Fiscal Projections Questioned on Capitol Hill, Wall Street". Or, as the headline of the sharp Andrews article in the New York Times put it today: "Trim Deficit? Only if Bush Uses Magic"...Voodoo magic indeed!

Put it less politiely, this is not a budget, it is a multi-trillion dollar decade-long scam, a voodoo black magic to the power of two, the biggest Ponzi game in the financial history of humanity that would lead the US to certain bankruptcy by the next decade.

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...but, hey...they'll do what they want, U.S. be damned, because their money is multinational.