(A portion of their press release) The Committee for a Responsible Federal Budget expressed concern over the state of the nation’s fiscal affairs, even in light of the improvements in the budget projections released today by the Office of Management and Budget. In its annual Mid-Session Review, OMB projected that the deficit in FY 2006 would be $296 billion or 2.3% of GDP. Last year’s deficit was $318 billion.
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | Est. 2006 | |
| Deficit | 236 | 128 | -158 | -378 | -413 | -318 | -296 |
The Committee warned Congress and the public not to be lulled into thinking the country’s fiscal affairs are on track. “A $300 billion dollar deficit is still a $300 billion dollar deficit, and that is nothing to break open the champagne over,” said Maya MacGuineas, President of the Committee for a Responsible Federal Budget. “We have experienced a neck-wrenching swing from large surpluses to large deficits since the start of the decade. Given that we have an entitlement crisis just around the corner, we should be shoring up the federal government’s balance sheet and addressing the nation’s long-term challenges. Instead we are discussing whether annual borrowing of hundreds of billions of dollars is too much, when clearly, it is,” said MacGuineas.
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“That’s what happens when you implement pro-growth economic policies,” Bush said, pointing to tax cuts that he said have left nearly $1.1 trillion in the hands of workers and business owners. “We’re way ahead of cutting the federal deficit in half by 2009. As a matter of fact . . . we’re now a full year ahead of schedule. Our policies are working.” (From the Washington Post)
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The Center for Budget and Policy Priorities also had something to say –
These remarks mirror previous statements by the President (Bush), the Vice-President (Cheney), and key Congressional leaders that the increase in revenues in 2005 and the increase now projected for 2006 prove that tax cuts “pay for themselves” — that the economy expands so much as a result of tax cuts that it produces the same level of revenue as it would have without the tax cuts.Economists and budget analysts outside of the administration have explained that these claims are not supported by data or economic theory. Now a Department of Treasury analysis presented in the Mid-Session Review itself confirms what outside experts have consistently said — tax cuts do not come remotely close to paying for themselves.
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So, the bottom-line is supply side economics still isn’t working. It has never worked. It didn’t work during Reagan and Bush I. It isn’t working now. So don’t believe the hype. We are not on course unless we are piloting the Titanic.