The Federal Deficit – Swimming Deeper into the Stupid Pond!

Thanks to the good people of Red State America we are now destined for a major budget train wreck. All aboard! The bridge is out, the stoker is pouring on the coal and Engineer Bush is in the dining car having celebratory drinks with the passengers. Apparently fiscal responsibility is not a “Moral Value.” The following is from the Economic Policy Institute (bookmark their page as it is essential reading):

Historical experience shows the implausibility of balancing the budget with revenues at only 17.6% of GDP. Total spending is now running at 19.8% of GDP and has exceeded 17.6% every year since 1965 (OMB 2004). Over the past two decades, the ratio of federal spending to GDP has averaged 20.7%. Under the unrealistic assumptions that discretionary spending would grow no faster than inflation and that interest rates would not rise beyond past norms despite ballooning federal deficits and debt, the CBO baseline has spending close to 20% of GDP for the next decade.

No serious student of budget politics believes that the president and Congress will agree to cut spending by more than 10% below that baseline. More likely, the coming decade could resemble the 1981-90 period, when revenues averaged 18.0% of GDP, spending averaged 22.2%, and the debt-to-GDP ratio almost doubled, from 26% to 49%.

Translation: Taxes are going to go up (or America is going down). However, this would require taking responsibility and demonstrating leadership, things Red State America, President Bush and the Religious Right talk about a great deal but have never actually done. Further, the tax hike signed into law by W.'s father helped bring fiscal sanity to our nation but cost George H. W. his job. W. has never forgotten this.

That's right folks, we're all in the dining car and the drinks are going on W.'s tab. Wait a minute, my wallet's missing and so are my credit cards!