Saturday, January 10, 2009

Bush's Last 10 Days, Part 1: Recipe For Fiscal Disaster


As the countdown to Bush as ex-"president" begins, it might be good to put into context why some Americans, even some U.S. historians, regard Il Doofus as the worst "president" of modern times.

The federal deficit for the current fiscal year is being projected at $1.2 trillion. That's more than the entire national debt was at the time Jimmy Carter left office in January 1981.

The Congressional Budget Office report lays much of the blame for this spike on lower tax revenues due to the recession, and on $400 billion spent to bail out Fannie Mae, Freddie Mac and various financial institutions amid the mortgage crisis. Bush policies did a great deal to contribute to all of the above, but that's another post. For now, let's stick to the budget.

The deficit for fiscal 2007-08 was about $455 billion, consistent in real dollars with what was being run annually during the Reagan and Bush I presidencies. It's not too shocking, until you consider that Bush II inherited what had been the largest surplus the federal government has ever run, some $230 billion in fiscal 1999-2000, from departing President Bill Clinton's administration.

The surplus decreased to $158 billion during fiscal 2000-01, which Bush presided over some of. Bush apologists have tried to make an end run out of this, saying that declining revenues due to a briefly sour economy were responsible. They've also pointed out that the Clinton surpluses occurred even though federal tax cuts were passed in 1997, an apparent argument for supply-side policies.

That's fair enough, up to a point. But by 2001-02, the federal government was in the red again, and that continued year after year until the aforementioned $455 billion deficit was reached. How did this happen?

Bush spent the first months of his presidency pushing tax bonanzas, mainly for his rich friends, through the Congress, along with scraps from the rich man's table for the rest of us, amounting to $300 per person. His economic plan basically rolled back the relatively modest Clinton tax increases on the wealthy, passed by the narrowest of margins in 1993.

Students of fiscal policy know that it's anything but simple, but a few policy effects during this administration seem clear. It didn't take long to turn surpluses into deficits, and arguments that this isn't related to tax policy are, at the very least, unconvincing.

Then, after 9-11, Bush the "decider" decided to take the country to war(s). The first one, in Afghanistan, seemed and still seems like a defensible action, despite the toll on the Afghan people. The second, the March 2003 invasion of Iraq, was in hindsight clearly elective. Aside from being an act of aggression, it turned out to be one of the most expensive mistakes a U.S. administration has ever made.

According to a July 2008 update, military operations alone in Iraq and Afghanistan have cost $872.6 billion. Some $661.1 billion of that was for ops in Iraq. Source: Congressional Research Service data.

Even conservatives need to put this into perspective. Would Winston Churchill have held fast to big tax cuts for the wealthy during an expensive war, and even have audaciously pushed for more such cuts?

George W. Bush did. And in so doing, the U.S. was set up, and knocked down like bowling pins, for the $1.2 trillion annual deficit we now face. Now tell me that, as a "president," this buffoon didn't suck great big green ones, with warts on them. His decisions were consistently the worst that could have been made, and yet he stubbornly continues to defend them. I don't think future generations will find his defense convincing.

Manifesto Joe is an underground writer living in Texas. Check out his blog at Manifesto Joe's Texas Blues.


Chris said...

The way things are going, the US seems to be going off a very large cliff. What scares me is how few people really just how great that fall could be.

Whatever surpluses Clinton and Gore passed on have been squandered on tax cuts for the wealthy while expensive wars and militarism. Not only that, how does the US intend to come up with the money for social security payments or the national debt?

Someday the US will have to default on some of its debts. The country is running the largest budget and trade deficit in history ... not a sustainable recipe.

Anonymous said...

You say the value of the US dollar is going to plumet. Let's say it becomes worth 10% of it's current value. That means my $240,000 home will be worth 2,400,000 once the correction takes place. Man, Americans must be awash is dollars. Where do you suppose they are hiding them all? Do you think Halliburton knows about this?

Manifesto Joe said...

A thing that bothers me is that wing nuts are already trying to blame the recession on Obama, before he even takes office. Can you imagine what kind of diarrhea we'll be seeing and hearing by 2012?

Marc McDonald said...

>>>The way things are going, the
>>>US seems to be going off a very
>>>large cliff.

Actually, I have kind of mixed feelings about the impending collapse of American power.
On the one hand, times will be leaner and meaner. (But it's nothing really new that those of us who've already lived through lean times can't handle).

On the other hand, the coming collapse of U.S. power will mean an end to the ongoing horror that is the Iraq War. In fact, it'll mean an end to future similar horrors. No more Vietnams or Iraqs. The demise of the bloated monster that is the Military Industrial Complex.

So the "bad" news isn't really all that bad, after all.

Chris said...

I don't feel that most people truly understand the impact of the collapse of America's status as the world's superpower.

It will mean a drastic reduction in the standard of living for most Americans. It will mean learning that the US does not dominate the world politically, economically, or militarily. The US simply will not be able to afford aggressive wars such as Iraq.

The US dollar will no longer be used to value commodities or the like. The US will be something like the UK at the end of WWII - a former superpower collapsing.

Anonymous said...

Well it is about time America got a taste of how the rest of the world lives. Try spending the majority of your day carrying water to drink, cook and bathe. And you whine because you have noting to eat but cornmeal mush? The average person living in "poverty" in America has a warm, dry home that meets all the building codes. They have running water, gas and electricity, and most have cable, a landline and a cell phone. "Being hungry" in the U.S. means having to make careful choices while selecting from the finest quality foods delivered daily to the store down the street. For the American "impoverished," food is free, health care is free, housing is free or subsidized. And on top of that there is usually enough money to go around to purchase huge amounts of alcohol, tobacco and lottery tickets. And we are not even talking about the f***ing fat bastards ABOVE the poverty level ($22,050 for a family of 4.)When you see how hard even our neighbors to the south have it in Mexico, it is hard to feel sorry because Americans will have to get by with a lesser standard of living. At least they do not raise children in shanty towns with sewage running in the streets! We have had it too easy for way to long. Finally, the playing field will be leveled under this new president, and we will learn the value of sacrifice for our ideals. Finally!

Marc McDonald said...

>>For the American "impoverished,"
>>food is free, health care is
>>free, housing is free or

LOL, so when did America turn into Sweden?

You've never been poor before, have you?

I'll never cease to be amazed at all the people I talk to who come from cushy, middle and upper class backgrounds who are convinced that the poor "have it made" in this country. I think these clueless "let them eat cake" types are gonna be in for a BIG surprise, come the People's Revolution.