Federal Deficit

The Congressional Budget Office has recently reported that the Federal deficit for the fiscal year 2005 will be $317 billion, which is much lower than in 2004 [when the deficit was $413 billion]. The administration was quick to argue that the improvement is vindication for the President’s fiscal policy, especially the tax cuts. This is nonsense. The numbers remain grim and the President has made things worse, not better. Federal revenue [i.e. the total of all taxes etc the Federal government collects] is still very low by historical standards at around 17.1% of GDP. In other words the supposed stimulus of the tax cuts has not boosted revenue at all. In fact revenue under George Bush has been lower than at any time since World War 2. So much for stimulus! On the contrary: much of the revenue increase stems for the cessation of a business tax cut which meant that corporate taxes rose $51 billion from 2004. Nor are Federal revenues confounding forecasters at all: they are pretty much what the CBO projected for the year, so there is no sudden improvement. No one expects the deficit to be eliminated any time soon, so all the crowing in Washington is just an attempt to divert our attention away from the failed fiscal policies the Republican shave foisted on us for the last few years. Remember that when Bush came power the budget was running a surplus. Where did that surplus go? Into the Republican tax cuts. Finally don’t forget that the deficit includes a surplus on Social Security of $175 billion, which means the deficit on everything else [like Defense etc] was really $492 billion. That’s no triumph, that’s a disaster. When will we wake up to this rotten policy and the selling out of our future?