Saturday, February 11, 2006

I Heart Paul Krugman

Thought the man was brill for years. On a whim I ran his name in one of the search engines and his Princeton Web site had this at the start: "If someone reading this site wants to get in touch with me for radio, TV, karaoke, whatever, I run such things through. . ." and then it listed his agents. . . I think I want to invite Paul Krugman to karaoke. No, not really. -- Well, I do, but I have no balls to invite him to a night of karaoke in London where I am the only one in the band that could speak to the Fuckedupitness of American economics, fools gold verisimilitude of the Bushies and the general sad state of affairs in the old U S of A. Plus I'm not smart enough to hang. So, since I can't ask Paulie to sing " Pour Some Sugar On Me", I will post his last NY Times you need to be paying the big bucks -isn't that BS? for Times Sellect column. Thanks to J. Zeccola for forwarding it. ------------------------------------------------- February 10, 2006 Op-Ed Columnist The Vanishing Future By PAUL KRUGMAN At this point we've had six years to grow accustomed to Bush budget chicanery. (Yes, six years: George W. Bush's special mix of blatant dishonesty and gross irresponsibility was fully visible during the 2000 presidential campaign.) What still amazes me, however, is the sheer childishness of the administration's denials and deceptions. Consider the case of the vanishing future. The story begins in 2001, when President Bush was pushing his first tax cut through Congress. At the time, the administration insisted that its tax-cut plans wouldn't endanger the budget surplus bequeathed to Mr. Bush by Bill Clinton. But even some Republican senators were skeptical. So the Senate demanded a cap on the tax cut: it should not reduce revenue over the period from 2001 to 2011 by more than $1.35 trillion. The administration met this requirement, but not by scaling back its tax-cutting ambitions. Instead, it created fictitious savings by "sunsetting" the tax cut, making the whole thing expire at the end of 2010. This was obviously silly. For example, under the law as written there will be no federal tax on the estates of wealthy people who die in 2010. But the estate tax will return in 2011 with a maximum rate of 55 percent, creating some interesting incentives. I suggested, back in 2001, that the legislation be renamed the Throw Momma From the Train Act. It was also obvious that the administration had no intention of abiding by its concession to fiscal prudence, that it would try to eliminate the sunset clause and make the tax cuts permanent. But it quickly became clear that the budget forecasts the administration used to justify the 2001 tax cut were wildly overoptimistic. The federal government faced a future of deficits, not surpluses, as far as the eye could see. Making the tax cut permanent would greatly worsen those future deficits. What were budget officials to do? You almost have to admire their brazenness: they made the future disappear. Clinton-era budgets offered 10-year projections of spending and revenues. But the Bush administration slashed the budget horizon to five years. This artificial shortsightedness greatly aided the campaign to make the 2001 tax cut permanent because it hid the costs: since budget analyses no longer covered the years after 2010, the revenue losses from extending the tax cut became invisible. But now it's 2006, and even a five-year projection covers the period from 2007 to 2011, which means including a year in which making the Bush tax cuts permanent will cost a lot of revenue — $119.7 billion, but who's counting? Has the administration finally run out of ways to avoid budget reality? Not quite. As the Center on Budget and Policy Priorities points out, until this year budget documents contained a standard table titled "Impact of Budget Policy," which summarized the effects of the administration's tax and spending proposals on future outlays and revenues. But this year, that table is missing. So you have to do some detective work to figure out what's really going on. Now, the administration has proposed spending cuts that are both cruel and implausible. For example, administration computer printouts obtained by the center show that the budget calls for a 13 percent cut in spending on veterans' health care, adjusted for inflation, over the next five years. Yet even these cuts would fall far short of making up for the revenue losses from making the tax cuts permanent. The administration's own estimate, which can be deduced from its budget tables, is that extending the tax cuts would cost an average of $235 billion in each year from 2012 through 2016. In other words, the administration has no idea how to make its tax cuts feasible in the long run. Yet it has never, as far as I can tell, allowed unfavorable facts to affect its determination to make the tax cuts permanent. Instead, it has devoted all its efforts to hiding those awkward facts from public view. (Any resemblance to, say, its Iraq strategy is no coincidence.) At this point the administration's budget strategy seems to be simply to ignore reality. The 2007 budget makes it clear, once and for all, that the tax cuts can't be offset with spending cuts. But Bush officials have decided to ignore that unpleasant fact, and let some future administration deal with the mess they have created.


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