Repiglicans at the trough

US budget deficit

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It's the poor that gets the blame

Leader
Saturday November 5, 2005
The Guardian


As President Bush's popularity ratings sink to a new low, his
administration has decided to attack the ballooning US budget deficit
in an attempt to win back credibility. At least that is what is
happening if you believe John Snow, the US treasury secretary, who said
this week that the clear priority of the administration now was to meet
the president's objective of halving the deficit by the time he leaves
office. It is about time too because, as Alan Greenspan, retiring head
of the Federal Reserve noted earlier this week, unless the situation is
reversed, the worsening budget deficit "will cause serious economic
disruptions", which is Greenspanspeak for a recession with heavy
unemployment.
This is not the easiest time to tackle the budget deficit when military
spending in Iraq is very high and the Katrina hurricane has forced the
administration into an enforced Keynesian reconstruction programme
involving increased public spending. But beggars can't be choosers. It
has to be done. Mr Bush inherited a healthy budget surplus from the
outgoing Clinton administration and squandered it partly on tax cuts at
a time when Mr Bush was infused with Reaganite notions that deficits
don't really matter. They do, and the bigger they get, the harder the
subsequent fall unless they are tackled very carefully. This week the
government's advisory panel on federal taxation unanimously proposed,
among other things, that mortgage interest relief (which disappeared in
Britain years ago) should be cut and that the deduction of state and
local taxes for federal income tax be eliminated. These are not
particularly radical options. They steer well clear of calls to rescind
the unfair and economically dubious tax cuts which mainly benefited
rich people who didn't need to spend the cash dispensed to them.
If the budget cuts passed by the US senate on Thursday are anything to
go by, the whole thing will end in tears. Republicans - disgracefully -
targeted most of the cuts on the elderly and the poor through
restructuring (ie cutting) some Medicare and Medicaid programmes. Worst
of all, part of the cuts originally aimed (creditably) at cutting
America's ludicrously high agriculture subsidies was amended so the
brunt would be taken by chopping $844m from food stamps for the poor
rather than from farm subsidies. Meanwhile, Republicans are hoping to
pass yet more tax cuts for the wealthy. An administration that can
tackle a serious budget problem in this way deserves all that may be
coming to it.

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Relevant Pages

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