So What?

13 October 2006



Bush Halves Budget Deficit Three Years Early, Trade Deficit Soars

President George “LBJ” Bush had a news conference earlier this week that wasn’t as bad a performance as he usually gives. His success stemmed from the spineless reporters who were too worried about North Korea to ask any hard questions. Had they any vertebrae, they might have challenged Mr. Bush on his assertion that he has succeeded in cutting the budget deficit in half, three years earlier than he had promised. Statistically, it is true, but since he had a surplus on inauguration day and since the trade deficit is still decaying, his record is shameful.

Mr. Bush, in his speechwriters’ own words, said, “First, I want to briefly mention that today we’ve released the actual budget numbers for the fiscal year that ended on September the 30th. These numbers show that we have now achieved our goal of cutting the federal budget deficit in half, and we’ve done it three years ahead of schedule. The budget numbers are proof that pro-growth economic policies work. By restraining spending in Washington and allowing Americans to keep more of what they earn, [the] economy’s creating jobs and reducing the deficit and making our nation a more prosperous nation for all our citizens.” He buried the needle on the BS-ometer.

“Restraining spending in Washington” is a lie, and one can’t even couch it as mis-speaking, being misquoted or anything else. Mr. Bush hasn’t restrained spending in DC, and his administration has set records for spending. Moreover, the Mesopotamian Adventure is paid for off the books, so even his allegation that the deficit has been halved is a lie. “A more prosperous nation for all our citizens” is also a “misrepresentation of the facts,” since the working and middle classes simply aren’t better off than they were 5 years ago. "Pro-growth" economic policies would result in huge spending in education and infrastructure, and there hasn't been much of that under this Mr. Bush.

Also, the federal deficit is only one measure of fiscal rectitude; another is the trade deficit, that is exports minus imports. Thanks to rounding errors, the figure came in at negative $69.9 billion for August rather than a nice round $70 billion. This is a record for any month (July was a record at $68 billion), and it puts the US on track for a fifth consecutive trade deficit record annually (which coincides with Mr. Bush becoming president). The January-August 2006 deficit is $784.2 billion, 9.4 percent higher than the $716.7 billion record of last year January-August.

Two of the culprits in the trade deficit are oil prices and China’s trade surplus. Both are susceptible to political influence. A needless war in Iraq, hostility to Venezuela and environmental/tax policies that make SUV’s profitable have driven oil prices far beyond where they could have been, most of which America imports. Meanwhile, the commitment to free-trade is noble, but has been executed by Reagan-Bush-Clinton-Bush unilaterally. American firms can’t enter China as Chinese firms can enter the US. Proper negotiations on this (and NAFTA, and all the rest) could have avoided this as well.

Above all, no one is impressed by cutting a deficit in half when the administration started out with a surplus. The failing student has earned a "D-" but it still isn't good enough.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.


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