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The Bankrupting of America

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No matter where you get your news, it seems that the pitiful state of the American economy is the front and center story. One day it’s the foreclosure rate. On another day it’s about a major financial institution getting bailed out by the Fed. The most telling, however, was the article I found about tent cities going up in the Los Angeles area. This is particularly disturbing, especially when you look back at where this country was before George Bush took office.

When President Clinton took office, we were operating in deficit mode in part because of the disastrous economic policies of the Reagan-Bush (George H.W.) years. In August of 1993, President Clinton signed the Omnibus Budget Reconciliation Act, which raised taxes on the wealthiest 1.2% of taxpayers and lowered the taxes on 15 million low-income families. It also made tax cuts available to 90% of small businesses and reigned in spending. By 1998, the United States had its first surplus in 42 years. Now, everyone knows that all administrations take credit for these kinds of statistics, and the Clinton administration was no exception. While it was a number of converging factors that led to the surplus, such as the economy outperforming estimates and cutting the interest on the federal debt, the Clinton package was certainly one of the factors that contributed to the economic recovery. In 2000, the year George W. Bush was elected, the United States had a surplus of $237 billion dollars. It was Clinton’s third consecutive surplus year, and the largest surplus in history.(1) Fast-forward eight years and look around. What do you see?

A fiscal meltdown of titanic proportions

A $237 billion dollar surplus is now officially a $9+ trillion deficit. Some estimate that national debt has increased an average $1.65 billion per day since September 29, 2006. Another web site, http://www.truthin2008.com, states that the government keeps two sets of books and the actual deficit number is $55 trillion and growing. The site is not merely an offspring of the “liberal media.” It is a product of the Institute for Truth in Accounting and the information on the site has been confirmed by the outgoing Comptroller General of the United States, David Walker, who states, “we have been diagnosed with fiscal cancer.” The institute calls for openness in dealing with the deficit issue and calls for the American public to find out if the candidates know how much we are really in the hole for and what plans each has to deal with it.

Whether the real deficit number is $9 trillion or $55 trillion, the economy is in dismal shape all the way around. As he has done with so many issues facing the American people during the past seven years, President Bush continues to minimize the situation. He touts the 52 months of uninterrupted job growth that his administration has delivered. The fact is that his job growth performance is anemic. Bush has created only 5.9 million jobs in seven years (or 72,000 jobs per month). By this time in his administration, Bill Clinton had created 20.2 million new jobs (or 246,600 per month) and he did it by investing in America. Our own Mr. Optimism is competing with his father for the worst record of job growth since the presidency of Herbert Hoover. He goes on insisting that his ineffectual economic stimulus package will take care of bolstering the sagging economy.

How did things get this bad?

How we got here is a bone of contention. Bush supporters say we can’t lay all of the economic woes at his feet. Some want to blame the sub-prime mortgage meltdown entirely. It is certainly one factor, but beware laying the blame here as some economists are tying Bush’s tax cuts to this folly. Yet, even if we take the position that the economy was slowing down when George Bush took office, his fiscal irresponsibility on a number of fronts has directly led to this economic meltdown. Furthermore, anyone who believes that the money we are funneling into Iraq and Afghanistan has nothing to do with the failing economy is out of touch. Prior to the Iraq invasion, President Bush went on national television and insisted that this war would be quick and inexpensive as wars go. We were going to be greeted by the Iraqi people as liberators. We’d be in and out. I still have the image in my mind of George Bush in airman get-up landing on the deck of a carrier and proclaiming “Mission Accomplished.” That was the furthest thing from the truth.

Today the endless war in Iraq is being waged at a price of $12.5 billion per month. When you add in the long-term bills as a result of the war, such as disability payments for veterans, it looks more like $25 billion per month. The total economic cost for the Iraq war through 2008 is estimated at $1.3 trillion. This war is not creating jobs for the American people. It is, however, creating tidy little profits for businesses like Halliburton, Blackwater USA (our own freelance mercenary army), and KBR (formerly Kellogg Brown & Root). To add insult to the economic injury, KBR, our leading Iraq contractor, avoids paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring employees through two Cayman Island shell companies. The Defense Department has known this since 2004 and approves because it means KBR can do the work more cheaply. Dwight D. Eisenhower’s worst fears about an out-of-control military-industrial complex are coming to fruition.

Simultaneous to waging this fiscal albatross, President Bush has handed out $2 trillion in tax relief over the past seven years, primarily to those who need it the least. This has never been done while the United States was at war. The revenue from the tax cuts should be going toward offsetting the war’s staggering costs. What is most disturbing of all is that this president does not include the total amount needed to fight the war in his yearly budgets. Instead, he routinely handles this as “emergency spending” which keeps it out of the normal budget channels. At the time of this writing, President Bush is about to ask the Congress for another $107 billion for the war. Where does this emergency money come from? We borrow it from China and other countries, compounding the size of the deficit. These deceptive practices, and Bush’s disastrous fiscal policies, are carried through in his $3.1 trillion budget for 2009.

Bush’s bunker busting 2009 budget

The 2009 budget calls for President Bush’s 2001 and 2003 tax cuts to be made permanent. These cuts are aimed at the top 20% of earners in the country and not at the majority of American families whose income has remained flat (or even declined) during his administration. It is in the hands of the average American family that the tax cut will stimulate the economy. These families will spend the money on past-due bills and items of necessity, like food and clothing. The rich will not spend the money. They will bank it or invest it. They already have everything they need. Bush’s proposed tax cuts will cost the country more than half a trillion dollars in revenue over the next five years and more than $2 trillion over the next decade.

The 2009 budget also calls for an 8.1% increase in Pentagon spending ($518.3 billion) plus an additional $70 billion to fight the war on terror. Again, these numbers do not reflect the full amount needed to fight in Iraq and Afghanistan, which will continue to be treated as “emergency spending.” Consider how many times President Bush has gone to Congress for money in 2007 and already in 2008. He is about to ask for yet another $107 billion. Should we really believe that $70 billion is enough in 2009? In the meantime, President Bush managed to cut Medicare by $208 billion over the next five years, and trimmed $18 billion right off the top in 2009 by cutting, of course, various education, training, highway and environmental programs (domestic programs where investment would create jobs).

It’s time to stop the bleeding

President Bush glibly states that the deficit is temporary and we’ll be operating in the black by 2012. Those Americans who fail to tie the state of the economy to the burgeoning cost of the wars in Iraq and Afghanistan and the unnecessary tax cuts to the rich point to this with optimism. They are delusional. Our imperial president bases this ridiculous projection on not needing more than $70 billion to continue fighting the wars in 2009 (a silly assumption when you consider how many times he’s asked for money on an emergency basis) and on a sunny economic forecast that says the U.S. economy will grow at 2.7% in 2008. The International Monetary Fund (IMF) projects U.S. growth at significantly lower rate: 1.5% in 2008. Americans should be made aware that this level of performance could actually add $250+ billion to the deficit over the next five years rather than reducing it.

President Bush has bankrupted America and the Congress has given him carte blanche to do so by continuing to fund the war. The timid Democrats simply do not want to be accused of not supporting the troops, particularly during an election year. However, even if the Congress cut off funding today, there would still be enough money allocated to keep the war going for another full year. The Congress should stand tall and cut fiscal support for this war, starting with Bush’s upcoming request for $107 billion. It should also let the tax cuts to the rich expire. This revenue could be used to invest in the very domestic programs President Bush continues to cut. We could hire more teachers, police officers, even border patrol agents. We could invest in infrastructure improvements to our bridges, tunnels and roads, investments that are sorely needed. These are the programs that will actually create jobs, stimulate the economy and, perhaps, even jump-start a recovery.

(1) Office of Management and Budget, National Economic Council (9/27/00)

 

http://turn-left.hypocrisy.com

Deb Della Piana is a corporate ex-patriot (30+ years in advertising & public relations) turned liberal political blogger. She lives in the great state of Massachusetts with her life partner, two children and three cats.
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One thing is for certain: If John McCain is electe... by Deb Della Piana on Monday, Mar 31, 2008 at 10:04:11 AM
Deb, you're confusing Clinton's annual bud... by Marc Krulewitch on Monday, Mar 31, 2008 at 1:56:20 PM
 You state:In 2000, the year George W. Bush w... by James Strait on Monday, Mar 31, 2008 at 2:17:43 PM
IRAQ TO BANKRUPT AMERICA, OPEN BORDERS TO  BR... by RICHARD SHADE on Monday, Mar 31, 2008 at 3:24:29 PM
The fact that Deb does not understand the differen... by Kitty Antonik Wakfer on Monday, Mar 31, 2008 at 3:26:26 PM
And why isn't it?!   Probably becaus... by Richard Clark on Monday, Mar 31, 2008 at 6:37:56 PM
Okay, folks. Deficit. Debt. Let's talk: The Ec... by Deb Della Piana on Monday, Mar 31, 2008 at 9:58:48 PM
Agree Deb. What's important is how to fix it. ... by TomK on Tuesday, Apr 1, 2008 at 12:07:21 AM
Where did I or other commenters who pointed out yo... by Kitty Antonik Wakfer on Tuesday, Apr 1, 2008 at 1:02:58 AM