When Democrats propose "deficit reduction" it's really a euphemism for a phrase they'd rather stay away from, a tax increase. Back in 2003 President Bush pushed for and got (temporary) tax reductions that have found a different path to increased tax revenues, through economic growth. Those increased tax revenues have led to a steadily decreasing deficit, as documented in this editorial in today's NY Sun.
The CBO's estimate of the 2007 deficit at 1.2% of GDP is significantly lower than the White House's July estimate of 1.5% of GDP, which we used back in the July 12 editorial, and well below the 40-year average of 2.4%. In other words, the case is stronger than ever that President Bush's tax cuts, rather than creating a budget deficit, are fueling economic growth that is swelling federal revenues and shrinking the deficit.
The Sun notes that the 2004 deficit, in gross figures, was $413 billion while the CBO now estimates the 2007 deficit will come in at about $158 billion, or 38% of the 2004 number, thus proving the Boston Globe, and a Heritage Foundation analyst, wrong and the President right.
Bush's plan to halve federal deficit seen as unlikely
Higher spending, lower taxes don't mix, analysts say
WASHINGTON -- With new bills for Iraq and Afghanistan, and President Bush pushing tax cuts and an expensive remaking of Social Security, the administration seems to have little chance of significantly shrinking the budget deficit, despite Bush's promises to halve it within five years, according to independent analysts and legislators.
The analysts said Bush's commitment to lowering taxes while expanding large parts of the budget makes it impossible to meet his deficit-reduction goals...
"Politicians love to promise higher spending, lower taxes, and a reduced budget deficit, but those three goals are incompatible," said Brian M. Riedl, lead federal budget analyst at the Heritage Foundation, a conservative think tank.
He's two years early on that "halving the deficit" thing. There are certainly arguments that could be made about this that are legitimate. There are also illegitimate arguments.
Democrats responded to yesterday's good news on the budget by predicting that the red ink would start flooding again in future years as the bills for entitlement programs such as Medicare and Social Security come due.
Democrats are blaming the flagship federal programs that Democrats refuse to even consider altering for possible future budget problems? And this is Mr. Bush's fault how? Recall that it was Mr. Bush - and seemingly only Mr. Bush - who floated proposals to reform social security in a way that would increase current deficits but make it solvent in the future.
Of course, the only solution the Democrats see is more growth-stifling "deficit reduction," to use their favored euphemism.