WORST—PRESIDENT—EVER
Federal deficit expected to hit record $422 billion

From the AP via the Houston Chronicle:

The projection by Congress' nonpartisan budget analysts would surpass last year's $375 billion shortfall, the current record.

When adjusted to erase the effects of inflation, the 2004 projected deficit exceeds the value of every annual shortfall since World War II.

Tuesday's CBO estimate should prove fairly accurate because the federal budget year, which runs through Sept. 30, has less than one month to go. The government is expected to spend about $2.3 trillion this year, which means it will be borrowing about one of every five dollars it spends.

And the hypocrisy runs rampant as Republicans try to defend this monster. Read on:

Republicans who spent the 1980s and 1990s railing against budget shortfalls have argued that fighting wars in Iraq and Afghanistan, battling terrorism and righting the economy are higher priorities.

They also argue that today's deficits are no reason for panic because as a percentage of the overall economy, they are smaller than the largest shortfalls under President Reagan. Many economists consider that ratio the most significant measure of the harm deficits can cause.

They may have a point at the moment about the deficit as a percentage of the GDP—the economy won’t really be affected until federal overspending grows. However, the deficit is certain to do exactly that: Bush’s tax cuts for the rich have proven to be wildly ineffective at jump starting the sluggish economy, but they’ve done a very good job of decreasing much needed federal revenue; funny how the Republicans don’t mention that as a cause for the deficit.

There’s one more context conspicuously missing from this saga of Bush’s deficit, and the Democrats only hint at it. Read on:

Democrats say the shortfalls are forcing policy-makers to restrain spending for schools, domestic security and other priorities, while driving up the government's borrowing costs.

Click here for the entire article.

Long ago, neo-liberal guru Milton Friedman recommended that, for political reasons, it is actually good for the federal government to run massive deficits. Neo-liberals believe that the government has absolutely no business spending money on schools and social programs because it interferes with the market. Such programs, however, are politically popular, and it’s just not feasible that they would ever be cut. Massive deficits, according to Friedman, are just the tool needed to force politicians’ hands. The idea is that if the government is bankrupt, it would have no choice but to cut important social services, which would clear the way for neo-liberals to implement their savage and crackpot economic ideas. Certainly, not all politicians are aware of this ploy, but, almost as certainly, many are aware.

I can almost hear them laughing.

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