The budget plan that President Bush outlined this week simply doesn’t add up. Making matters worse, if he does get this bill through, his tax cuts will be virtually locked into political concrete. The president will surely not repeat his father’s politically suicidal step of raising tax rates in the future, even if changed economic or budgetary conditions require such a course.
Why is the Bush budget so irresponsible? Admittedly, the tax cuts would only consume
about one-third of the total projected surplus over the next decade, and the country could
retire most of its debt in the meantime. But of course, those projections assume that a
crashing NASDAQ, escalating healthcare costs, and external shocks will not deflect us
from a rosy outcome. They could well be wrong.
Even if economic conditions prove as good as now expected, Mr. Bush’s numbers still do
not compute. In fact, he seems to recognize as much—insisting that debates over Social Security
privatization, strengthening the military, and improving healthcare await passage of his tax cut. Otherwise, he rightly fears, the public could grow disenchanted with his latter-day voodoo economics when it discovers that he has promised far more than he can deliver.
Consider the $3 trillion or so in projected non-Social Security surpluses for the next decade. Bush’s tax cut—combined with the added interest that the federal government would have to pay if it passed such a bill—would cost about $2 trillion. Can the remaining $1 trillion, admittedly a lot of money, do everything Bush wants it to do?
The answer is clearly no. Starting with defense, Clinton administration plans would themselves require about $0.5 trillion of the remaining projected surplus. Although they might be scaled back by Secretary of Defense Donald Rumsfeld later this year, Bush came to office pledging to strengthen the military. Making good on that pledge and plans to deploy a missile defense system mean that Bush will have to spend at least $0.3 trillion more on the nation’s armed forces, no matter how ingenious Mr. Rumsfeld proves to be.