Ellington

AP is reporting: "The White House's projection of a record federal deficit that could approach $450 billion this year will further fuel a campaign-season dispute over President Bush's handling of the economy. Bush's budget office planned to release its latest forecast Friday. Its magnitude, described by congressional aides speaking on condition of anonymity, will easily surpass last year's $375 billion, the largest ever in dollar terms. Republicans said the number would underscore the economy's upturn because it shows improvement over early this year, when expectations were for an even larger shortfall. [...] Some congressional aides said the report might also project an increase in spending by Medicare, the government's $300 billion health insurance program for the elderly and disabled. That could further heighten concerns about the program's solvency, already in jeopardy over the next two decades with the impending retirement of the huge baby-boom generation. Medicare's anticipated rapid growth in coming years is expected to be a major engine keeping the budget in the red. The report's release was coming two weeks after an often-ignored July 15 deadline, a delay White House officials attributed to a desire for accurate numbers." [emphasis added]

Previous Comments

ID

85489

Comment

In a related story today: The U.S. economy grew at an annual rate of just 3 percent in the spring, a dramatic slowdown from the rapid pace of the past year, as consumer spending fell to the weakest rate since the slowdown of 2001, the government reported Friday. The Commerce Department said that the gross domestic product, the country's total output of goods and services, slowed sharply in the April-June quarter from a 4.5 percent growth rate in the first three months of the year. The size of the slowdown caught economists by surprise. Many had been looking for GDP growth to come in around 3.8 percent in the second quarter. Even that would have been a sharp deceleration for an economy that had been growing at a 5.4 percent annual rate through the year ending in March. It raised the issue of whether the economy, which Federal Reserve Chairman Alan Greenspan said last week had encountered a ``soft patch'' in June, could be in danger of seeing growth falter even more in coming quarters. In one piece of good news, inflation pressures eased with a key GDP inflation gauge that excludes energy and food rising at an annual rate of just 1.8 percent in the second quarter, down from a 2.1 percent increase in the first quarter. President Bush is counting on strong economic growth to generate sizable gains in employment in coming months to give voters a good feeling about the economy as they go to the polls on Nov. 2. However, Democratic challenger John Kerry contends that Bush is pursuing a failed economic policy that has produced the worst jobs record of any president since Herbert Hoover and is subjecting Americans to a ``middle class squeeze'' of falling wages and rising costs for health care and education,

Author

DonnaLadd

Date

2004-07-30T11:21:31-06:00

ID

85490

Comment

The White House's projection of a record federal deficit that could approach $450 billion this year... Its magnitude... will easily surpass last year's $375 billion, the largest ever in dollar terms. Definitely something to keep a weather eye on, no question. However, its good to wonder about two (IMO) more relevant items. (1) The size of the deficit in relation to the budget (2) The size of the deficit in relation to our Gross Domestic Product Taking a wild guess, I will say that (1) is a good indicator of our short-term ability to close the deficit. (2) is a good indicator of our long-run ability to pay off the deficit the report might also project an increase in spending by Medicare, the government's $300 billion health insurance program for the elderly and disabled. That could further heighten concerns about the program's solvency, already in jeopardy over the next two decades with the impending retirement of the huge baby-boom generation. Medicare's anticipated rapid growth in coming years is expected to be a major engine keeping the budget in the red. On this count, I will agree: this is a big concern, which is why I would support tax increases for the purpose of keeping the program solvent (although this is going to be a delicate balancing act: budget solvency vs. economic growth needed to support our budgets). Kerry's right --- roll back the tax cuts for those who earn more than $200K per year. Bush gave us more than enough tax cuts already. Whatever good they may have done - they've served their purpose. However, Democratic challenger John Kerry contends that Bush is pursuing a failed economic policy that has produced the worst jobs record of any president since Herbert Hoover Mmmm....I'm not quite ready to accept THAT in it's full forcee, although there's no question that Bush's job record has been you-know-what poor. The real question is "What is the yearly job creations/losses as a % of the labor force for each year?". Our population (I don't know about labor force, though) is well over twice as large now as it was in 1929, after all. Lots of stuff to mull over, I know.

Author

Philip

Date

2004-07-30T17:21:06-06:00