Big Ideas

When President George W. Bush announced his $2.23 trillion budget for fiscal year 2004, Budget Director Mitchell E. Daniels Jr. remarked that "this is a president of big projects and big ideas." True enough: the Bush budget runs the largest single-year deficit ever recorded, in excess of $300 billion. That is one reason the president told the nation’s governors in late February, many of whom are swimming in a sea of red, that he could not help them with more funds for education, Medicaid, or homeland security. As part of his "supply-side" therapy for the ailing economy, a year ago the president cut corporate taxes and is now recommending further relief for upscale taxpayers. According to the Center on Budget and Policy Priorities, a Washington oversight group, in the next ten years Bush’s budget stewardship will lead to a shortfall of $2.5 trillion. Only two years ago, the projection for the same period was a $5.6 trillion surplus. As Senator Kent Conrad (D-N.D.) put it, that’s a $7-trillion turnaround-and that doesn’t factor in the costs of a war with Iraq or its possible aftermath.

When Federal Reserve chairman Alan Greenspan was asked by a Senate committee to assess the Bush deficits, he responded by calling them "sobering." Why? Such shortfalls will eventually drive up interest rates, balloon deficits, spark inflation, and shrink economic growth. The best Greenspan could do was to nod that he didn’t see any...

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