Fiscal future somewhat frightening
By Walter Cronkite: March
For most of us, the astronomical numbers quoted for such things
as the federal budget and the deficit simply numb our minds, making
those numbers easy for politicians to play with - which seems to be
just what has been happening. Two
agencies of Congress - the Congressional Budget Office and the General
Accounting Office - recently
have cast doubt
on either the Bush administration's ability to count or its candor.
The CBO says the president's claim
that he will halve the deficit in five years is
off the mark. And the
GAO warns of a fiscal train wreck not far
down the track.
Indeed, David Walker, the comptroller general of the United
States, has taken the unusual step of going directly to the public with
his concern. The comptroller general is the head of the GAO, which was
established by Congress in 1921 to serve as its investigative arm and
to audit the economic performance of the federal government.
In a recent op-ed piece in The New York Times, Walker said the government's gross
debt - the total of all its annual deficits - was about $7 trillion
last September. That translates, he said, into roughly $24,000
for every man, woman and child in the country. And those numbers climb
steeply if the gap between Social Security and Medicare commitments and
the money set aside to meet them is added in.
They climb even steeper, according to Walker, if we add in the
projected cost of the new Medicare prescription-drug benefits.
Simulations by the GAO have established that by 2040, we could be faced
with a choice of cutting government spending by 50 percent or doubling
taxes to balance the budget.
Doubling taxes would cripple the economy, not to mention family
budgets. Cutting spending in half would gut programs we take for
granted today, such as Social Security, Medicare and other so-called
entitlement programs that make up 54 percent of federal expenditures.
Say goodbye to school-lunch programs, farm subsidies, federal block
grants and subsidized college loans. Altogether, one might guess that
life for millions of Americans would get a lot harder and meaner than
anything we experience today.
It is the contention of President Bush and his economic advisers
that a rising economy will grow us out of the problem by increasing
revenues and dispelling those dire predictions.
That seems to be what happened when President Reagan raised the
deficit to then historic levels. But there is a rising chorus of
critics today - -conservatives as well as liberals - who warn that
history is not about to repeat itself. The very conditions that
produced recovery then are conspicuously absent today. Those conditions
included the large baby boomer segment of the population - at its peak
working years then, but going into retirement now. The dollar was
strong then - it isn't now. Interest rates were high, inviting foreign
investment. Today, the opposite is true.
So what can this president
be thinking, with his call for even further tax cuts while he increases
spending by astronomical amounts (the GAO estimates the
long-term costs of the new prescription-drug law at up to $8 trillion)?
Well, there's a theory suggested
by some that might or might not be valid. It's called "Starve the
is an idea dear to the hearts of many conservatives who believe the
only way to get rid of government programs is to cut off the flow of
money going to them. That's a scary idea.
Of course, tax cuts always can be rescinded by another
administration and a different majority in Congress. Also, any effort
to severely squeeze or eliminate Social Security or Medicare would be
politically undoable in the foreseeable future, given the large and
growing proportion of elderly voters. But a real financial crisis
that would require such draconian measures is exactly what Federal
Reserve Chairman Alan Greenspan warned about just last week, and he
recommended squeezing the entitlements.
There is another possibility - that Bush and his team don't
really know what they are doing. That's the scariest idea of all.
Write to Walter Cronkite c/o King Features Syndicate, 888
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email@example.com. Copyright 2004 Walter Cronkite. Distributed by
King Features Syndicate.