Sunday, August 24, 2003
Wall Street Wants Bush Attention On Deficit
The Congressional Budget Office will release new budget forecasts Tuesday that will put next year's red ink near $500 billion. Allen Sinai, president of Decision Economics Incs., own forecast put the figure even higher, as high as $535 billion. Absent any serious change in policy, private sector economists say deficits will remain in that range through the decade, then escalate sharply with the retirement of the baby-boom generation.
"I see absolutely nothing that's going to bring the deficit back to balance in the foreseeable future," said David Wyss, chief economist at Standard & Poor's.
Bush's response Friday was that Wall Street and others should put such concerns on hold until after the economic recovery begins to produce jobs.
If the tax cuts expire and military spending in Iraq and Afghanistan winds down, the budget would be back in balance -- or at least close to it -- by the end of the decade, budget forecasters predict.
But with military spending locked in, tax cuts likely to be extended, Medicare and prescription drug spending sure to rise, and political interest waning on a fix for Social Security, "the government is in a pickle," said Mickey Levy, chief economist at Bank of America.
Diane Swonk, chief economist at Bank One Corp., even raised a fear that has seemed remote for half a decade: inflation.
Coupled with surging defense spending, "a trillion in deficits over two years could create explosive [economic] growth," she said, predicting an unacceptable inflation rate of 3 percent emerging by the end of 2005 .
What is Bush's answer? Probably privately something like this:
Problem? I don't see a problem while I'm the in the White House. I don't care that I've already charged $3,500 to every American's national debt credit card. How much your kids will owe when you try to retire isn't my concern. My supporters give me more than half that to get me reelected.