Political Economics

White House Budget Director Portman Resigns – washingtonpost.com

Sobering feedback based on the best available economic data was never welcome at the Bush White House according to the Treasury Secretaries (Paul O’Neill and John Snow) who have resigned after discovering that they were playing ceremonial roles in the Bush Cabinet. This latest resignation (article above) reaffirms the intense politicization of everything that is under way in the Bush Administration.

The funniest aspect, or the most vexing aspect depending on one’s point of view, is that the Congressional Budget Office (CBO) has consistently shown that the federal deficit 1) resulted from the Bush tax cuts and 2) the federal deficit will disappear as soon as the Bush tax cuts expire in both its July 2006 (pdf) economic forecast and its January 2007 (pdf) economic forecast. The summary, page IX, of the 2006 projection states quite flatly:

After 2010, it [the federal deficit] would decline sharply, reflecting the rapid increase in tax revenues that would occur after provisions initially enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) expired. By 2016, the deficit would decline to 0.4 percent of GDP, according to CBO’s baseline projections.

Mindful of the fact that the CBO is, historically, the most nonpartisan and the most reliable economic forecasting institution, public or private, in the US, one can hardly refrain from rendering the most damning judgment against the Bush and Republican budgetary process, and this damning judgment is what this budgetary process merits.

But, perhaps the ultimate blame in all of this lies at the doors of voters who fail to realize that economics is a numbers game, and that numbers matter more in a numbers game than ideology.

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