Tuesday, December 27, 2005

Bush "successes" of 2005 - Slim and None

I was thinking about this last week because I seriously could not remember the last time that Bush achieved a legislative success. The pre-Christmas maneuvering by the Democrats that iced down the GOP agenda reminded me that, aside from the Roberts nomination to the Supreme Court, Bush hasn't had any victories in recent memory. Well, today, there's an AP story that describes the King's recent "successes". The following are listed as 2005 "successes" for King George:

- A new bankruptcy law
- A law making multi-million dollar lawsuits more difficult
- Confirmation of John Roberts
- Free trade pact with 6 Latin American nations
- A highway bill
- An energy bill
- Extended the tax cut for another year

That's it folks. And the list isn't actually totally honest. In fact, it's one reporters attempt to have "balance" in the article since the report is a decidedly negative take on the last year of the Bush Kingship. For example, the free trade pact hasn't passed Congress. It's just a non-binding deal with 7 nations. The highway and energy bills were non-controversial, long-term funding provisions for transportation modernization and other bits and pieces. The tax cut extension (not mentioned in the article) was part of the budget that is still in the political trenches. And bankruptcy and lawsuits aren't exactly the type of successes that a King can sell to the people. No, in the end, John Roberts, a pretty much unopposed nomination, is about all the King George can claim as a "success" in 2005.

What will 2006 bring for our burgeoning royalty? It says here, not a whole lot. The Democrats have new found backbone that is likely to stick around because King George's popularity is hovering in the low 40's and there's a mid-term election coming in the Fall. The election means that very little is likely to pass - the Republicans don't want to make missteps and the Democrats don't want the Republicans to have any victories before the election. Legislative paralysis is the likely near term for the Congress. No, instead of progress, we're likely to see a filibuster on Alito and more symbolic fights than actual policy squabbles. In fact, it's a very real possibility that King George could fail to pass any major legislation for a second consecutive year.

...In other news, one particularly vexing adage I've heard trumpeted by right wing (pseudo) economic intellectuals is that budget deficits aren't really a big deal because they're manageable. This argument takes two basic forms. First, even at extraordinarily high levels, deficits are still only a meager percentage of the overall net revenue (economic output). So, in those terms, the deficit is relatively insignificant. In other words, if you looked at it on a personal level, a $3 trillion debt would account for a few percentage points of your yearly income and you wouldn't worry about it.

The other part of this argument, indeed the critical part, is that deficits are irrelevant because the conditions that lead to high deficits (lower taxes) stimulate economic growth in the long run sufficient to eventually pay off the debt. This is a curious sort of logic that seems akin to borrowing money from a bank to invest in that bank, knowing that the better the bank did, the lower your interest rate would drop, and the quicker you could pay off the loan. In other words, a dubious strategy at best.

The clear weakness of this strategy, much like day trading, is that you incur debt loads of a sufficient size that overcoming them with a low tax, high growth rate becomes near impossible. But don't take my word for it. The newly resigned former head of the Congressional Budget Office offers a more qualified editorial about it when he says: "don't even think about it...you can't grow yourself out of this problem...it's just too big."

None of this is shocking to anyone who's really paying attention. Twelve years of Reagan-Bush led the Clinton administration to slash spending and raise taxes. The butcher had to be paid eventually, which certainly made political irony when a "big government, tax and spend" Democrat had to sort out the trickle down mess. Now, after squandering the largest budget surplus in history, King George is gearing up to leave the US in massive arrears, much like he did with the Texas Rangers and various other failed businesses. And, unlike 1992, this problem looks worse. Best of luck to the next Dem that has to sort this out, because that's an unenviable task.


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