Ever since he checked into the White House in 2001, President Bush's fiscal policy has possessed two striking features:
¢ An obsession with tax cuts, especially those benefiting the affluent who least need them.
¢ A lack of budget discipline, dramatized by the fact that he still hasn't vetoed a single spending bill after nearly five years in office.
A fiscal policy with such defining traits almost invariably will face rocky times, particularly for the long term, because it simply cannot be sustained.
It's true that tax cuts can help stimulate the economy. But you can't keep whittling taxes without eventually squeezing government revenues that pay for services.
If you sharply reduce taxes, it's reckless to increase federal spending significantly at the same time. But that's exactly what Bush and the Republican-ruled Congress have done with startling abandon.
The unsurprising result has been record budget deficits.
The tax-less/spend-more approach leaves little margin for error when it comes to budgeting. The approach is especially perilous for presidents who have extraordinarily costly surprises thrown in their laps.
In Bush's case, the first stunning surprise was the Sept. 11, 2001, attacks by Muslim madmen, which led to a wave of homeland security and anti-terrorism spending. And now Hurricane Katrina. The federal government's tab for the storm is likely to exceed $200 billion.
Before Katrina, the Bush administration already had been merrily ringing up record budget deficits, accentuated by $412 billion in red ink for fiscal 2004.
Things were looking a little better by August, with the nonpartisan Congressional Budget Office having forecast that the deficit for fiscal 2005, which ends Sept. 30, would shrink to a less-corpulent $331 billion. But that forecast did not include $62.5 billion in new spending that Congress since has authorized for Katrina, with further large allocations expected in the future.
As a result, the deficit is suddenly headed in the wrong direction again in the short term. And the long-term outlook is more ominous, according to the Concord Coalition, a nonpartisan budget watchdog with a deserved reputation for straight talk.
Interestingly, the long-term deficits will be far higher if Bush gets the things he covets in his second term - an extension of various first-term tax cuts, permanent repeal of the estate tax and private investment accounts for Social Security, for example.
Concord forecast in mid-August that annual budget deficits cumulatively could total $2.1 trillion over the next five years and a stunning $5.7 trillion over the next 10 years.
That projection is based on certain things happening, including extension of the Bush tax cuts adopted in 2001 and 2003, changes in the alternative minimum tax and some continued funding (although at reduced levels) for U.S. operations in Iraq and Afghanistan.
Deficits would jump substantially if Bush were to win congressional approval for his proposal to let Americans divert a portion of their Social Security payroll taxes into private investment accounts. But, mercifully, Bush's proposal looks as if it is going nowhere because of a lack of public support.
As the Concord Coalition stresses, continued high federal deficits could seriously harm the U.S. economy in coming years and imperil America's ability to deal with spiraling costs for Social Security, Medicare and Medicaid at a time when many baby boomers will be retiring and putting extraordinary demands on the system.
Several things need to happen to prevent continued budgetary train wrecks that could leave our children and grandchildren with an unbearably large financial burden:
The Bush tax cuts need to be scaled back to increase federal revenues, trim budget deficits and pay for post-Katrina reconstruction.
Proposals to permanently repeal the estate tax should be scrapped.
Congress must adopt common-sense rules to rein in spending and shrink deficits, as it did in the late 1990s when budget surpluses were realized. If Congress boosts spending in one area, it must offset that with spending reductions elsewhere or revenue-increasing measures such as higher taxes or fees.
Congress should adopt bipartisan Social Security reform that will ensure the program's long-term solvency and preserve its current basic structure.
Health care costs must be reined in, including those for Medicare and Medicaid.
Bush's fiscal policy was foundering even before Katrina made landfall. The storm's reconstruction costs will leave us drowning in even more red ink, unless Washington undergoes a fiscal reality check.
- Jack Z. Smith is a columnist for the Fort Worth Star-Telegram. His e-mail address is email@example.com