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Published: Thursday, 7/31/2008

Deficit debacle

MORE bad news from Washington: the Bush Administration now projects the federal budget deficit for the fiscal year beginning Oct. 1 will be a heart-stopping $482 billion, far and away the worst deficit in U.S. history.

A lot of knowledgeable people believe it will be much higher, possibly exceeding $500 billion - half a trillion dollars.

As a percentage of the nation's economy, the projected deficit may not be especially large, but the billions in interest costs it will require will do the damage in the future.

This nightmarish news follows closely the revelation last week that, as a result of the government bailout of Fannie Mae and Freddie Mac (whose CEOs earn $11.6 million and $18.3 million, respectively), Congress feels obliged to raise the ceiling on the national debt to $10.6 trillion. This new ceiling would put the debt - which has doubled during the Bush years - into the 14-digit category for the first time.

The budget deficit projection, meanwhile, is most notable for upcoming government spending it does not include. Among these items is the $80 billion that the administration estimates for the cost of the wars in Iraq and Afghanistan next fiscal year, an estimate that is probably only about a third of the actual total.

Failing to include the war costs is, first of all, preposterous. It's like making out the family budget for the next year and not including the mortgage payment. But this omission is fairly typical of the budgetary shell game the administration has been playing for the past eight years.

The tax cuts of the first Bush term were supposed to magically stimulate the economy and increase federal revenue, but they haven't. Now the economy is tanking, and the administration is blaming declining revenues for the ballooning deficit. Talk about circular reasoning.

Profligate spending by the Democratic Congress also is being blamed, but that's another smokescreen. Mr. Bush was only too willing to allow Republicans, who controlled Capitol Hill during most of his tenure, to jack up spending. His veto pen was cleverly hidden.

In effect, the Bush economic program has been predicated on charging off Mr. Bush's ideologically driven tax cuts and disastrous wars to the next generation, which will find itself buried under a mountain of deficit and debt.



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