Bush sends $2.77 trillion budget plan to congress

Bonddad v Treasury Secretary Snow (shameless shill)
by bonddad

Wed Feb 08, 2006 at 06:40:46 AM PDT

I hate Treasury Secretary Snow. I refer to him as an idiot, dolt and moron. Yesterday Treasury Secretary Snow testified before the Senate Finance Committee. The topic was the President's 2007 budget. Snow's opening statement is full of incredibly gaping economic holes that have no base in reality. Below I will explain why.

bonddad's diary :: ::
Snow's pack of lies, er, testimony, is here.

Quote:

I'm pleased to be here today to talk with you about the President's Fiscal Year 2007 budget. This budget represents the President's dedication to fiscal discipline, an efficient federal government and the continuation of a thriving U.S. economy.

This is just too much. Bush is "dedicated to fiscal discipline?" Let's look at the facts, Johnny. According to the Congressional Budget Office Total government revenues for 2001 were $1,991.4 trillion and 2,153.9 in 2005 for an increase of 8.16%. Over the same years government spending increased from $1,863.2 trillion in 2001 to $2,472.2 trillion in 2005, or an increase of 32.68%. A large amount of this increase came from discretionary spending, which increased from $649.3 billion in 2001 to $967.9 billion in 2005, or an increase of 49%. Of course, there is also the increase in total federal debt which increased from $5.2 trillion in 2001 to $8.2 trillion in 2005, an increase of 57%. That is some serious responsibility.

Quote:

It also seeks to avoid a tax increase by making the President's tax cuts permanent; I want to take a moment to explain why that is entirely consistent with our deficit-cutting goals.
In short, lower tax rates are good for the economy and a growing economy is good for Treasury receipts. Indeed, our rate of economic growth led to record levels of Treasury receipts in 2005. And, going forward, we project that receipts will rise every year. In 2011 we will again reach, as a percentage of GDP, the levels we've seen over the average of the last 40 years.

Notice how Snow sidesteps a really crucial number here? Yes, total Federal Receipts were a record last year. However, Snow avoids talking about how individual income receipts are still 6.7% below the levels when Bush came into office (994 billion in 2001 verses 927 in 2005)? Nice move to the left there, Johnny. Way to avoid the inherent problem of your tax cuts not paying for themselves. Also note that current revenue projections from the CBO assumes the tax cuts expire in 2010. In other words, the only way to get revenue back to 10% of GDP levels (a whoppingly painful amount of taxes) is for the tax cuts to expire.

In addition, Snow completely avoids the CBO's analysis which concluded that an extension of Bush's tax cuts beyond 2010 would result in a cumulative deficit of 2.5 trillion:

Quote:

If all of the tax provisions that are scheduled to expire were extended together, the revenue projection for 2006 would be about 11.5 billion lower. That revenue loss would grow to 57 billion in 2007 and to 106 billion in 2010, before jumping to 254 billion in 2011 and then reaching 455 billion in 2016. For the entire 2007-2016 period, projected revenues would be reduced by about 2.64 trillion.

Snow Continues:

Quote:

Since May of 2003, the economy has created 4.7 million jobs, two million of them in the last year alone. We found out on Friday that unemployment has fallen from 4.9 percent to 4.7 percent, running lower than the average for the 1970s, 1980s and 1990s. GDP growth was three and a half percent last year. U.S. equity markets have risen, and household wealth is at an all-time high.

This is by far my favorite trick of this administration. Notice how Snow uses May 2003 as the starting point for his jobs measurement? I wonder why that is? Could it be that May 2003 was the low point of total jobs in the US over the last 5 years? Yes, I think that's it. How does Bush's entire term look? You know - since he was sworn into office? In January 2001 there were 132,471,000 establishment jobs in the US. In December of 2005 there were 134,371,000 - an increase of 1.9 million jobs over 5 years. Wow - that's impressive. Of course, Snow also avoids the fact the economy has lost 2.8 million manufacturing jobs or that Bush's best areas of job creation PAY $9000/LESS PER YEAR THAN THE JOBS THEY REPLACE How about the fact that inflation adjusted non-supervisory wages have risen under 3% over the last 5 years, John? I could go on and mention that national income is down and poverty is up because this economy is not creating good-paying jobs, but that would be overkill.

Quote:

Household net worth - that's assets minus debts - is a record high, and not just because of housing. Deposits - the money in checking accounts, savings accounts, and money market funds - are at a record high and are larger as a share of disposable income than at any time since 1993. Defaults on residential mortgage loans at commercial banks are at historic lows.
In the past two years, the economy has generated about 170,000 jobs per month, and that includes the two-month slowdown in job growth in the aftermath of Hurricanes Katrina and Rita. In the past 32 years, new claims for unemployment insurance have almost never been as low as they have been recently, the only exception being the peak of the high-tech bubble from November 1999 to June 2000.

Ah yes, the old Kudlow Household net worth argument. First notice how Snow can't mention wages because their performance is terrible. So, we'll find an arcane statistic that sounds really impressive. Here is the main problem with using Household Net Worth. Household net worth was roughly 21 trillion in 1992 and 41 trillion in 2000 - a nearly 100% increase. Over 2000-2005, household net worth has increased from 41 trillion to 51 trillion - an increase of 24%. Using this measurement advanced by the RWNM and used by Snow in his Congressional testimony, Clinton's economy was much better.

So long as we're deriving numbers from the Flow of Funds Report, how about the fact that total consumer debt now equals 87% of GDP? Or the fact that total consumer debt outstanding has increased from 7.1 trillion in the first quarter of 2001 to 11 trillion in the fourth quarter of 2005 -- a 54% increase. Also note that his "impressive" deposit statistic represents all deposits in the US -not just those of individual consumers

This figure includes corporations and foreign depositors. Going back to the Flow of Funds report, corporations are the only economic sector to meaningfully save money in the last 5 years. Individual's saving have been negative for the better part of the last year and the government has been running in the red ever since Bush was elected the first time.


What bothers me the most about Snow is he has a degree in economics. There has to be a voice in his head that knows his statements are garbage. But he obviously doesn't have a conscience. That's the scariest point.

BACK on the F-Bar Ranch, when I was too young to load the chute, de-horn, vaccinate, hold a hot iron or otherwise make myself useful as my father and older brothers branded calves, I would spend my time collecting "earmarks" ?- V-shaped pieces of a calf's left ear detached with two swift strokes of a pocketknife. I would stack these earmarks on the fence surrounding the corral as an unofficial tally of our progress.

Well, the more things change, the more they stay the same. Here I am in Congress, again being asked to collect earmarks. Sorry. I've had enough of that.

Earmarking ?- in which members of Congress secure federal dollars for pork-barrel projects by covertly attaching them to huge spending bills ?- has become the currency of corruption in Congress. It is not just the rising number of earmarks (more than 15,000 last year ?- up from around 1,200 a decade ago), or the dollar amount ($27 billion) that is troubling. More disturbing is that earmarks are used as inducements to get members to sign on to large spending measures. (The disgraced lobbyist Jack Abramoff was astute when he referred to the House Appropriations Committee as an "earmark favor factory.")

It is no coincidence that the growth of earmarks has paralleled the monstrous increase in overall federal spending. And President Bush's new $2.77 trillion budget will only set off another frenzy.

When I was first elected, I had visions of participating in the great debates of our time: How can we give the federal government the tools it needs to identify and root out our enemies while maintaining a free society? What tax and trade policies lend themselves to survival and prosperity in a global economy? How do we assert our influence abroad in a manner that enhances our security?

It is not that these policy debates haven't occurred during my time in Congress. They have. But they are diminishing.

In Congress these days, you establish your priorities by getting money for them. When the carefully designed process of authorization, appropriation and oversight is adhered to, these policies and priorities are given a thorough vetting. But earmarking circumvents that cycle: the Appropriations Committee ensures that earmarks escape scrutiny by inserting them into conference reports, largely written behind closed doors.

By the time appropriation bills reach the House or Senate floor, passage by a lopsided margin is virtually assured because every member who got earmarks is obligated to vote for the entire bill. Further, the scope of debate is substantially narrowed, with even partisan arguments that would otherwise occur hushed as Republicans and Democrats find common cause: protecting their pork.

Earmarks are also making it increasingly difficult for Congress to oversee federal agencies. It's hypocritical for us to criticize the Defense Department for not providing body armor when we earmark growing portions of its budget for items like a genomics research project at the American Museum of Natural History in Manhattan.

Solving the earmark problem will require transparency ?- a requirement that earmarks be included in the actual text of legislation (where they can be seen and challenged) rather than hidden in committee and conference reports. I've introduced such legislation in the House and my Arizona Republican colleague John McCain has introduced companion legislation in the Senate. Debate on these measures should begin as soon as possible.

During my last few years on the F-Bar we stopped earmarking our calves altogether. We concluded that a brand on the left side was sufficient, and that the earmark simply marred an otherwise healthy critter. Here's hoping we reach the same conclusion in Congress.

Jeff Flake is a Republican representative from Arizona

.. They lie, lie, and lie more. Spin the numbers. Make it look good. Pretend that everything is okay. All while piling up the massive deficits and debt. And the public is too busy/dumb/lazy to care about finding the lies.

Cycloptichorn