February 6, 2007

EVERYTHING WILL BE DIFFERENT...:

Democrats face limits in changing U.S. budget (Steven R. Weisman, February 5, 2007, NY Times)

[I]n practice, Democrats know that the only way they can find the revenue to restore the administration's proposed spending cuts would be to cut back on military spending, delay their stated intentions to balance the budget or rescind the Bush tax cuts in future years. They are not especially eager to do any of these.

The most likely result, even some Democrats acknowledge, will be a limited reshaping of the budget by restoring some proposed cuts in a variety of domestic programs, including children's health care, Head Start and home heating assistance for the poor and the elderly.

But few Democrats are expected to look for new revenues by calling for an end to Bush's tax cuts, instead of extending them as the president proposed Monday, or to deal with the looming costs of Social Security and Medicare as the postwar generation retires, all of which pose huge budget problems in future years.

"The long-term budget crisis appears so distant that it's going to be very hard to get politicians excited about it this year," said Robert D. Reischauer, president of the Urban Institute. "The economy is strong, and the deficit seems to be at manageable levels right now. No one wants to risk popular support by doing something courageous."


If Democrats didn't have the stones to deal with entitlement reform when George W. Bush and the GOP were prepared to take the responsibility for them, what earthly reason could one have to believe they'd step up now when they'd share the responsibility?


MORE:
Bush wants to means-test middle-class benefits (Caroline Daniel and Krishna Guha, February 5 2007, Financial Times)

President George W. Bush presented his $2,900bn budget to Congress on Monday, setting the stage for a confrontation with Democrats by making greater means-testing for middle-class benefits a central part of his proposals to address entitlement reform.

The budget represents a challenge to parts of the system of entitlements enacted as part of the Great Society agenda of the 1960s, with plans to cut Medicare spending, the main publicly funded health insurance programme for those over 65, by raising premiums for wealthier recipients.

That could save $66bn over five years, according to budget estimates, and up to $9,000bn during the next 75 years, according to some analysts.

Michael Franc, vice-president for government relations at the Heritage Foundation, said Mr Bush had considered means-testing as part of Social Security reform. "Now there is a shift to applying it across the board for all entitlements. The big change concerns the wealthy. Democrats want to tax them more. Republicans say they want to make them pay more for their middle-class benefits and shoulder more of the burden."

Posted by Orrin Judd at February 6, 2007 8:20 AM
Comments

Medved was discussing the budget yesterday and the loons were out. Spitting and ranting.

And then he used my fav analogy, do you have a mortgage?

Posted by: Sandy P at February 6, 2007 9:44 AM

I was talking to a buddy who's a Dartmouth econ prof at the Super Bowl Party and he was venting about the debt. I asked him if there was any economic model under which it didn't make sense for you to borrow money at 4% and invest it at 8%. He said: No, I know, I just don't like the idea of debt."

As Americans we can't underestimate that Puritan/moral animus.

Posted by: oj at February 6, 2007 9:52 AM

-- No, I know, I just don't like the idea of debt."--

Did you ask him if he has debt?

Posted by: Sandy P at February 6, 2007 12:45 PM

oj:

What does it say about the reliability of those Chinese GDP numbers that Chinese investors would settle for T-Bill returns in an economy allegedly growing at 9-12 percent per year.

Posted by: Fred Jacobsen (San Fran) at February 6, 2007 5:47 PM

Nevermind the inflated GDP, no one knows better than the Chinese how unstable their society is. American bonds are the only safe harbor.

Posted by: oj at February 6, 2007 8:27 PM
« MODERN WAR IS SO CHEAP WE COULD LEARN TO LOVE IT: | Main | THE IDEAL CONSERVATIVE PROGRAM: RETAINING SOVEREIGNTY; TAXING CONSUMPTION; FORCING INNOVATION »