Wednesday, January 28, 2004
Economic Jitters:
Deficit Fears:
This is an old story, a too-old concern. We can recall Fritz Mondale and his plaintive cries about “the deficit”. As then, the Republicans have purposely created imposing deficits in the hope that the “beast” that is government will be drowned in that red ink bathtub. Not if we fight (or Fite).
The Congressional Budget Office predicted on Monday that the federal budget deficit would hit a record $477 billion this year and that accumulated deficits over the next decade would total $1.9 trillion.
The nonpartisan budget office's outlook for the long term is significantly more pessimistic than it was just one year ago. It casts new doubt on the ability of President Bush to fulfill his promise of cutting the deficit in half over the next five years, particularly if he persuades Congress to make his tax cuts permanent, which he has vowed to do.
If Congress extends all tax breaks that are scheduled to expire, the agency predicted, the total cost would add up to more than $2 trillion in additional borrowing over the next decade.
And if Congress moves to stop an explosive rise in what is known as the alternative minimum tax, a provision that is expected to raise taxes on millions of families as their incomes rise, the Treasury would lose an additional $469 billion over 10 years.
Extending the tax cuts would increase the accumulated deficit more than $1.2 trillion above the agency's basic forecast. They are now scheduled to expire at various points between now and 2011.
Just a year ago, before the war in Iraq and before Congress passed a sweeping expansion of Medicare, Congressional forecasters predicted that the deficit could melt away by 2007 and that the government could rack up $1.3 trillion in accumulated surpluses within 10 years.
Democrats immediately pounced on the new report, saying it provided more evidence of Mr. Bush's fiscal recklessness. http://www.nytimes.com/2004/01/27/politics/27BUDG.html?pagewanted=print&position=
Krugman on Deficits
Why, then, do we face the prospect of huge deficits as far as the eye can see? Part of the answer is the surge in defense and homeland security spending. The main reason for deficits, however, is that revenues have plunged. Federal tax receipts as a share of national income are now at their lowest level since 1950.
Of course, most people don't feel that their taxes have fallen sharply. And they're right: taxes that fall mainly on middle-income Americans, like the payroll tax, are still near historic highs. The decline in revenue has come almost entirely from taxes that are mostly paid by the richest 5 percent of families: the personal income tax and the corporate profits tax. These taxes combined now take a smaller share of national income than in any year since World War II.
This decline in tax collections from the wealthy is partly the result of the Bush tax cuts, which account for more than half of this year's projected deficit. But it also probably reflects an epidemic of tax avoidance and evasion. Everyone who wants to understand what's happening to the tax system should read "Perfectly Legal," the new book by David Cay Johnston, The Times's tax reporter, who shows how ideologues have made America safe for wealthy people who don't feel like paying taxes.
What's playing out in America right now is the bait-and-switch strategy known on the right as "starve the beast." The ultimate goal is to slash government programs that help the poor and the middle class, and use the savings to cut taxes for the rich. But the public would never vote for that.
So the right has used deceptive salesmanship to undermine tax enforcement and push through upper-income tax cuts. And now that deficits have emerged, the right insists that they are the result of runaway spending, which must be curbed.
While this strategy has been remarkably successful so far, it also offers a big opportunity to the opposition. So here's a test for the Democratic contenders: details of your proposals aside, which of you can do the best job explaining the ongoing budget con to the American people? http://www.nytimes.com/2004/01/27/opinion/27KRUG.html?pagewanted=print&position=
Global Economy Advocates Unsettled:
The Wall Street Journal (Bob Davis) noted that there are increasing doubts amongst those at the Davos World Economic Forum that the global economy will produce those promised high-wage jobs.
Many of the business, government and academic leaders who came here for the annual meeting of the World Economic Forum, traditionally a gathering of advocates of globalization, have voiced doubts over the past few days about one of the central tenets of global economic integration…
Their concern stems from the free-trade axiom that when a rich country sends blue-collar jobs overseas, it creates opportunities back home for workers to move up the skill ladder. The more recent corollary was that sending service jobs overseas would do the same for white-collar workers back home.
But the rising number of skilled, white-collar jobs migrating from rich nations to developing countries is raising fears that, in fact, well-paid workers in developed countries will have trouble finding equally well-paid computer, design and medical jobs at home. Many of the true believers in globalization at the Davos forum, which ended Sunday, worry that outsourcing also could erode political support for free trade internationally… http://online.wsj.com/article/0,,SB107506802467310973,00.html?mod=home%5Fpage%5Fone%5Fus
More (Criticism) at Davos: An array of critiques at the Davos meeting
Despite the US attempts to tread more lightly, Washington was not spared some harsh words at Davos, notably from UN Secretary General Kofi Annan, whose help it is now seeking to sort out the aftermath of the Iraq war.
Annan warned that the US focus on security had diverted attention from critical development issues facing the world and risked reducing the collective security system to "brute competition based on the laws of the jungle."
He said if global terrorism threatened peace and communal harmony, "the war against terrorism can sometimes aggravate those tensions, as well as raising concerns about the protection of human rights and civil liberties."
Critics from the Muslim world branded the US as hypocritical for preaching the spread of democracy in the Middle East while continuing to back Israel's occupation of the Palestinian territories.
Even the widely touted economic recovery in the US attracted suspicion from officials and economic pundits alike.
Stephan Roach, chief economist at Morgan Stanley, said the Americans were getting the headlines for what is in some respects an "artificial recovery" compared to the real growth registered in countries like China.
"We are doing it at the cost of lots of structural imbalances and a lack of job recreation and an economy that is running on cash cuts and debt," he said. http://www.taipeitimes.com/News/world/archives/2004/01/26/2003092555
What’s Happening, Iraq:
A particularly deadly week, if somewhat lost amidst the polls and N.H. results.
With the wmd issue a mighty embarrassment, it seems clear that the new strategy is two-fold—to blame the CIA, and to spin the new line, that ousting Saddam was a great humanitarian move. (Globe and Mail, Paul Koring)
Seeking to recast its reasons for toppling Saddam Hussein's regime in Iraq, the Bush administration is sending high-ranking officials abroad to justify the war as good for humanity, despite increasing evidence that Baghdad did not possess stockpiles of chemical, biological or nuclear weapons.
"The former dictator sits in captivity. He can no longer harbour and support terrorists, and his long efforts to acquire weapons of mass destruction are at an end," U.S. Vice-President Dick Cheney said yesterday in a speech to political and business leaders in Rome. Today, Mr. Cheney will take the same message to the Vatican on a fence-mending mission to Pope John Paul II, who had condemned the war as a defeat for humanity and whose personal emissary failed to dissuade President George W. Bush from attacking Iraq last spring. http://www.globeandmail.com/servlet/story/RTGAM.20040127.wxiraq27/BNStory/Front/
Meanwhile, the General Accounting Office and the House Budget Committee are perplexed by the Pentagon’s spending habits, questioning whether the Defense Department is using the money that is allocated. One speculation is that the Administration asked for extra money so as to not request more during the election year.
In all, Congress has approved about $4 billion a month for Iraq and $1 billion a month for Afghanistan, officials say. Based on those numbers, lawmakers have estimated the cost of operations at as much as $45,000 per soldier each month in Iraq and $100,000 in Afghanistan.
Some lawmakers say such high numbers cast doubt on the U.S. government's staying power in future conflicts. "I think it costs one hell of a lot to maintain the force," Rep. John Spratt of South Carolina, the senior Democrat on the House Budget Committee, said in an interview. "It should affect your strategic thinking about when and where it's cost-effective to engage [an enemy], and secondarily whether we can maintain go-it-alone geopolitics."
Others are questioning whether the Pentagon is even spending all the money that the administration sought from Congress. "It's hard for me to believe we're spending that much money a week," Comptroller General David Walker, the head of the GAO, said last week. http://online.wsj.com/article/0,,SB107508538756111308,00.html?mod=world_news_whats_news
And another disturbing note, from the Denver Post (Miles Moffeit and Amy Herdy):
Female troops serving in the Iraq war are reporting an insidious enemy in their own camps: fellow American soldiers who sexually assault them.
At least 37 female service members have sought sexual-trauma counseling and other assistance from civilian rape crisis organizations after returning from war duty in Iraq, Kuwait and other overseas stations, The Denver Post has learned. The women, ranging from enlisted soldiers to officers, have reported poor medical treatment, lack of counseling and incomplete criminal investigations by military officials. Some say they were threatened with punishment after reporting assaults.
The Pentagon did not respond to repeated requests for information about the number of sexual assault reports during the conflict. Defense officials would say only that they will not tolerate sexual assault in their ranks. http://www.denverpost.com/Stories/0,1413,36%257E27059%257E1913069,00.html?search=filter
9/11
Rarely in the major media, which is what the White House wants. Let’s recall that they opposed a commission and have dragged out the proceedings, now refusing to extend the deadline for its May report. The Commission is clearly behind in its work, and has outraged some of the committee members and a group representing the families of 9/11 victims. But, a disturbing note is that the Chair Thomas Kean and the Vice Chair, Lee Hamilton, both Republicans, have been reportedly hesitant to ask for more time.
Fortunately, today’s NY Times (Philip Shenon) brought the issue back, quoting Kean and Hamilton as asking- tho rather mildly- for more time. http://www.nytimes.com/2004/01/28/national/28TERR.html?hp
Election: Issues: Health Care and Economy Trump Iraq
From the Washington Post (Jonathan Finer)
Health care (22 percent) topped the list of issues considered critical by voters in a recent University of New Hampshire Survey Center poll, ahead of both the economy (16 percent) and the war in Iraq (10 percent). Health care also was deemed most important by voters in a Pew Foundation survey conducted last month.
A Gallup poll released Monday found that the economy (38 percent) and health care (26 percent) are the two most important issues influencing voters' choices Tuesday. The war in Iraq was cited as the most important issue by 20 percent of those surveyed. http://www.washingtonpost.com/ac2/wp-dyn/A50538-2004Jan26?language=printer
-R
Deficit Fears:
This is an old story, a too-old concern. We can recall Fritz Mondale and his plaintive cries about “the deficit”. As then, the Republicans have purposely created imposing deficits in the hope that the “beast” that is government will be drowned in that red ink bathtub. Not if we fight (or Fite).
The Congressional Budget Office predicted on Monday that the federal budget deficit would hit a record $477 billion this year and that accumulated deficits over the next decade would total $1.9 trillion.
The nonpartisan budget office's outlook for the long term is significantly more pessimistic than it was just one year ago. It casts new doubt on the ability of President Bush to fulfill his promise of cutting the deficit in half over the next five years, particularly if he persuades Congress to make his tax cuts permanent, which he has vowed to do.
If Congress extends all tax breaks that are scheduled to expire, the agency predicted, the total cost would add up to more than $2 trillion in additional borrowing over the next decade.
And if Congress moves to stop an explosive rise in what is known as the alternative minimum tax, a provision that is expected to raise taxes on millions of families as their incomes rise, the Treasury would lose an additional $469 billion over 10 years.
Extending the tax cuts would increase the accumulated deficit more than $1.2 trillion above the agency's basic forecast. They are now scheduled to expire at various points between now and 2011.
Just a year ago, before the war in Iraq and before Congress passed a sweeping expansion of Medicare, Congressional forecasters predicted that the deficit could melt away by 2007 and that the government could rack up $1.3 trillion in accumulated surpluses within 10 years.
Democrats immediately pounced on the new report, saying it provided more evidence of Mr. Bush's fiscal recklessness. http://www.nytimes.com/2004/01/27/politics/27BUDG.html?pagewanted=print&position=
Krugman on Deficits
Why, then, do we face the prospect of huge deficits as far as the eye can see? Part of the answer is the surge in defense and homeland security spending. The main reason for deficits, however, is that revenues have plunged. Federal tax receipts as a share of national income are now at their lowest level since 1950.
Of course, most people don't feel that their taxes have fallen sharply. And they're right: taxes that fall mainly on middle-income Americans, like the payroll tax, are still near historic highs. The decline in revenue has come almost entirely from taxes that are mostly paid by the richest 5 percent of families: the personal income tax and the corporate profits tax. These taxes combined now take a smaller share of national income than in any year since World War II.
This decline in tax collections from the wealthy is partly the result of the Bush tax cuts, which account for more than half of this year's projected deficit. But it also probably reflects an epidemic of tax avoidance and evasion. Everyone who wants to understand what's happening to the tax system should read "Perfectly Legal," the new book by David Cay Johnston, The Times's tax reporter, who shows how ideologues have made America safe for wealthy people who don't feel like paying taxes.
What's playing out in America right now is the bait-and-switch strategy known on the right as "starve the beast." The ultimate goal is to slash government programs that help the poor and the middle class, and use the savings to cut taxes for the rich. But the public would never vote for that.
So the right has used deceptive salesmanship to undermine tax enforcement and push through upper-income tax cuts. And now that deficits have emerged, the right insists that they are the result of runaway spending, which must be curbed.
While this strategy has been remarkably successful so far, it also offers a big opportunity to the opposition. So here's a test for the Democratic contenders: details of your proposals aside, which of you can do the best job explaining the ongoing budget con to the American people? http://www.nytimes.com/2004/01/27/opinion/27KRUG.html?pagewanted=print&position=
Global Economy Advocates Unsettled:
The Wall Street Journal (Bob Davis) noted that there are increasing doubts amongst those at the Davos World Economic Forum that the global economy will produce those promised high-wage jobs.
Many of the business, government and academic leaders who came here for the annual meeting of the World Economic Forum, traditionally a gathering of advocates of globalization, have voiced doubts over the past few days about one of the central tenets of global economic integration…
Their concern stems from the free-trade axiom that when a rich country sends blue-collar jobs overseas, it creates opportunities back home for workers to move up the skill ladder. The more recent corollary was that sending service jobs overseas would do the same for white-collar workers back home.
But the rising number of skilled, white-collar jobs migrating from rich nations to developing countries is raising fears that, in fact, well-paid workers in developed countries will have trouble finding equally well-paid computer, design and medical jobs at home. Many of the true believers in globalization at the Davos forum, which ended Sunday, worry that outsourcing also could erode political support for free trade internationally… http://online.wsj.com/article/0,,SB107506802467310973,00.html?mod=home%5Fpage%5Fone%5Fus
More (Criticism) at Davos: An array of critiques at the Davos meeting
Despite the US attempts to tread more lightly, Washington was not spared some harsh words at Davos, notably from UN Secretary General Kofi Annan, whose help it is now seeking to sort out the aftermath of the Iraq war.
Annan warned that the US focus on security had diverted attention from critical development issues facing the world and risked reducing the collective security system to "brute competition based on the laws of the jungle."
He said if global terrorism threatened peace and communal harmony, "the war against terrorism can sometimes aggravate those tensions, as well as raising concerns about the protection of human rights and civil liberties."
Critics from the Muslim world branded the US as hypocritical for preaching the spread of democracy in the Middle East while continuing to back Israel's occupation of the Palestinian territories.
Even the widely touted economic recovery in the US attracted suspicion from officials and economic pundits alike.
Stephan Roach, chief economist at Morgan Stanley, said the Americans were getting the headlines for what is in some respects an "artificial recovery" compared to the real growth registered in countries like China.
"We are doing it at the cost of lots of structural imbalances and a lack of job recreation and an economy that is running on cash cuts and debt," he said. http://www.taipeitimes.com/News/world/archives/2004/01/26/2003092555
What’s Happening, Iraq:
A particularly deadly week, if somewhat lost amidst the polls and N.H. results.
With the wmd issue a mighty embarrassment, it seems clear that the new strategy is two-fold—to blame the CIA, and to spin the new line, that ousting Saddam was a great humanitarian move. (Globe and Mail, Paul Koring)
Seeking to recast its reasons for toppling Saddam Hussein's regime in Iraq, the Bush administration is sending high-ranking officials abroad to justify the war as good for humanity, despite increasing evidence that Baghdad did not possess stockpiles of chemical, biological or nuclear weapons.
"The former dictator sits in captivity. He can no longer harbour and support terrorists, and his long efforts to acquire weapons of mass destruction are at an end," U.S. Vice-President Dick Cheney said yesterday in a speech to political and business leaders in Rome. Today, Mr. Cheney will take the same message to the Vatican on a fence-mending mission to Pope John Paul II, who had condemned the war as a defeat for humanity and whose personal emissary failed to dissuade President George W. Bush from attacking Iraq last spring. http://www.globeandmail.com/servlet/story/RTGAM.20040127.wxiraq27/BNStory/Front/
Meanwhile, the General Accounting Office and the House Budget Committee are perplexed by the Pentagon’s spending habits, questioning whether the Defense Department is using the money that is allocated. One speculation is that the Administration asked for extra money so as to not request more during the election year.
In all, Congress has approved about $4 billion a month for Iraq and $1 billion a month for Afghanistan, officials say. Based on those numbers, lawmakers have estimated the cost of operations at as much as $45,000 per soldier each month in Iraq and $100,000 in Afghanistan.
Some lawmakers say such high numbers cast doubt on the U.S. government's staying power in future conflicts. "I think it costs one hell of a lot to maintain the force," Rep. John Spratt of South Carolina, the senior Democrat on the House Budget Committee, said in an interview. "It should affect your strategic thinking about when and where it's cost-effective to engage [an enemy], and secondarily whether we can maintain go-it-alone geopolitics."
Others are questioning whether the Pentagon is even spending all the money that the administration sought from Congress. "It's hard for me to believe we're spending that much money a week," Comptroller General David Walker, the head of the GAO, said last week. http://online.wsj.com/article/0,,SB107508538756111308,00.html?mod=world_news_whats_news
And another disturbing note, from the Denver Post (Miles Moffeit and Amy Herdy):
Female troops serving in the Iraq war are reporting an insidious enemy in their own camps: fellow American soldiers who sexually assault them.
At least 37 female service members have sought sexual-trauma counseling and other assistance from civilian rape crisis organizations after returning from war duty in Iraq, Kuwait and other overseas stations, The Denver Post has learned. The women, ranging from enlisted soldiers to officers, have reported poor medical treatment, lack of counseling and incomplete criminal investigations by military officials. Some say they were threatened with punishment after reporting assaults.
The Pentagon did not respond to repeated requests for information about the number of sexual assault reports during the conflict. Defense officials would say only that they will not tolerate sexual assault in their ranks. http://www.denverpost.com/Stories/0,1413,36%257E27059%257E1913069,00.html?search=filter
9/11
Rarely in the major media, which is what the White House wants. Let’s recall that they opposed a commission and have dragged out the proceedings, now refusing to extend the deadline for its May report. The Commission is clearly behind in its work, and has outraged some of the committee members and a group representing the families of 9/11 victims. But, a disturbing note is that the Chair Thomas Kean and the Vice Chair, Lee Hamilton, both Republicans, have been reportedly hesitant to ask for more time.
Fortunately, today’s NY Times (Philip Shenon) brought the issue back, quoting Kean and Hamilton as asking- tho rather mildly- for more time. http://www.nytimes.com/2004/01/28/national/28TERR.html?hp
Election: Issues: Health Care and Economy Trump Iraq
From the Washington Post (Jonathan Finer)
Health care (22 percent) topped the list of issues considered critical by voters in a recent University of New Hampshire Survey Center poll, ahead of both the economy (16 percent) and the war in Iraq (10 percent). Health care also was deemed most important by voters in a Pew Foundation survey conducted last month.
A Gallup poll released Monday found that the economy (38 percent) and health care (26 percent) are the two most important issues influencing voters' choices Tuesday. The war in Iraq was cited as the most important issue by 20 percent of those surveyed. http://www.washingtonpost.com/ac2/wp-dyn/A50538-2004Jan26?language=printer
-R
