Bush’s Game of Fiscal “Chicken”

Drive straight for a head-on collision and let liberals get out of the way.

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


Article created by The Century Foundation.

The year is ending with an honest touch. After the administration failed to get Congress to cut future Social Security benefits (in the guise of reforming the system), and after it chose to ignore the recommendations of its tax reform panel, the legislative year is ending with a flurry of tax and spending cuts which aim at, well, cutting taxes and spending.

In the end, that is what this government has come to stand for: cutting taxes and non-military spending while waging war. The spending binge since 2001 is winding down. Military spending will level off, perhaps even decline. Legislators from Utah to Alaska are sated with pork (although they slipped a provision to permit oil drilling in wilderness areas into the defense appropriation bill). And the president has no more elections to win. So the administration can turn to its long term vision: to starve government of revenues and thereby force it to shrink.

In a show of indifference not only to the distributional consequences of its fiscal policy but to the laws of arithmetic, the government continues to thumb its nose at fiscal orthodoxy.

The move is deliberate. Most citizens do not follow number crunching anyway. The damaging consequences of throwing the budget wildly out of balance may not come home to roost for years. By then, The President and Vice President, Mr. DeLay and the other architects of our fiscal mess will be long gone, stone-walling any responsibility.

It took ten years of tough policy to move the federal budget from the deficits of the Reagan-Bush I years to the surpluses of the late 1990s. The Clinton administration cut federal spending as a share of GDP by 3.7 percentage points while increasing revenues as a share of GDP by 3.3 percentage points, for a net effect on the deficit of 7 percent of GDP. All those effort to restrain spending and raise revenues have been torn up and tossed aside as the Bush administration has added to spending while eviscerating revenues: so far, the Bush administration has raised the share of spending in GDP by 2 percent while slashing taxes by 4.1 percent. The ten-year-long uphill struggle to set the federal fiscal house in order has been undone in less than half that time.

The tax and spending cuts of December 2005 are entirely consistent with the politics of fiscal “chicken” that the administration is playing: drive straight for a head-on collision and let liberals get out of the way.

The spending cuts in the reconciliation bill will hit Medicaid and other health benefits, child care, student loans, and Food Stamps. The total effect of the spending cuts over five years is expected to be $42 billion. Against this, the tax cuts nearing final approval are expected to cost $90 billion over five years, principally by offering tax relief on dividends and capital gains.

For the budget, the policy continues to be cut and run. As for the poor, the policy seems to be to let them eat cake.

THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

payment methods

THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate