Reply #38: As a Budget Storm Gathers, Bush Ignores Fiscal Forecasts

[UpInArms]

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http://www.forward.com/articles/4012

Ever since the Bush administration came to office in January 2001, it has repeatedly expressed overly optimistic views of the future. No sooner are the sunny pronouncements out of their mouths, it seems, that disaster strikes.

This may be the first president who bases the defense for his performance on all the bad things that have happened on his watch. The White House argument seems to be that it is doing surprisingly well — once you take into account the 2001 recession, the September 11 terrorist attacks, the breaching of the levies in New Orleans and the quagmire in Iraq.

The common thread running through all of these disasters is the administration's failure to consider in advance the downside contingencies of history. The same pattern, not so coincidentally, applies to President Bush's economic policy, particularly the budget deficit.

<snip>

In January 2001, the government forecasted that the fiscal surpluses that had been inherited from the preceding administration would continue as far as the eye could see. Among other reasons for this, their forecast of the future economic growth rate did not allow for the likelihood that someday there would be a recession and a consequent decline in tax revenues.

<snip>

Already by August 2001, the Bush administration had given away so much money in tax cuts — without the positive effect on growth and revenues that had been predicted by supply-side economics materializing — that professional forecasts showed that the surpluses were about to disappear.

But most of the public had yet to notice, and soon enough came the September 11 terrorist attacks. The White House was able to give Americans the impression that this tragedy was the source of the renewed budget deficits. Never mind that that the lost growth and tax revenue pre-dated September 11 rather than following it.

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