Deficit Reduction Spin

Another Mission "Accomplished" is how the New York Times describes the Bush administration's report that the deficit fell 30 percent this year to $296 billion. Note the apostrophes around the word "accomplished." That's because this news put into context is nothing to gloat about.

Bush is crediting increased revenue as a result of his tax cuts for the reduction, but economists aren't impressed.

Even with this year'’s bigger haul, real revenue growth during the Bush years will be abysmal, averaging about 0.3 percent per capita, versus an average of nearly 10 percent in all previous post-World War II business cycles. That might be excusable if the recent revenue improvements could reasonably be expected to continue. They cannot. Much of the increase in tax receipts is from corporate profits, high-income investors and super high-earning executives, sources that are just as unpredictable as the financial markets to which they're inevitably linked.

[...] A growing number of economists, most prominently from the Congressional Budget Office, point out that upsurges in revenue are also the result of growing income inequality in the United States, an observation that is consistent with mounting evidence of a rapidly widening gap between the rich and everyone else. As corporations and high-income Americans claim ever more of the economic pie, revenues rise, even if there'’s no increase in overall economic growth.

Celebrating a $296 billion deficit is also bizarre considering it's the fourth largest budget deficit in the nation'’s history - all under the stewardship of the Bush administration. What is the truth behind the spin? The AFL-CIO blog points to these dismal figures:

The net share of the national debt for 99 percent of Americans has jumped by more than $7,000 per person over the past six years, according to a report by Citizens for Tax Justice (CTJ).

Because of the Bush administration tax cuts, the national debt has grown to $7.5 trillion - paid for with borrowed funds, such as money owed to the Social Security Trust Fund. Those who aren'’t paying for this debt are the wealthiest 1 percent, with an average income of more than $1.2 million a year. For the wealthiest 1 percent, the tax breaks outweigh the added debt burden by a net average of $30,352 per family member.

Says Alliance for Retired Americans President George Kourpias:

The tax cuts basically cost the average American over $7,000 while adding more than $30,000 to the bank accounts of those who were already rich. The fact that Republicans want to extend the tax cuts proves they only care about lining their pockets and those of their wealthy friends instead of acting with fiscal responsibility.

So, once again, good news turns out to be bad news. Why am I not surprised?