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Saturday 6 September 2008

Where Bush really was a disaster

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There's a truly fascinating commentary at Bloomberg, which Andrew Sullivan points to:

With a recession looming, the policy implications of the spending explosion are serious. If a deep recession occurs, we will have less wiggle room. 

To see how different the world could have been, I gathered data from a number of sources and ran an alternative history. In that wishful place, government spending was set equal to the spending envisioned by the Congressional Budget Office in the January 2001 long-run forecast, plus the spending for the war in Iraq and to fight terrorism. This simulation assumes that the war would have happened in spite of Bush's spending promise, and wouldn't have induced him to seek cuts elsewhere.

The difference between that spending path and the one we are on is huge. Today, we expect federal spending in 2008 will be $2.9 trillion. According to the alternative history, spending would be $2.5 trillion.

With spending at the lower level, we would have a surplus of $152 billion if revenue were equal to what it is currently projected to be.

Running the simulation forward, the gap between revenue gets wider and wider. By 2017, we are scheduled to spend almost $1 trillion more than we would have if we had stuck to the Clinton baseline. With the low spending baseline we would have a surplus in 2017 of $1.1 trillion, instead of the $151 billion surplus that's currently forecast.

Think of it this way. If we now had the lower spending levels that Bush inherited, we could extend his tax cuts, repeal the alternative minimum tax, enact the current stimulus package, and still have a 10-year budget surplus of $1.9 trillion. And, remember, that allows spending to be adjusted up for the Iraq war and the war against terrorists. ...Let's see what happens when we allow mandatory spending to go up as it did. This lets Bush have his prescription-drug benefit, which is now part of mandatory spending.

If we had held the line on everything else that is discretionary, we could have had the prescription-drug plan, the Iraq war and the war against terrorists. We could have kept all the Bush tax cuts, made them permanent, repealed the AMT and added the stimulus package and still ended up with a balanced budget from 2008 to 2017.  

They're wrong because they usually refer to his foreign policy. when in truth he has been right about the biggest issue of all - defending the West from Islamism. 

But they're right, for the wrong reason: he has indeed left an awful legacy to the world - he has been a fiscal disaster.

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