Having Their Cake and Eating Your Children’s Too
Business Week has an interesting article on the long-term economic effect of the Bush taxcuts enacted last month. It’s amazing how far we have come in such a short period of time. The federal budget went from having a surplus of 1.3% of GDP in 2001 to a deficit of 4% of GDP in 2003. If the taxcuts are implemented as proposed (and expire over the next five years) an additional $350 billion will be tacked onto the national debt. However, if the cuts are made permanent, as will likely happen, an additional $1 trillion will be added to the national debt.
So what? Well the Business Week article points out that the long term impact of budget deficits is expected to add about 1 1/4% to long term interest rates. That would have a significant impact on long-term growth. It will, in effect, saddle the nation’s children with the burden of paying for Bush’s 2004 re-election campaign favors to his fat-cat friends.
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