Bush is right on many things, but wrong on some key economic ideas. Tax cuts are necessary but you can’t cut taxes and increase spending. Both the US and Canada are over-taxed and spend money irresponsibly. Everything but breathing is taxed and every interest group, lobby group, program, minority and politically vital project is funded. The US and Canada are flooded with wasted monies.

In Canada government’s at all levels are raising taxes and increasing spend. Toronto’s budget growth is 6 % per annum in spending increases, while taxes go up on average 3 % per year. These seem marginal but accumulate rapidly over 4-5 years. Ontario’s spending budget is growing 8-10 % per annum far outpacing revenues. Federally the budget spend growth outpaces GDP growth by a factor of 2-3 x on average per year. Total national debt in real dollars has increased in the past 10 years and unfunded liabilities for pensions, health and other worthies has soared to over a Trillion dollars in future debt.

The US fares little better. Tax cuts are necessary to stimulate investment and jobs and starve rapacious governments and smiling well coiffed politicians who use your money to buy your vote. There is something akin to insanity in allowing governments to appropriate 40-50 % of a person’s income per annum. Bush’s tax cuts constituting $3.2 trillion in necessary relief will be made permanent. But it is his non-military spending that is driving real Conservatives to cry wolf.

Bush and Congress have control over $2.5 trillion in spending. About 50 % is for the sacred cows of Medicare, Medicaid and Social Security. The portion of the budget Bush wants to restrain, domestic discretionary, represents a small portion — $389 billion — of the $2.5-trillion budget. Until the US Congress is ready to significantly cut the mandatory side of the budget deficits loom far into the future. Mandatory programs need massive reform, privatization [US Health Care is NOT a free market system with over 50 % of health spend controlled by the government], and budget reductions. Coupled with discretionary budget cuts, a growing economy thanks to tax cuts and reduced government the US COULD balance its budget. But Bush and friends have little real interest in budget reductions. A case example is the increases in Medicaid spend by $70 billion per annum, in part to buy the votes of seniors dependent on government subsidies for drug purchases.

Bush talks about government reduction but his words are not matched by deeds. Bush's previous budgets increased spending by a dramatic 33 percent in four years, defense spending increased by 44.7 percent while non-defense spending increased by 41.9 percent. Bush and friends argue that much of the increase in non-defense spending is due to homeland-security spending. But this is wrong. Over half of all new spending in the past two years is from areas unrelated to defense and homeland security. As well even in defence and homeland security budgets, economies are not being sought and money is dispensed in all directions to huge government agencies with little accountability on results achieved.

Bush declared that his reforms would close 150 departments or groups and save about $20 billion in fiscal 2006. This is great – but sadly his budget spend will increase by more than $2.5 trillion over the coming 4 years. No cuts to any large department exists – Education, Health, Transport, Subsidies– and indeed all share in greater budgets. The past four years will reflect the coming four years:


-National Education spending in the US under up by 60 %
-National Spending on labor by 56 %
-Department of the Interior [not Homeland Security] budget up 25 %
-Medicare reform = $70 billion per annum for 10 years
-Agricultural subsidies - an extra $10 billion per year to around $70 billion per annum
-2005 Highways bill will spend $235 billion over 10 years laying asphalt in various politically sensitive areas

The result is massive Federal Budget deficits and growing government. These facts more than the trade deficit, has impacted the U$ and faith in the US economy. The Democrats are being given a gift for the next Presidential race – fiscal recklessness and Conservative spending largesse – in fact deficits are hitting all time highs.



Bush pledges to reduce the deficit in half from $427 billion in 2005 to $223 billion by 2009. He will never do it. Bush and friends leave out important items from the calculation, such as the additional costs in ‘05 for Iraq and Afghanistan, which could hit $80 billion in 2005 alone and which will certainly be added to costs in 2006 and beyond. The US will not be leaving Iraq or Afghanistan any time soon. As well Bush’s numbers do not include any of the potential transition costs for restructuring Social Security, which in 2006 and beyond might add a few hundred billion more to budget deficits.

The Central Budget Office in the US has already stated that the tax cuts and spending increases passed by Congress will contribute $504 billion to the government's overall forecasted debt between 2005 and 2014. Such an accumulation of debt and spending increases is fiscally irresponsible. Budget deficits coupled with tariffs, anti-dumping fees paid back to industry, and questionable commitments to open and free trade is bad politics and unsound economics. Bush needs to reduce government, reduce taxes, reduce spend and close entire agencies and programs. Action not words is needed.

Some sources:
WSJ Public article
CBS News

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