Stan Collender: Bush Midsession Budget: Profound Sadness

Bush Midsession Budget: Profound Sadness | Capital Gains and Games: It says more about me than I should probably admit, but back in 2000 I found the  prospect of paying off the national debt to be very exciting. 

To me, the pledge to do that, which Bill Clinton made towards the end of his presidency and George W. Bush made as his years in the White House were just beginning, was absolutely thrilling.  Because of the lower annual interest payments that would result, no other change then being seriously talked about had the potential to alter the long-term federal budget outlook as positively and permanently.

That's why I found the mid-session review of the budget released yesterday to be so depressing.  It was the official notice that the pledge, and all the good things that would come from it, would not be fullfilled.  It was also time to admit that the budget politics, economics, and limits of the past decade would continue...and continue...and continue.

That's just not a happy occasion for anyone but those of us who blog, write, and talk about the budget. Business will be booming.

None of this was a surpise, of course.  The prospects for paying down the national debt firmly ended back in the first year of the Bush administration.  And the close to $490 billion deficit that OMB projected for 2009 has long been assumed or leaked.

Nevertheless, the release of the midsession review on July 28, 2008 should be noted as the official date when the dream of a very different budget debate and fiscal policy opportunities died.

I'll have more about the following shortly.  But other observations:

The bad news absolutely is understated.  The $482 billion projected fiscal 2009 deficit will actually be closer to $600 billion before the year is over.

The much-ballyhooed Bush administration pledge to cut the deficit in half was a gimmick.  There clearly was no commitment to do it more than once (that is, if there really ever was a commitment to do it even once).

From a budget, deficit, debt, interest rate, and fiscal policy perspective, the Bush administration is leaving the country so much worse off than it found it that it will likely hamstring the next president and Congress in ways that aren't yet fully understood.

Based on what we now know for sure about next year's budget, none of the presidential candidates' promises should be taken seriously.  Unless they, the country, and those lending us money are willing to tolerate much higher nominal deficits and a larger debt than has so far been imaginable, the next president's options will be severely limited.

More to come.