From the New York Times Magazine this week:
"At times, deficits are necessary to stimulate economic growth, and their dampening impact on private investment is occasionally exaggerated. But because of the Bush administration's policies and a weak economy, deficits are now approaching unmanageable levels, as they did in the 1980's. In fact, the federal government's fiscal health has deteriorated at a pace so stunning that few have yet caught up with the facts.
"Here are some of those facts. Even without a war, the budget deficit would have exceeded $300 billion this year -- just three years after the budget experienced a surplus of nearly $240 billion. (This was in the midst of a four-year run of substantial surpluses.) But with war costs escalating and revenues falling as a result of the flat economy, this year's deficit could rise to $400 billion. In fiscal year 2004, it is likely to be higher.
"The president has asked Congress for $75 billion to finance war-related costs, but many think a more realistic estimate of the combined costs of war and reconstruction will be closer to $200 billion. More alarming is the decline of government revenues over the long run. Instead of generating $5 trillion to $6 trillion in surpluses over 10 years from rising tax revenues on growing incomes, the government will now probably come up nearly $2 trillion short through 2013. That recession and slower growth have shrunk tax revenues is predictable enough. But the sinking stock market has taken more of a toll than expected: there are no more outsize capital gains to tax. These yielded fat revenues in the late 1990's, when stocks were soaring, exaggerating the fiscal health of the nation. Now the train is running in reverse.
"Finally, the Bush tax cuts have made long-term financial prospects significantly worse. Occasionally, tax cuts make sense. But the $1.4 trillion tax-cut package passed in 2001 would have been more productive if it had been temporary and applicable to more taxpayers. Instead, it was skewed to the rich (who are prone to save rather than spend) and will be permanent -- far from disappearing should the economy improve, the tax cut will grow larger. The administration proposed a second major tax cut in early January, estimated to cost $726 billion over 10 years, and it appears to be even less effective as a near-term stimulus: more than half of the total results from the elimination of taxes on dividends, an idea raised at Bush's economic summit in Waco, Tex., last August by a stockbroker, Charles Schwab. In addition, the Bush administration followed up this tax plan with a new budget that would extend the 2001 cuts three years past their expiration, costing another $600 billion.
"The Center on Budget and Policy Priorities calculates that reductions in mandatory programs for the elderly, veterans and the poor would come to $265 billion over 10 years. Another $210 billion would be lopped off of discretionary programs. The total of $475 billion is about equal to the tax reduction the president is requesting for the top 1 percent of earners in America."