WASHINGTON -- Since his re-election, President George W. Bush has emphasized the need for U.S. fiscal responsibility. He has pledged to halve the enormous federal budget deficit in his second term. He has vowed to put social security on a sound, long-term footing. And he has just submitted a 2006 budget request that promises to make the federal government leaner and more effective.
The president's conversion to fiscal conservatism is welcome. But unfortunately, he has diverted the country's attention from the primary reason for these deficits -- his own tax cuts, which he now wishes to make permanent. Doing so would add some $400 billion to the annual deficit a decade from now. And since they would decrease net national savings at a time when such savings are already far too low, there is no serious economic argument that they can increase GDP enough to allow us to grow our way out of the deficit.
To be sure, current deficits are not all Bush's fault. The end of the 1990s' Internet bubble, the 9/11 attacks and the normal cycle of economic expansions and recessions conspired against him in his first term. But all of the above factors explain some one-third of the deterioration in the country's fiscal position since 2000. Most of the rest of the problem was caused by legislated revenue reductions -- tax cuts -- that greatly exceeded any corresponding cutbacks in government programs. They now total about $250 billion a year in value, relative to what Clinton-era law would have generated.