Arizona Daily Wildcat
Wednesday, September 28, 2005
Cut spending or raise taxes to increase relief money, but don't deepen deficit
Now that the emotional devastation of hurricanes Katrina and Rita is finally beginning to subside, the costs of the reconstruction process are starting to set in.
Estimates vary, but a rough figure of $200 billion is not a stretch. That puts the costs of the reconstruction about on par with the costs of U.S. involvement in Iraq.
It couldn't come at a worse time for the U.S. budget deficit. Despite coming into office with a rare budget surplus, President Bush and Congress have mismanaged the federal budget into the largest deficit in U.S. history.
So in the face of adding $200 billion to the deficit, what do Bush and Congress do?
Propose to raise taxes to mitigate the deficit? Not a chance, and in fact, Republicans are still trying to eliminate the estate tax.
Propose spending cuts? They've proposed $35 billion in cuts to social programs like Medicaid and food stamps, but we'll believe it when we see it.
In reality, we'll end up borrowing it by selling U.S. treasury notes to Asian central banks, setting up a long string of interest payments that will undermine U.S. sovereignty.
Weren't Republicans supposed to be the fiscally responsible party? Instead, it seems like their tax-and-borrow strategy is just as bad as Democrats' tax-and-spend strategy.
Does anyone really understand the magnitude of the deficit? Just to halve the projected deficit for next year, $700 billion, the government will have to borrow money that will have interest payments of roughly $1 per family per day lasting forever.
The effects will be significant. Next year's budget deficit will only make the already substantial national debt larger. As interest payments on the debt grow, it becomes an increasing and permanent barrier to U.S. prosperity. The interest on the national debt will be $385 billion next year, or more than $3 per person per day.
And the above figures are considering the low interest rates that continue to prevail. As the budget deficit grows, those rates who will only edge higher. Either the government will have to substantially raise taxes, substantially cut spending or employ some combination of both. And the longer it waits, the worse the pain will be.
Of course, Bush would rather not worry about it at all. By doing so, he's giving Republicans a bad name and undermining the future of the U.S. economy.
Opinions are determined by the Wildcat opinions board and written by one of its members. They are Caitlin Hall, Ryan Johnson, Damion LeeNatali, Aaron Mackey, Mike Morefield and Tim Runestad.