NDN Blog

New NDN Report and Debate: The Bush Economic Record

As Director of NDN’s Globalization Initiative I’m pleased welcome our readers to a new experiment - two days of economic debate on our blog. Today we are launching new report – The Bush Economic Record. It is a guide to the President's economic mistakes. More than that, it is a reason why this administration must be held accountable for its failed economic stewardship in November elections.

You can download a copy of the report in PDF format here.

Over the next two days we have invited various guest bloggers to debate the administration's record, to highligth the key economic issues facing our country, and to discuss the priorities for progressives to make our economy work for all Americans once again. Over the coming days you will see contributions from:

The debate about the economy is becoming more important by the day. Driven by the issue of stagnant wages and flat incomes, a new CNN poll this week showed that the economy is the single most important issue for most voters in deciding how to cast their vote in November. For the first time the economy is more important to voters than Iraq, terrorism and immigration.

The administration has tried, and will continue to try, to spin its dismal economic record. But it will fail because ordinary Americans know that they're not gaining ground under Bush when they manage their real paychecks and bills every month. Finally, the political establishment is also waking up to the fact, as this Washington Post editorial said over the weekend, that most Americans just are not benefiting from our current growth.

We hope that today’s report, and the debate on this blog over the next few days, will help to further focus attention on the current administrations poor economic choices, and what we as progressives need to do ensure our economy works for all American’s once again. And I encourage anyone reading this to take part, either by blogging the report or by offering comments to any of our guest posters.

The Hidden Cost of the Falling Deficit Forecast

Once again, administration officials are corrupting a branch of economic science, and the American economy will pay a much bigger price than they realize. This week, the Treasury announced that based on spending and revenue data through May, the 2006 budget deficit will be some $100 billion less than the Treasury estimated just last February. The White House used the new estimate to trumpet the success of its tax cuts – which makes no economic sense, because Congress hasn’t passed tax cuts since February that could affect current economic activity in any way.

That leaves two possibilities. Either the revenue estimators at Treasury and spending estimators at OMB are wildly incompetent, and only recently became so – which frankly is not very likely. Or, the Treasury and White House manipulated the February estimate upward -- for example, using the most pessimistic economic assumptions available and massaging pay-out formulas for entitlements – so they could claim progress for their controversial policies in July. For an administration that has pursued political gain at almost any price, time and again, that seems entirely likely.

When the senior economic agencies and officials of the United States Government produce deficit estimates which wouldn’t pass muster in economic forecasting 101, they mislead the capital markets. Tens of billions of dollars in investments are made assuming that these estimates are as accurate as humanly possible – and no private forecaster can do an equally authoritative independent estimate, because nobody outside government has the Treasury’s revenue datasets and OMB’s spending datasets.

When these estimates are manipulated for cheap political purposes, it corrupts vital information flowing into U.S. capital markets, impairing their basic efficiency and distorting the distribution and cost of investment capital. And if it becomes a pattern – and when has this administration given up any of its bad habits? – the markets could simply stop trusting government data, and then the American economy could really suffer.

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