TheAgitator.com
The $44 Trillion Hoax: A (Mild) Defense of Paul O’Neill
Tuesday, January 20th, 2004It’s funny to watch conservatives give the former Treasury secretary the “Nurse Ratched at low tide” treatment. It really reveals how conservatives have managed to divorce themselves (pun fully intended) from any notion of limited government advocacy. They like Bush because he kills would-be terrorists, and because he’ll appoint judges who support the pledge, uphold the ten commandments, and ban butt sex. If that means bloated government too, so be it.
O’Neill’s a budget hawk. And President Bush probably wouldn’t be facing the deficit and political turmoil he is today if he’d paid O’Neil a bit more heed. Against O’Neil’s advice, for example, Bush doubled foreign aid outlays. Against O’Neill’s advice, he imposed those dastardly steel tariffs. And as Gene points out, O’Neil also advised — back in the surplus days — that President Bush devote a trillion dollars to fully privatizing Social Security, an idea Bush apparently shrugged off.
But most disconcerting, even downright scary, is the report O’Neill commissioned shortly after taking his position from economists Kent Smetters and Jagadeesh Gokhale (disclosure: Gokhale was an economist with the Cleveland federal reserve at the time — he’s now a senior fellow at Cato).
You might know that the federal government doesn’t factor its future obligations into its annual budget. In fact, it oftentimes shifts massive amounts of money from previous years into future years, and then shifts it all back again, all in an effort to stuff big numbers into small spaces.
Given the impending Boomer retirements, the coming ailing of those Boomers, ever-expanding entitlements, and the federal government’s creative accounting methods (commonly known in the private sector as “fraud”), O’Neill worried that the federal government was facing a massive revenue shortage, yet was choosing to remain blissfully ignorant of it by only looking at its budget from year to year.
So he commissioned said report, which employed a method known as “generational accounting,” whereby Smetters and Gokhale added up all of the federal government’s obligations over the coming years, added up all of its projected revenues, then factored the difference.
Here’s the stunner: The federal government faces a projected 44 trillion dollar deficit.
That’s trillion. That’s really not a number any of us can effectively wrap our brains around. It is one-and-a-half times the GDP — of the entire world. It is basically the sum total of every asset owned by the U.S. government. And it gets bigger every year.
O’Neill was fired before the study was completed. And the Bush administration, trying to push a tax cut and a new $400 billion entitlement program, never let it see the light of day.
Fortune magazine has the details. The abstract is here. A reprint that I’m fairly sure violates copyright law can be found, for now at least, here.
(Thanks to reader Steve Skutnik for the tip.)
UPDATE: More from the Atlantic Monthly.
That’s a fuck-ton!
What’s really disturbing is that people for whom this was an important issue used to be able to at least vote for Republicans. But we have always been in the minority- there truly is no political cost to running deficits in the Federal Government. As George Bernard Shaw said, if you rob Peter to pay Paul, Paul isn’t likely to vote against you.
http://www.hayekcenter.org/prestopunditarchive/002298.html
Reality Check. Analysts have concluded that the U.S. Government faces a massive 44 trillion dollar deficit in the coming years,…
For the Republicans it has stopped being about conservatism and started being about staying in power. By taking a page from the Democrat playbook, they have pandered enough votes to stay in power. Who cares about right v. wrong?
The article is interesting and as it states, it will be a heck of a wild ride going through the baby boomer retirement period. The thing that will make it even more interesting will be the conflict between the immense voting power of said boomers with their insatiable appetite for entitlements versus the ‘Generation-Fucked’ taxpayers footing the bill.
‘Generation-Fucked’ is a more appropriate name than Generation X, which sucks and means nothing.
Check out this study by the National Taxpayers Union (a non-partisan group) that concluded that the proposed policies of the Democratic candidates, including Lieberman even, are far worse in terms of spending. That doesn’t justify Bush’s spending, but it does mean that if this is the only issue you care about you should prefer him.
http://www.ntu.org/main/press_release.php?PressID=549&org_name=NTUF
‘Gen F’d’ — I like it.
like any conclusion with tomorrow will bring the perfect balance of the objective norm…a percentage of the number that balance contentment before this uncertain future….your living in ninth grade math class and worried about you grade.
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