Today’s Headline: Obama to raise 10-year deficit to $9 trillion

In 2004, this is what we were reading…

The Boston Globe, January 13, 2004

The … president and Congress will have to rein in the federal budget deficit or risk serious damage to the U.S. economy, according to former Treasury Secretary Robert Rubin.

He argued then and still does that eliminating the red ink helped spur the economic boom of the 1990′s.

Brookings Institution Study, January 2004:

” Sustained Budget Deficits: Longer-Run U.S. Economic Performance and the Risk of Financial and Fiscal Disarray”

Robert E. Rubin, Peter R. Orszag (President Obama’s Director of the Office of Management and Budget), and Allen Sinai

“The U.S. federal budget is on an unsustainable path. In the absence of significant policy changes, federal government deficits are expected to total around $5 trillion over the next decade. Such deficits will cause U.S. government debt, relative to GDP, to rise significantly. Thereafter, as the baby boomers increasingly reach retirement age and claim Social Security and Medicare benefits, government deficits and debt are likely to grow even more sharply. The scale of the nation’s projected budgetary imbalances is now so large that the risk of severe adverse consequences must be taken very seriously, although it is impossible to predict when such consequences may occur. “

AFLCIO: No Recovery Without Middle-Class Jobs - This when the national unemployment rate was 5.6%

IMF delivers strong warning on growth of US debt: January 2004

The International Monetary Fund has sounded the alarm on the state of US finances, warning that the growth of external debt and the increase in the budget deficit are threatening global financial stability.

Investing in the Future, and Mortgaging It: New York Times, January 2004

… some government officials say they are growing nervous about looming bills. Douglas Holtz-Eakin, formerly the chief economist on President Bush’s Council of Economic Advisers and now director of the Congressional Budget Office, said the growing pile of unpaid bills could become a drag on future growth.

“Growth, in the end, is about giving up something now in order to invest it in the future,” Mr. Holtz-Eakin remarked as Congress was struggling to pass the new Medicare prescription drug benefit. “If you look at the budget proposals, many of them are not about giving up stuff now. They are about getting stuff now.”

The federal budget deficit this year is likely to approach $500 billion, a record. President Bush has vowed to cut that number in half over the next five years, a goal that many analysts say is unrealistic. But even if he succeeds, consider the bills that could come due after that.

“There is a fundamental disconnect between these big sweeping agendas and the limited-government tax policies that the administration is pursuing,” said Robert L. Bixby, executive director of the Concord Coalition, an advocacy group that lobbies for tighter fiscal discipline. “In any particular year, this is something you can afford. But in order to be manageable, you have to have somebody managing. And right now, there is nobody managing.”