...That Treasury Secretary Paul O'Neill
was ousted for being impolitic.
US 'Faces Future of Chronic Deficits'
Financial Times
By Peronet Despeignes in Washington
May 28 2003 | Last Updated: May 29 2003
The Bush administration has shelved a report commissioned by the Treasury that shows the US currently faces a future of chronic federal budget deficits totalling at least $44,200bn in current US dollars.
The study, the most comprehensive assessment of how the US government is at risk of being overwhelmed by the "baby boom" generation's future healthcare and retirement costs, was commissioned by then-Treasury secretary Paul O'Neill.
But the Bush administration chose to keep the findings out of the annual budget report for fiscal year 2004, published in February, as the White House campaigned for a tax-cut package that critics claim will expand future deficits.
The study asserts that sharp tax increases, massive spending cuts or a painful mix of both are unavoidable if the US is to meet benefit promises to future generations. It estimates that closing the gap would require the equivalent of an immediate and permanent 66 per cent across-the-board income tax increase.
The study was being circulated as an independent working paper among Washington think-tanks as President George W. Bush on Wednesday signed into law a 10-year, $350bn tax-cut package he welcomed as a victory for hard-working Americans and the economy.
The analysis was spearheaded by Kent Smetters, then-Treasury deputy assistant secretary for economic policy, and Jagdessh Gokhale, then a consultant to the Treasury. Mr Gokhale, now an economist for the Cleveland Federal Reserve, said: "When we were conducting the study, my impression was that it was slated to appear [in the Budget]. At some point, the momentum builds and you think everything is a go, and then the decision came down that we weren't part of the prospective budget."
Mr O'Neill, who was fired last December, refused to comment.
[cont'd]
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1051390392975&p=1012571727088
=========
How do you get a tax cut through while at the
same time your Treasury Department says massive
tax hikes are needed?
Easy, deep six the report, and throw your Treasury
secretary overboard with it...
