The Bush Administration got hammered on its fiscal policy last week. First, former Treasury Secretary Bob Rubin came forward with a study (co-authored with Peter Orszag and Allen Sinai) warning that the budget deficit could lead to a loss of confidence in the dollar, which could lead to a disruption in financial markets. New York Times columnist Paul Krugman said the study proved that the United States is becoming a Third World country like Argentina, and could soon suffer a financial crisis similar to the one Argentina is in the midst of.
Then the International Monetary Fund issued a paper warning about the unsustainability of the deficit. The New York Times hyped it on page one (above the fold). Although the IMF said there was nothing new in the study beyond what it has said repeatedly in its Article IV consultations, the Times made it seem as if the U.S. budget deficit were the world's single greatest problem today. Every other paper I saw took a different view, burying the story in the back pages of the business section, where it belonged.
Of course, the idea that no one in a position of authority is aware of the budgetary situation is ludicrous. The Congressional Budget Office and the General Accounting Office issue reports on the subject all the time. I don't say this to minimize the problem, but rather to question why it has suddenly gotten on to page one of the nation's leading newspaper.
The answer is politics. The liberal New York Times, which often operates as a think tank for the Democratic Party, and Bob Rubin, who served under Bill Clinton, are laying the groundwork for a political assault on President Bush over his budget policies. They hope to give the Democratic presidential candidate an issue to run on that could propel him into the White House.
It isn't as though Mr. Bush isn't vulnerable on the issue. Clearly, he has been inattentive to the growth of spending on his watch, and most conservatives think he made a grave error in pushing a massive new Medicare drug benefit through Congress. But people like Mr. Rubin are not concerned about that, they are concerned only about Mr. Bush's tax cuts, which they blame entirely for any fiscal problems the nation may have.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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