I submitted two questions to “Ask the White House” the other day, and today I was quite surprised to see that one of these questions had actually been answered. The subject of today's question and answer session was the FY 2007 Budget, and the host was Joel Kaplan, Deputy Director of the Office of Management and Budget (OMB).
Adam, from Chicago, IL writes:
“The President's goal is to cut the budget deficit in half by 2009, but half of a huge deficit is still a huge deficit. How do you justify this to the American people?”
Joel Kaplan:
“Adam- You are correct that in 2004 the President pledged to cut the deficit in half by 2009. At the time of his pledge, the deficit was projected to be 4.5 percent of GDP that year. In the budget we released yesterday, the deficit is projected to be 3.2 percent of GDP in FY 2007, and just 1.4 percent of GDP in FY 2009, which is well below the 40-year historical average deficit. At these levels, the deficit should not threaten our economic health.
“While we would always like to be able to have the budget in balance, we need to make sure we are meeting our national priorities, like winning the War on Terror and creating jobs for the American people. We have had big challenges as a country the last five years or so, and that has taken a toll on our budget. But the proposals in the President’s Budget will meet our priorities and keep us on track to cut the deficit in half.
“In the long-term, we do face a fiscal crisis as a result of the unsustainable growth in our entitlement programs. We really do need to take action to bring the growth in those programs under control if we are going to avoid serious damage to the economy in the future. The President has demonstrated that he’s willing to take on these challenges in the entitlement programs, and we look forward to working with Congress to make progress.”
[Transcript]
To be perfectly honest, the first time I read this response, I was like, "Huh?"
Politicians love to hide the national debt behind the mask of production, but I explain why this practice is absurd in the article entitled “National Debt or National Disaster?”
“...As unbelievable as it may seem, many politicians are unaware of the fact that the national debt is rapidly becoming a national disaster. This is because they have been trained to view the national debt in terms of the gross domestic product (GDP). The GDP represents the total value of our country’s industrial production, and this figure is typically used to measure the growth of our economy. In 2004, our national debt amounted to 63.7% of the GDP, and since this percentage remained within historical averages, Congress was able to justify its massive deficit spending. However, referring to the national debt in terms of GDP is a dangerous accounting trick...”
I found it somewhat amusing that Mr. Kaplan concluded his response to my question by talking about entitlement programs. After all, I had submitted another question...
“The President has made it very clear that he is concerned about the long-term solvency of Social Security. If this is the case, then why does he continue to borrow money from the Social Security trust fund in order to support his massive budget deficits?”
I guess I'll just have to wait a little longer for the answer to that last question.
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