Weekend news wrap. (to my one viewer -- in case you do not know, I do not have a television that is currently powered up. Hence, I do not watch any television whatever. My news is limited to that which I can read on the Internet)

In this AP piece (hat tip to ABC News and The Smirking Chimp), we learn that the dismal scientists AKA economists are predicting a fifty year outlook that is anything but pretty. Whole article below.

WASHINGTON Dec. 20 Keeping the federal budget at or near balance over the next 50 years could require painful tax increases, spending cuts or both, the Congressional Budget Office says.

In a look at the government's long-term budget outlook, Congress' nonpartisan fiscal analyst offered possible combinations of tax and spending changes, all of which would leave lawmakers choosing among politically unpalatable options.

Even so, some still would leave the government in fiscal peril. Yet, failing to act would drive the accumulated federal debt to unsustainable levels, said the study, released Friday.

"Taken to the extreme, such a path could result in an economic crisis," including the possibilities that foreign investors would pull out, the dollar's value plunge, interest rates and prices soar and stock markets collapse.

"The longer that lawmakers delay acting to counter an unsustainable budgetary situation, the larger the spending cuts or tax increases will eventually have to be," the 60-page study warned.

The big problem facing the government is the impending retirement of the baby boom generation, whose 76 million members will start later this decade relying on Social Security and Medicare and increase their use of Medicaid.

The budgets for those automatically paid benefits are also growing as medical costs continue to soar. The three programs provide pensions and medical insurance for the elderly, disabled and poor.

Social Security is so large, and Medicare and Medicaid are expanding so rapidly, that limiting the growth of defense, education and other spending that Congress controls would not be enough for sound budget policy, the report said.

"Substantial reductions in the projected growth of spending or a sizable increase in taxes as a share of the economy or both will probably be necessary to provide a significant likelihood of fiscal stability in the coming decades," the report said.

The study compared current and future spending and revenues to the size of the U.S. economy, now about $11 trillion. Economists consider the resulting percentage a useful way to measure the federal budget over time, because it illustrates how affordable particular programs or policies might be.

In the study, the budget office offered six hypothetical scenarios for restraining spending and raising taxes through 2050.

Highlighting how dire the long-range budget picture is, even the scenarios that let trillions of dollars in tax cuts enacted under President Bush expire, which would bring in piles of new revenue, would mean that "fiscal stability is not assured."

Of the six scenarios, three offered the chance of balanced budgets in 50 years.

But of the three, two used the politically unlikely assumption that the Bush tax reductions would expire. The third incorporated the improbable scenario that spending for Medicare and Medicaid would not keep pace with health-care costs, that spending for other benefits would shrink compared to the economy's size, and that other domestic programs would grow only with inflation.

In another scenario, revenues would rise from their current 16.2 percent of the economy to their historic 18.4 percent average, and spending for all programs but Social Security, Medicare and Medicaid would be less than half their current 9.6 percent of the economy. But "to prevent an indefinite spiraling of federal debt," spending on those three benefit programs would grow by no more than 0.5 percent annually over inflation, the report said.

The report's conclusions echoed numerous similar studies that have been done in recent years. But coming just as the calendar is to turn to a presidential and congressional election year, both parties tried using it to buttress their arguments for their favored budget policies.

"If spending is left unchecked, it could have a disastrous effect on the economy," said Rich Meade, Republican staff director of the House Budget Committee. "The bottom line is deficits do matter, and we need to address them."

Thomas Kahn, his Democratic counterpart, said, "The worst thing we could do is approve the Republican agenda, because its extra $1 trillion in new tax cuts would make the long-term budget problem even worse."

Copyright 2003 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Those wacky economists at the Congressional Budget Office. Crazy group. Of course the Bush response to this is..Drumm roll, please: More tax cuts!!! Talk about a zany parallel universe.



In The Death of Horatio Alger, Krugman dispels out a common myth perpetuated by Limbaugh, Bush, et al. Concerning the opportunities for upward financial mobility in present day America.

The other day I found myself reading a leftist rag that made outrageous claims about America. It said that we are becoming a society in which the poor tend to stay poor, no matter how hard they work; in which sons are much more likely to inherit the socioeconomic status of their father than they were a generation ago.

The name of the leftist rag? Business Week, which published an article titled "Waking Up From the American Dream." The article summarizes recent research showing that social mobility in the United States (which was never as high as legend had it) has declined considerably over the past few decades. If you put that research together with other research that shows a drastic increase in income and wealth inequality, you reach an uncomfortable conclusion: America looks more and more like a class-ridden society....

He continues... The myth of income mobility has always exceeded the reality: As a general rule, once they've reached their 30s, people don't move up and down the income ladder very much. Conservatives often cite studies like a 1992 report by Glenn Hubbard, a Treasury official under the elder Bush who later became chief economic adviser to the younger Bush, that purport to show large numbers of Americans moving from low-wage to high-wage jobs during their working lives. But what these studies measure, as the economist Kevin Murphy put it, is mainly "the guy who works in the college bookstore and has a real job by his early 30s." Serious studies that exclude this sort of pseudo-mobility show that inequality in average incomes over long periods isn't much smaller than inequality in annual incomes. Much More Reading.

Highly recommended.

Ross Baker tosses a softball in this Newsday piece, entitled "Hussein May Be Weapon for Dems."

George W. Bush has to restrain himself from running victory laps to celebrate the Saddam Hussein capture. Republican leaders are gleeful about facing a Democratic ticket likely led by Howard Dean. So, it may seem odd, even perverse, to suggest that rooting the Iraqi dictator out of his hole might actually be an ace-in-the-hole for Democrats.

For starters, seizing Hussein shifts the focus of the hunt for America's most dangerous enemies from Iraq to the rugged Afghanistan-Pakistan border where Osama bin Laden and Mullah Omar, the deposed leader of the Taliban, are said to lurk. As elusive as Hussein was in Iraq, the terrain around bin Laden's lair is far more forbidding and the population, if anything, more hostile to Americans and the chances of success less likely.

While Bush steadfastly maintains that somehow we have dealt the worldwide terrorist network a punishing blow by apprehending Hussein, most experts deny that the Iraqi ever fomented much terrorist activity against this country. The U.S. government itself concedes that an alleged meeting between an Iraqi intelligence agent and an al-Qaida operative in Prague before September 2001 never took place.

The president's boast that snaring Hussein was a major gain could easily blow up in his face if there is another outrage directed against this country. If such an attack were to take place before the 2004 election, it could spell real trouble for Bush and make the capture of Hussein appear less consequential. More at Link.

Recent polling suggests that Americans at large are a bit schizophrenic about Saddam's capture. President Bush's approval raring spiked roughly 9 points -- although it is difficult to ascertain how much of this is due to Hussein's capture and how much is due to an improving economy-- while a large majority felt that Saddam's capture did not make them safer. Oddly, support for the Iraqi war bounced a full ten percent. So, while Americans do not feel any safer due to Saddam's capture, they are more apt to be supportive of the Iraqi invasion and occupation because of it..truly odd. Shorter Baker: This is most likely a short term positive for Bush, but if there is another attack, or more casualties in Iraq, the pendulum will swing the other way.