-- Posted 7 February, 2006 | |

According to the White House’s new 2007 budget, Expanding Economic Opportunity, President Bush will meet his goal of slashing the deficit in half over the next four years. But according to one expert, Bush’s rhetoric is nothing but smoke and mirrors.

Addison Wiggin, co-author of the New York Times bestseller Empire of Debt, says, “When Bush talks about cutting the deficit in half, he’s not talking about dollar amounts. Instead, the plan calls for a reduction in the deficit to half of the current percentage of the nation's GDP.”

That means the deficit doesn’t actually have to decline for the president to declare he met his goal of cutting it in half. “To hit their target,” says Wiggin, “the economy just has to grow by 3.3% a year for the next 4 years.”

The new budget spending plan, at $2.77 trillion, will leave America with a record $423 billion deficit. The 2007 Defense Department budget alone will cost America $439.3 billion, 7% more than 2006. And does not include spending for wars in Iraq and Afghanistan, which would add another $120 billion for 2006.

Wiggin warns, “The sheer magnitude of this budget shows that there is little political resolve to deal with spending at the federal level. In the current climate, all problems no matter how small are believed to be problems Washington needs to solve rather than at the state or local level. And so the budget is 2,400 pages long and weighs 11 pounds.”

What’s worse, Wiggin says, is the route the government is taking to solve these problems.

“Instead of truly solving the budget deficit, Washington is trying to mask it. They will focus on keeping the GDP up with tax cuts and other incentives instead of trying to control debt by keeping government spending under control.”

For more from Addison Wiggin, see http://www.dailyreckoning.com

Addison Wiggin is editorial director and publisher of The Daily Reckoning. He is also the co-author, along with Bill Bonner, of the recently released New York Times bestseller, Empire of Debt: The Rise of an Epic Financial Crisis.

Brought to you by Agora Financial, and written by the NY Times bestselling authors, Bill Bonner and Addison Wiggin, The Daily Reckoning is a daily, free e-letter that weaves information about the financial world, investing and everyday life into an educational and entertaining format that has been engaging their readers for over six years.

SOURCE www.dailyreckoning.com