According to the economists at Allianz Group and Dresdner Bank the halving of the deficit envisioned by President George W. Bush and John F. Kerry is unachievable.
George W. Bush or John F. Kerry: the deficits remain
Based on current legislation, a macroeconomic projection shows the budget deficit slipping from 3.8 % in the calendar year 2004 to around 2.9 % in 2008 thanks to cyclical effects. Based on the same macroeconomic conditions, full implementation of the Bush program implies a budget deficit in 2008 of 3.1 % of GDP. Above all the re-channeling of today’s Social Security and Medicare surpluses to promote private insurance models would take a chunk out of revenues. On full implementation of the Kerry program the tax hikes for earners of upwards of USD 200,000 would fall well short of covering the extra spending planned in the health insurance field. Under Kerry the 2008 deficit could come in at 3.4 % of GDP. However, over a 10-year horizon the two programs barely differ in their fiscal impact. In both cases deficits over the 10-year period would add up to some USD 700bn more than under current legislation.