Bill Manzi.com

More news from the land of fiscal responsibility. From the Washington Post:

The federal budget deficit will surge to nearly $490 billion next fiscal year, a record dollar amount, driven by continuing war costs and an economic slowdown that is not likely to turn around fast, according to the Office of Management and Budget. After three successive years of decline, this year’s deficit will jump dramatically as well. That is likely to scramble the plans of the next president, regardless of which candidate prevails. Either Republican John McCain or Democrat Barack Obama will enter the White House in a tide of red ink.

With the Presidential campaign in full swing you might think that deficit reduction would be high on the list of topics, but it really has just been ignored.

Neither McCain nor Obama have been particularly mindful of the budget deficit. McCain has proposed to extend all of Bush’s first-term tax cuts, which expire in 2011, and add hundreds of billions of additional tax cuts, mostly for business. Obama would allow only the tax cuts for most affluent to expire, leaving the lion’s share in place and adding additional tax cuts for the working poor and middle class, plus hundreds of billions in more spending on health care, energy and education.

The Post story had economist Martin Feldstein poo-pooing the deficit numbers.

McCain economic advisers this morning shrugged off the new deficit figures. Harvard University economist Martin Feldstein said the surge of red ink is tied to cyclical developments — the economic stimulus checks and the slowing economy — not permanent changes.

“So I don’t think it has implications going forward,” he said.

Neither campaign seems to want to deal with this issue, or make hard choices on finances. Is it just accepted at this point that Dick Cheney was right when he said “deficits don’t matter”. Republican Senator Tom Coburn, featured in my next post, does not agree.

With the prices of food commodities soaring Texas governor Rick Perry has asked the EPA to waive the ethanol requirements for gasoline in his state. From the New York Times:

Mr. Perry says the billions of bushels of corn being used to produce all that mandated ethanol would be better suited as livestock feed than as fuel.

Feed prices have soared in the last two years as fuel has begun competing with food for cropland.

“When you find yourself in a hole, you have to quit digging,” Mr. Perry said in an interview. “And we are in a hole.”

Further attempts to provide relief from ethanol mandates have been filed legislatively.

Ethanol is under siege from other quarters. Senator Kay Bailey Hutchison, Republican of Texas, has introduced legislation calling for a freeze of the mandate at the current level, saying it “is clearly causing unintended consequences on food prices.” The measure is co-sponsored by 11 other Republican senators, including John McCain, the presumptive presidential nominee.

And recent testimony by Fed Chairman Bernanke advocated elimination of the tariff on Brazilian sugar ethanol, currently at 51 cents per gallon. See my prior post on ethanol and the Brazilian import issue.

With food prices causing hunger all over the world isn’t it time to look at our policies here?

In a new report, the Organization for Economic Cooperation and Development is critical of biofuels, saying further development will raise food prices while doing little for energy security.

Well I think both points have been proven true. But the ethanol boondoggle continues unabated, with supporters launching political counter-attacks.

In ethanol’s home ground of the Midwest, where much of the corn is grown and the additive is made, Mr. Perry’s petition was opposed by 12 governors. Senator Charles Grassley, Republican of Iowa, accused the Grocery Manufacturers Association, the group leading the public relations fight against ethanol, of “treasonous” acts.

Ethanol supporters also hold out ethanol as critical to our energy future.

A cut in the mandate might be the beginning of a slippery slope that could mark the end for ethanol, said Lee Reeve, one of the pioneers of the industry. His Garden City, Kan., plant has been in operation since 1982. “If this goes through, I guarantee you that by next Thursday there would be arguments about how we should get rid of the mandate entirely,” he said. “And where are you going to find the oil to replace eight or nine billion gallons of ethanol?”

An expensive boondoggle that ought to have its taxpayer subsidy revoked. It is ironic that some of the biggest ethanol supporters routinely lecture us about the sanctity of “free markets” and “free trade”, except for Ethanol.

Read the New York Times story here.

I had the video below sent to me via email, and it is pretty clever. Blue Mass group has it posted as well. Enjoy.

The Bush Administration is seeking clarification from the Iraqi government after German magazine Der Spiegel printed remarks from Iraqi Prime Minister Nouri Al-Maliki that appeared to support the position of Barack Obama on a sixteen month withdrawal timetable for American troops. Maliki seems to be pushing the Americans for some sort of exit strategy, and has even gotten President Bush to support a “general time horizon” for withdrawal of American troops. How is a “time horizon” different than a “timetable”? I am not sure but maybe John McCain can explain that in his next talk on Iraq. After pressure from the Bush Administration the Iraqi government did indeed issue a “clarification”, putting out a statement that Der Spiegel had botched the translation. But the New York Times quickly blew that explanation away.

But the interpreter for the interview works for Mr. Maliki’s office, not the magazine. And in an audio recording of Mr. Maliki’s interview that Der Spiegel provided to The New York Times, Mr. Maliki seemed to state a clear affinity for Mr. Obama’s position, bringing it up on his own in an answer to a general question on troop presence.

The following is a direct translation from the Arabic of Mr. Maliki’s comments by The Times: “Obama’s remarks that — if he takes office — in 16 months he would withdraw the forces, we think that this period could increase or decrease a little, but that it could be suitable to end the presence of the forces in Iraq.”

He continued: “Who wants to exit in a quicker way has a better assessment of the situation in Iraq.”

A top advisor to al Maliki talked of the domestic political discontent over the presence of foreign troops in Iraq.

“Foreign soldiers in the middle of the most populated areas are not without their side effects,” he said. “Shouldn’t we look to an end for this unhealthy situation?”

With Obama on a diplomatic tour of the region the al-Maliki comments had to have stung President Bush. And Iraqi discontent with foreign troops on a semi-permanent basis in Iraq is a political problem for the Iraqi Prime Minister. I find it stunning that the Iraqi political leadership is routinely lectured by American politicians about breaking partisan gridlock in Baghdad and showing political courage in the face of hostile public opinion. Do you think the Iraqis ever ask about the Washington situation in response? Read the New York Times story here.

Al Gore gave a major speech last week on energy. I know that the Gore haters will flame this post, but Gore is breaking some important ground. And in anticipation of the criticism lets get right to it. It has been 8 years of Republican “energy policy” that has brought us to the edge of energy disaster. And what can we talk about in this post. Well lets start with the fight in Washington over CAFE (Corporate Average Fuel Economy) standards. Without going into all of the details of CAFE let me simplify by saying that there has been a move for many years to increase the existing CAFE standards so that auto manufacturers would be forced to increase fuel efficiency of the autos they are selling the American public. And every time that issue comes up we hear the Republican opposition (and John Dingell) state many things. They have essentially told people that cheap gasoline is an American birthright. They have said that raising CAFE standards would cost jobs and cripple American auto manufacturers. Well it appears that the Republican policy of build em big and thirsty has brought the Big Three to the brink of disaster. GM Chairman Rick Wagoner is still trying to figure out what happened. While he is thinking about it GM is burning as much as a billion dollars a month in cash. They have said that raising CAFE standards will lead to safety problems on the roads. What nonsense.

While the Republicans have told people that everything is fine in energy we as a nation are preparing for a winter where many people will not be able to afford to heat their homes. The Republican have stood in charge of the greatest transfer of wealth in the history of commerce, sending trillions overseas to buy oil, and not producing one tangible policy to reduce that dependence. The best I can figure for energy policy from the Bush Administration is going to Saudia Arabia and begging the King to pump more oil. We can do better, and we must do better. So lets talk about the Gore call in that context. It has been Gore giving clear and unambigous warnings about where we were headed. Lets talk about energy policy in this country, and the total abdication of leadership by this administration. I will try to do postings on some of the energy proposals and the political disputes that surround many of them in the weeks ahead.