White House takes budget to skeptical Congress

here's the link to the article: http://www.cnn.com/2007/POLITICS/02/06/bush.budget.ap/index.html

President Bush has brought his new $2.9 trillion dollar budget plan to congress, hoping to get it passed. The new budget would include a large increase in military spending while reducing, or abolishing funding for many social programs, such as social security and medicare. The Bush administration claims that the cuts in funding for the domestic programs, coupled with the projected revenue created by the economy will be enough to generate a surplus by 2012. Without having to raise taxes at all. The Democrats, however, are unconvinced. They claim that the projected surplus is based on overly optimistic assumptions of the performance of the economy. The Democrats have also pledged to reverse the budget cuts to domestic programs that were enacted under the republican led congress, so the likelihood of slashing social prgrams for the new budget is slim.

From an economic standpoint, it is difficult for me to see how the $244 billion deficit is ever going to go away without a significant raise in taxes. The administration is proposing a $2.9 trillion budget, with a boost of $245 billion to the Defense Department, and they propose to balance that out by cutting or reducing 141 social programs which will save $12 billion, and hoping the economy does really, really well in the next 5 years. I'm not a brilliant economist or mathematician, and i don't have access to the economic projections for the next 5 years, but spending $2.9 trillion and saving $12 billion and then hoping the economy performs as projected does not seem like sound economics. or good math. Especially when there is doubt about the truthfulness of the economic projections to begin with.

Global trade talks 'to resume'

I found this story at: http://www.cnn.com/2007/BUSINESS/01/27/davos.trade.reut/index.html

It deals with a global trade agreement, started in 2001 after sept. 11th led to worries about the global economy, which had been called off last july due to disagreements.

now, the accord may be reached, as nations and business groups alike have agreed to make more compromises.

the article does not go deeply into what the compromises would be, but it mantions that they entail "Washington [needs] to make deeper cuts to farm subsidies, the EU and some leading developing country importers, such as India, [need] to accept lower farm tariffs and developing countries as a whole [need] to slash industrial duties."

as far as my understanding of economics thus far goes, though i know each country is trying to maximize its own profits and efficiency, it appears counterproductive to slash the industries of developing countries as that will prohibit creative destruction. and it will make specialization more difficult.