Another good article on the budget problem can be found here.
It should be noted that as long as I have been watching this sort of thing, almost all long-term budget projections--optimistic or pessemistic--by those who make such projections have been totally wrong.
That being said:
The tax cuts will increase revenues. By as much as 11 percent? God knows. Over Reagan's administration, revenues did increase, but I doubt it was by 11 percent a year in real constant dollars.
The key is controlling spending. Bush has to start putting the brakes on some of this stuff, and the sooner the better. He has not been doing a good job in that department. Unfortunately, I suspect that we are not going to see much action in this area before the election. There is one rule that all politicians of both parties pay close attention to, and that is "No one ever lost votes by throwing taxpayer money around."
A critical issue right now is not creating new entitlements or expanding old ones.
Politically, this is a highly unpopular route to take, but it is essential. All projections of future budget disasters show entitlements as the big problem. This projection is one of them:
Of the total federal FI [fiscal imbalance] of $44.2 trillion, Social Security’s FI is about $7.0 trillion in
present value. Medicare’s FI is $36.6 trillion (for both Parts A and B). Medicare Part A (Hospital Insurance) contributes $20.5 trillion and Part B (Supplementary Medical Insurance) contributes $16.1 trillion.3 By contrast, the rest of federal government’s FI amounts to only $0.5 trillion, which is comprised of a surplus of prospective revenues over outlays of $4.6 trillion as well as liabilities to Social Security, Medicare, and the debt held by the public of
$5.1 trillion.
Nobody who is serious about deficits and spending could support the prescription drug benefit, and a politician who enthusiatically pushes the concept while complaining about deficits is playing politics, and has no real interest in controlling spending, just in winning an election. That goes for Bush, too.
And some attempt has to be made to ramp back existing entitlements. Again, not a politically popular decision, to say the least, but it has to be done. Like most Ponzi schemes, our current setup is impossible to maintain over a long period of time.