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Cato Daily Dispatch for July 15, 2003

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

Federal Budget Deficit May Exceed $450 Billion

"War, tax cuts and a third year of a flailing economy may push this year's budget deficit past $450 billion, according to congressional sources familiar with new White House budget forecasts. That would be 50 percent higher than the Bush administration forecast five months ago," reports The Washington Post. "The deficit projection due out today is nearly $50 billion more than economists anticipated just last week, and it underscores the continuing deterioration of the government's fortunes since 2000, when the Treasury posted a $236 billion surplus. That represents a fiscal reversal exceeding $680 billion."

Cato Fiscal Policy Analyst Veronique de Rugy says: "Political bickering over the nation's deteriorating fiscal picture is continuing to rise with this afternoon's release of the deficit numbers by the White House. The Democrats blame Republican-guided tax cuts while Republicans blame the war against terrorism and a sagging economy. But the truth is that the deficit would be insignificant if the Bush administration had controlled spending, in particular non-defense discretionary spending that has increased around 28 percent during President Bush's first three years in office. Democrats have no case either, considering that they have consistently pushed for a greater spending frenzy than the administration. Hopefully this deficit will be an effective restraint against further spending binges by the Bush administration and its enablers in Congress."

In the Cato Handbook for Congress, Chris Edwards, Cato director of fiscal policy, offers several suggestions for budget reform, including discretionary spending caps and a balanced-budget amendment. "Both Congress and the administration must end their shortsighted jostling for more taxpayer cash," writes Edwards. "Not only is the government running huge deficits again, but the looming explosion in entitlement costs demands that all aspects of the federal spending empire be overhauled."

North Korea Says It's Producing Nuclear Weapons

"North Korean officials told the Bush administration last week that they had finished producing enough plutonium to make a half-dozen nuclear bombs, and that they intended to move ahead quickly to turn the material into weapons," reports The New York Times.

"The new declaration set off a scramble in American intelligence agencies - under fire for their assessment of Iraq's nuclear capability - to determine if the North Korean government of Kim Jong Il was bluffing or had succeeded in producing the material undetected. Officials said today that the answer was unclear."

In "All the Players at the Table: A Multilateral Solution to the North Korean Nuclear Crisis," Cato Senior Fellow Doug Bandow writes: "Washington's dominant role in Northeast Asia was unnecessary when the North's threats were limited to conventional forces. That entanglement will be equally unnecessary-but far more dangerous-if North Korea becomes a nuclear power."

Bandow argues that "the United States should rely on deterrence to protect its interests, while placing on the DPRK's (Democratic People's Republic of Korea) neighbors responsibility for their defense."

"Multilateral negotiations and pressure from the four regional powers-China, Japan, Russia, and South Korea-offer the best hope of forestalling North Korean production and sale of nuclear weapons."

Terrorist Information Awareness Will Include Private Information

"The type of information that can be legally obtained for a new federal government computer program ranges from political and religious contributions to magazine subscriptions, clothing sizes and even data about prostate problems," reports The Washington Times. "The Pentagon's Terrorism Information Awareness program is being designed to track terrorists, but privacy advocates say it could be misused."

In "Protecting Privacy in the Database Nation," Clyde Wayne Crews Jr., Cato's director of technology policy, calls databases like TIA "the most pressing threat to liberty."

Crews writes: "Compulsory databases would undermine the many potential benefits of authentication technologies. If government is hell-bent on assembling and mining massive databases of our credit card purchases, car rentals, library books, airline ticket purchases, and so on, then banks, airlines, hotels, Internet service providers, and other private businesses we deal with have no choice but to routinely transfer our private information to the government against our wishes. They cannot promise to safeguard our privacy as they otherwise could.

"To safeguard civil liberties in the new surveillance state enabled by digital technologies, there are basically three requirements: (1) avoid mandatory databases or any form of National ID, because they violate the 4th Amendment, and because government's dominance of the evolution of these technologies would effectively destroy the privacy sector's ability to offer any privacy guarantees to us at all; (2) ensure 4th amendment protections even for surveillance in open, public places, and (3) avoid the mixing of public (compulsory) and private (voluntary) databases as new technologies emerge and proliferate."

Wyatt Dubois, editor, wdubois@cato.org