IT STRIKES ME as a little odd when I hear United States citizens commenting on the state of Hong Kong's fiscal affairs. For a dose of Operation Shock 'N Awe, they may wish to look at their own president's fiscal record. The first chart tells you the essentials of this astounding story. It shows the record of the US federal deficit as a rolling 12-month total with a forecast for the three months until the end of the current fiscal year in September, the official forecast, not mine. We start on the left side of the chart with George Bush Sr taking office and expanding the deficit over his four-year term of office to a new one-year record of US$332 billion. Then the Democrats (the ones accused of being such wasters, you know) took control of the White House from the Republicans in 1993 under Bill Clinton and in eight years steadily wrested a $330 billion deficit into a $270 billion surplus, that peak there at the right hand side of the chart, real wasters you understand, oh yes. But along came Bush Jr at the beginning of 2001 and in the space of just 30 months took that surplus back to a deficit of $312 billion and then announced last week that he expects this negative figure to reach $455 billion by the end of September. What a man. Among his reasons for it is that he had to cut taxes to stimulate the economy. He certainly cut the taxes. That tax revenue was down by 25 per cent within barely two years of taking office. We shall have to wait to see whether this theory of economic performance, christened 'voodoonomics' the last time it was tried, stimulates the US economy. There is no sign of it yet. But there you get your second excuse for the deficit. The economy is down. US economic growth was 1.5 per cent year over year in the quarter in which Mr Bush took office. The latest quarter showed 2 per cent growth. This is down, you see. Ah-hah, but that must be evidence that voodoonomics is working. Meanwhile, little is said about the fact that federal spending is 18 per cent greater now than when Mr Bush took office and, with his warlord approach to the job, there is little prospect of that figure coming down unless US voters next year give him the same treatment they gave his father and limit him to a four-year term. Look at it another way. The second chart shows you a cumulative 33-month total of the increase in US federal debt, 33 months because that is how long Bush Jr will have been in office by time the forecast $455 billion deficit is achieved at the end of September. Start at the left again and you can see the same pattern. Up go the figures with Bush Sr, down they go with Clinton and then we get to the real debt rocket with Bush Jr. In just 33 months at the end of September, he will have boosted US federal debt by US$1.1 trillion, an increase of 20 per cent in the space of less than three years. Have you ever seen that federal debt clock in New York, the one that, back in the Reagan and Bush Sr years, showed you how fast federal debt was rising right to the second? The first four digits to the right on that clock must be blur now. What an achievement. But let us put Hong Kong into perspective for the sake of those American commentators who shake their heads about the fiscal deficit we run. Here are a few comparative measures of ability to handle a bulging deficit. Did you know that while the US has $6.6 trillion of federal debt at present, the Hong Kong government has no net debt at all but in fact substantial savings? Did you know that Hong Kong's foreign reserves are 50 per cent greater than US foreign reserves? Did you know that while the US runs a current account deficit equivalent to more than 5 per cent of gross domestic product, we run a current account surplus equivalent to 12 per cent of our GDP? And finally, did you know that US figures show Hong Kong to have been a greater net purchaser of US federal debt securities last year than any other economic jurisdiction in the world?
