Wednesday, July 12, 2006

Don't worry about debt, just earn more money...

Talking Points Memo writes:
President Bush is out saying that his tax cuts are responsible for the deficit this year being lower than his economists predicted earlier this year and slightly lower than the actual deficit last year. But is someone going to mention that the tax cuts are the prime reason we have record deficits to begin with? President Bush came into office with surpluses. He ran up the deficits, structural deficits created by his tax cuts. Or have we forgotten that?
The tax cuts are the prime reason? As if the wasteful out-of-control spending has no part in the equation?

3 comments:

Einzige said...

It's definitely annoying that almost no one mentions the spending side of things.

George said...

The point being made is that the Bush (as with JFK and Reagan) tax cuts have resulted in increased revenues. The budget was neutral in the late 90s because of the massive dotcom boom. When it ended in the last 6 months of Clinton's term, it had a massively negative effect on revenue and it's nearly impossible to get the Government to ever lower spending. You also have to factor in 9/11 and the cost of the war on terror for a huge increase in spending.

Yes there is too much spending, but the Republicans were brutally slammed by the left and the main stream media last year for trying to decrease the rate of increase in spending. No Democrat has ever produced a smaller budget than the Republicans.

Jim Lippard said...

I don't think that's correct, George. I think that historically, the periods of lowest increase in spending (and debt) have been with a Democrat executive and Republican control of one or both houses of the legislature. When one party is in control of both the executive and legislative branches, they go nuts spending on their favored areas and nobody applies the brakes. Further, Democratic presidents have been in power in periods of greater economic growth (as I found to my surprise a few years ago reviewing NBER data, which I posted on the az.general newsgroup). This site has some nice collections of data on these and other points.

What the Republicans say and what they do are completely different.