Four decades of GOP deficits
Journal Online
January 26, 2008

Since Nixon-Ford, the big spenders haven't been Democrats

Fiscal conservatives are right when they say that a leaner government is good for the economy -- if by "lean" they mean a government that operates within its means: The more government borrows, the less money there is for the private sector to invest.

That's not to say that government borrowing is bad in and of itself. Sometimes deficit spending is necessary, even wise, if used to pull an economy out of recession or to power it forward. In that sense, deficit spending is like a business borrowing to expand, or an individual borrowing to earn a degree that'll bring its own rewards. The problem is when deficit spending becomes a deliberate substitute for wise economic policy -- when it's used to bankroll an ideology rather than improve the national economy.

For almost 40 years, conservatives have portrayed themselves as fiscally responsible while deriding liberals as irresponsible free-spenders. Why, then, have all five Republican administrations going back to Richard Nixon enlarged the deficit far more than their predecessors, while both Democratic administrations either held it steady (Jimmy Carter) or erased it altogether (Bill Clinton)? And why is it that the more conservatives have stressed the importance of fiscal restraint, especially since Ronald Reagan, the more they've turned the deficit into a millstone around the economy's neck? (See box.)

The size of the budget deficit hit records in four of Reagan's eight years, two of the first George Bush's, and two, so far, of the current Bush. The $648 billion turn-around from large surplus to massive deficit in George W. Bush's first term is unparalleled in history. Bush promised to have it erased by 2012, but the promise is as hollow as his promise, in 2000, that the surplus he was inheriting was large enough to take care of tax cuts and leave enough money to save Social Security.

The deficit narrowed in the last three years, to $163 billion last year. But the Congressional Budget Office announced this week that improvements are over. The deficit for 2008 is projected to hit $219 billion -- not including the cost of the economic stimulus package currently being debated, which could add $150 billion to the deficit, or the costs of the wars in Iraq and Afghanistan, which would add at least $30 billion, or the costs of a slowing economy, which would add billions in extra unemployment compensation and social services. A deficit back in the $400 billion range is possible.

The lesson is that supply-side economics -- cutting taxes creates jobs and trickles down benefits throughout the economy, narrowing deficits -- which didn't work during the Reagan-Bush I years, hasn't worked for subsequent Republican administrations. Overall, the economy in the last seven years grew at a slower pace and added far fewer jobs than it did during the Clinton administration, which began with a big tax increase. The economy is again heading for a rough period.

Bush blamed the first downturn on 9/11 and the recession of 2000. But both of those events had a relatively small impact on the economy, while the Federal Reserve's madcap slashing of interest rates to record lows, which led to the housing boom, should have powered the economy mightily. Instead, the housing bubble papered over the recklessness of Bush's fiscal policies, delaying the inevitable. What "improvements" took place, both in job creation and in deficit reduction, since 2004 were improvements against the negative numbers precipitated by those policies -- not net improvements of the economy beyond where it was during the 1990s.

So where are we after seven years of Bushonomics? Declining job creation, wages lower than they were in 2000, bigger deficits, a far larger national debt devouring upwards of $1 billion a day in interest charges -- $1 billion a day withdrawn from private sector investments, and much of it drawn in from foreign banks, because Americans don't save enough to finance their own deficits. And still, Bush claims the best way forward is to make his 2001 and 2003 tax cuts permanent.

The Congressional Budget Office's projections see the deficit growing considerably in 2008, 2009 and 2010 (the years when large chunks of the Bush tax cuts, favoring the rich, kick in), then narrowing again beginning in 2011, and turning to surpluses by 2012. Success for the Bush tax cuts? Hardly. The turnaround assumes that the tax cuts all expire by then. It's one way to return to fiscal responsibility. Another is to quit believing the lie that links conservatism to fiscal prudence and see that link for what it is: an ideological deception that's allowed the Reagan-Bush Republican class to slur the purpose and value of government while enabling the greatest heist of public resources for limited private gain this country has ever known.

The Big Spenders

The Republican mantra is that Democrats are big spenders, Republicans are fiscally responsible. The facts say exactly the reverse. Since Richard Nixon, every Republican administration has worsened the federal budget deficit, and every Democratic administration has either held it steady or vastly improved it. The following numbers show the net gain or loss of the federal budget deficit in each administration. The data is from the non-partisan Congressional Budget Office.

· Nixon-Ford (R): Surplus was $3 billion when Nixon took office in 1969, deficit was $74 billion by the end of Ford's last year in office. Worse by $76 billion.

· Jimmy Carter (D): $74 billion deficit on taking office in 1977, $74 billion deficit in 1980. No change.

· Ronald Reagan (R): $74 billion deficit on taking office in 1980, $155 billion deficit in 1988. Worse by $81 billion.

· George H.W. Bush (R): $155 billion deficit on taking office, $290 billion deficit in 1992. Worse by $135 billion.

· Bill Clinton (D): $290 billion deficit on taking office, $236 billion surplus in 2000. Better by $526 billion.

· George W. Bush (R): $236 billion surplus on taking office, $413 billion deficit by the end of his first term, worse by $648 billion. The deficit at the end of 2007 was $163 billion. Overall, worse by $399 billion.

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