Setting the Record Straight on Fiscal Policy

For all the libpig agonists: Please read the following WSJ piece and learn to stop lying about and misrepresenting the debt, deficit, spending budgets, etc. Knowledge can help you overcome your many inadequacies.

Fiscal Revelation
February 6, 2007; Page A16
Politicians are typically late in picking up trends, so it will be interesting to see how long it takes Washington to acknowledge the big story in the Fiscal 2008 budget that President Bush unveiled yesterday: To wit, with a little spending restraint, Congress could balance the budget in no time.

You wouldn't know this from all the garment-rending yesterday in response to Mr. Bush's proposal to spend the not-so-meager sum of $2.9 trillion. Our favorite agonist is Kent Conrad, the Senate Budget Committee Chairman, and he didn't disappoint. "The President's budget is filled with debt and deception, disconnected from reality, and continues to move America in the wrong direction," said the Senator who was himself blocked from sneaking nearly $5 billion in "emergency" farm spending into a military construction bill in the final days of the last Congress. The North Dakotan needs to keep shouting disaster in a crowded political theater so he can justify his desire for a big tax increase.


The news Mr. Conrad won't broadcast is that over the past three years the federal deficit has shrunk by 58%. The Congressional Budget Office -- not the White House -- is estimating that the current year's deficit (for fiscal 2007) will fall to $172 billion. That's not bad given continuing Katrina relief spending, $30 billion for homeland security, and a couple hundred billion or so to fight the war on terror.

The White House is projecting that its new budget will eliminate the deficit by 2012 assuming Mr. Bush's tax cuts are extended after 2010. We don't put much stock in future budget forecasts because they depend on so many variables. But even CBO predicts the deficit should remain near or below 1% of GDP for the rest of the Bush Presidency. That's well below the 40-year average of 2.4% of GDP.

This also means that the federal debt burden will continue to fall. Alarmists point to the $1.4 trillion rise in total federal debt from 2003-2006, but that amount is dwarfed by the $14 trillion in new household wealth created over the same period. And for all the international scolding of an allegedly profligate America, U.S. federal debt as a share of GDP is falling again (see the top chart nearby). At 37% in 2006 and heading south, the U.S. figure compares to 52% in Germany, 43% in France, and 79% in Japan. Once again rising total "debt" is a scare word used to justify higher taxes.

The real game to watch isn't debt or deficits but spending. Here, too, Mr. Bush has an improved track record in his second term. From 2001-2005, outlays ballooned by $609 billion, or 33%, and Mr. Bush never did veto a spending bill. By contrast, on current pace his second term outlays will grow by 21% -- hardly tightfisted, but a third slower.

The other news you won't often hear concerns the soaring tax revenues in the wake of the 2003 supply-side tax cuts. Tax collections have risen by $757 billion, among the largest revenue gushers in history. Receipts, especially from high-income individuals and corporations, have been growing for some two years at nearly twice the rate of spending, which explains the falling deficit. Economic growth is always the key to eliminating red ink, which is why keeping this 63-month expansion rolling needs to be the main domestic priority. This requires making those lower 2003 tax rates permanent, rather than letting them expire in 2010 and socking the economy with the biggest tax increase in history.

The more immediate budget brawl between Mr. Bush and Democrats will be how to divide that mere $2.9 trillion between guns and butter. Mr. Bush wants $245 billion more for Iraq and Afghanistan for 2007 and 2008. His overall Pentagon request of $606 billion in 2008 has been lambasted by Speaker Nancy Pelosi as a "huge number" and Democrats are moaning that their cherished social programs will suffer.

In fact, Mr. Bush's request would only bring defense outlays to 4.2% of GDP, or about 20% of total federal spending. That compares to 4.7% of GDP even under Jimmy Carter, and 6.2% of GDP in 1986 at the peak of the Reagan defense buildup (see bottom chart). Budgets are about setting priorities, and if Democrats agree that defeating terrorism is vital they will put it ahead of funding the National Endowment for the Arts.

Or how about capping subsidies to farmers with incomes above $200,000? Senator Conrad could lead by example in accepting that White House proposal, and in return zero out Mr. Bush's $200 million political sop for state and local police.

All in all, the fiscal news is so good that the tax hike lobby has had to do a bait-and-switch and fret about the "long-term." Somehow this wasn't a priority when Democrats and Republicans alike were trying to kill Social Security reform in 2005. But all of a sudden penury is said to be right around the corner. Well, Congress could always reform those programs, but don't hold your breath. Mr. Bush is proposing a very modest $96 billion reduction in the growth of Medicare and other entitlements over five years, and Democrats are already outraged.

The best news in yesterday's budget may be that Mr. Bush seems to be rediscovering some fiscal nerve. His proposals won't raise taxes, while using the power of the market to combat problems in health care, and putting a tight leash on domestic discretionary programs. Defense gets the bulk of spending increases, as it should in a time of war. Maybe we'll finally get a debate over national spending priorities.

www.wsj.com

 

Well, it comes as no surprise that the libs couldn't mount a defense to this information. I guess if it's not negative news, then they just don't care. I guess they don't like the facts getting in the way of their Bush-is-bad-for-the-economy slander, lies and falsehoods either.

Telling...

 

Going forward, I will be pointing any liberal whiners to this thread when they attempt to trash Bush on fiscal policy. You have your chance to defend your criticisms of him right here. You have failed to mount ANY defense of your hollow complaints. No surprise.



D&D Gotta love it when you shut the lying libs up with facts