Liberal Deficit Disorder

July 24, 2003

It never ceases to boggle the mind how a Liberal media that is so obsessed with 16 words from a State of the Union address can tolerate volumes of its own lies. With such a pathetic field of Presidential hopefuls lining up from the Left against G.W., the liberal propagandists are scratching for even more pathetic issues to fabricate.

In an attempt at a Bush 1 v. Clinton redux, the lefty liars are trying to create an issue with the budget deficit. Or, as an editorial in the Palm Beach Post screamed, "No matter how they wrap the $455 billion, the deficit’s sharp edges are dangerous." Of course, the New York Times really brings the lying into focus by Blairing out, "In the last three years, The United States government has gone from having the biggest annual surplus in its history to the biggest deficit".

Nothing beats a liar better than a stupid liar.

The big lie from the Left is that the biggest deficits in U.S. history were courtesy of Ronald Reagan at 6%, Bush 1 at $290 billion and the granddaddy of all budget busters…G.W. at $455 billion and counting. How convenient to forget the years from 1942 through 1946 when the respective deficits, as a percentage of GDP, were 14.2%, 30.3%, 22.8% and 21.5%. Of course the country was at war back then…nothing so Liberally insignificant as the destruction of the World Trade Center or the bombing of the Pentagon.

This fixation on the federal deficit as a percentage of GDP (Gross Domestic Product) is almost meaningless. What does it tell you to know how much the government is in the red as a percentage of the total economy? A better ratio would be the entire federal budget as a percentage of GDP. At least then you would know how big the monster is growing.

In their personal lives, citizens gauge their financial condition in simple terms…how much money is coming in and how much is going out. Today the U.S. government is pocketing about $2 trillion in receipts. A projected deficit of $455 billion says that the government is spending 22% more than it makes. In 1934, the icon of liberalism, FDR, presided over a government that spent 121% more than it made. Put that in your cigarette holder and puff on it.

Total U.S. debt is about $6.75 trillion. This amount makes the total annual receipts of the government 30% of total debt. The total consumer debt, including mortgage debt, in the U.S. is about $8 trillion. The total disposable income (income after Uncle Sam takes its vig) is about $8 trillion. So the average American has a total debt that equals a 9/11 worthy 100% of its annual income. People who live in over-leveraged glass houses shouldn’t throw stones.

And what is so bad about a little debt? Graduate business programs throughout the U.S., including the Ivy League schools, routinely teach that there are optimal debt/equity ratios for businesses to maintain. Zero debt can be a deterrent to growth. The trick is too pay down debt in surplus years (Clinton years) and use debt to spur growth in lean years. The pay down never happens.

But, the NYT dredged up William Dudley, chief U.S. economist for Goldman Sachs, to caution, "…if growth in the United States picks up again soon and borrowing by private sector business increases, it could become a problem." If growth increases, then, by logic, tax revenues increase and the deficit should decrease unless the government increases spending by more than the increased tax revenue. That must be a point that either Mr. Dudley didn’t think of or the NYT failed to note. So much for experts.

Another dud from the mouth of Dudley was the dogmatic mantra that, "the Bush administration tax cuts…mostly benefit the wealthiest taxpayers, who are less likely to spend their extra income than poorer people." Aside from the fact that the "wealthiest taxpayers" are usually defined as those with an adjusted gross income in excess of $27, 600 who pay 96.4% of the personal taxes, would somebody explain how the Democrats and Liberals keep blathering about "tax cuts" for people who don’t pay any taxes.

And for an expert economist, how did Mr. Dudley forget that immediately spending all extra income on personal consumption, while having a short-term lifting effect for the economy, could be inflationary. Whereas, the "wealthiest", who actually pay taxes, might invest their money and create capital which in turn creates long-term economic growth and jobs.

A real rocket scientist from Newhouse News, Miles Benson, quotes Robert Reischauer, former director of the Congressional Budget Office under the Democrats (big surprise), "They (the deficits) are likely to worsen significantly as the baby boomers begin to draw their retirement benefits." Hey Reischauer, read my lips…whose damn fault is it that the Social Security Trust has been robbed blind by the Congress who used the money to buy votes and left worthless IOU’s behind? Retirement benefits are supposed to be vested in a Trust and not come from current receipts. Whoever robbed the trust fund is going to be in big trouble soon enough.

The bottom line for a government that has no bottom line is the reality that local, state and federal governments cannot continue to increase spending from 2 to 5 times the rate of inflation and ever hope to balance their books. All this talk about record deficits is a smoke screen created by the same inadequate liars that will do or say anything to bring down the current President.

Where were these Liberal fiscal watchdogs when it came time to disclose that President Clinton, despite his bravado about imaginary surpluses, entered the Presidency on January 20, 1993 with a national debt of $4,188,092,107,183.60 trillion and exited on January 19, 2001 with a record debt of $5,727,776,738,304.64 trillion? Clinton never managed to pay down the U.S. debt, despite record tax increases, while the GDP grew from $6.5 trillion to $9.5 trillion. Spend…Spend…Spend…Tax…Tax…Tax!!!!

So, when Jared Bernstein from the liberal research group, the Economic Policy Institute (undoubtedly a non-taxpaying non-profit) lectures you from the pages of the NYT that the current deficits are, "…ideological deficits," the class should turn their heads from the right and look to the left…you know…over there at the dunce caps in the liar’s corner.

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