Democrats: Responsible for Budget Surplus, Not So Much for Budget Deficits
by Matthew Madia, 7/20/2006
In today’s Washington Post, Robert Samuelson chides President Bush for boasting about a $300 billion deficit, but finishes his column by shifting some of the blame for the atrocious fiscal policies of the Republican Congress and President to the Democrats.
For fiscal 2006, which ends in September, the administration projects a $296 billion deficit; for fiscal 2007, the estimate is $339 billion. How could anyone boast about that?
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I have reserved my harshest scorn for Republicans, who are (after all) in power. But Democrats aren't much better. The nub of the matter is spending. When Republicans passed the Medicare drug benefit -- the biggest new program in decades -- Democrats actually advocated a more costly version. Whenever anyone suggests curbing spending, Democrats screech: Spare Social Security and Medicare. But Social Security and Medicare are the problem.
Just as Republicans now say their policies have cut deficits, Democrats contend their policies produced budget surpluses from 1998 to 2001. Nonsense. Those surpluses resulted mainly from the end of the Cold War (which lowered defense spending) and the economic boom (which created an unpredicted surge of taxes).
Nonsense, indeed. Mr. Samuelson’s treatment of Democrats with respect to the current fiscal situation omits several critical facts that completely undermine the thesis that Democrats should share blame for the current budget deficit: Democrats support PAYGO, Democrats are willing to raise taxes, and Democrats are not in power.
Firstly, Democrats support fiscally disciplined "pay-as-you-go" rules, or PAYGO; Republicans do not. PAYGO rules require that increases in spending or decreases in revenue be matched with offsetting revenue or spending measures. These rules were in place until 2002; the same year that the federal budget flip-flopped from surplus to deficit.
Republicans have consistently thwarted Democratic attempts to re-implement PAYGO to restore fiscal discipline. The most recent and salient example of how Democrats and Republicans fundamentally differ is the recent Senate Budget Committee passage of Sen. Judd Gregg’s (R-NH) Stop Overspending Act 2006. By a party-line vote, Republicans defeated ranking committee member Sen. Kent Conrad’s (D-ND) attempt to attach a PAYGO amendment to the bill.
Another significant difference between Democrats and Republicans with respect to the budget is the Republicans’ rigid opposition to tax increase (and conversely, their unquenchable thirst for tax cuts). Mr. Samuelson likes to thrash the spending policies of Democrats, but fails to appreciate their preferred tax policies. Mr. Samuelson attributes the surpluses of the 90s to defense spending cuts and a booming economy. While both of these things occurred, you can see on the chart below that defense cuts are only a fraction of the story. Where that red line begins a precipitous drop is the same moment when President Clinton and a Democratic Congress raised taxes in 1993.
And finally, the Democrats control nary a branch of the government. So, it seems quite odd that Mr. Samuelson lays any of the blame of the budget deficit on the Democrats. He cites their support for a more expensive Medicare drug plan - a plan that didn’t pass Congress - as part of the reason why Republicans pass such expensive spending measures and refuse to find revenue sources for those measures. Yet, somehow, because Democrats voice opposition to spending cuts in Medicare and Social Security, - never mind that these two programs are wildly popular among all Americans, red and blue state alike - we are saddled with unending budget deficits. This is a bit of Mr. Samuelson’s logic I truly fail to grasp.
While the economy, as Mr. Samuelson asserts, "has little to do with the White House's economic policies", PAYGO rules and tax policy are fully controlled by the federal government. So, while the Democrats cannot take credit for the booming economy of the 90s, they can take credit for the federal budget policies that lead to the surpluses of the 90s. Blame for the train wreck that is our federal budget can be put squarely on a Republican Congress and President that have no appetite to raise taxes or to implement budget rules that force fiscal discipline.
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