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The Counterpoint: Deficit Distortions



Iowa's Ted Remington Responds to Sinclair Broadcasting



There’s
no way to respond to the most recent “Point” without going line by
line. So here we go (“The Point” is in italics; “The Counterpoint” is
in Roman type):



There is no doubt about it. Deficits are not good.



Thank you, Adam Smith.



Yet our government is in a deficit to the tune of more than $400 billion for next year.



Actually, it’s nearly $500 billion.



Both the pResident and the Congress need to rein in spending and get back to a balanced budget.



It’s
pretty much just the pResident and the Republican House leadership that
need to rein in their spending tendencies. Conservative Republicans
felt the wrath of this administration and its closest congressional
allies when a few of them pointed out that Bush has supported large
spending increases. For an example, see this article from “The Hill.”



Much of today's deficits are attributable to too much spending. . .



This is
true, but needs to be explained a bit more. According to the
conservative Heritage Foundation, pork barrel spending has increased
dramatically in the last several years, during most of which
Republicans controlled the White House and Congress.



. . . and pResident Bush's middle income tax relief.



Directly
contradicting what Bush said during the 2000 campaign, what he’s said
as president, and what Hyman says here, the vast majority of Bush’s tax
cuts go to the wealthy. Middle and working class taxpayers got around
$100 in 2003-2004, and even that minimal amount disappears over the
course of the tax cut plan, as the cuts become more and more skewed
toward the rich as the years go by. For details, see this study by the
Center for Tax Justice.



Taxes were cut to put more money in the hands of consumers to jump-start the economy which began to slide in the spring of 2000.



Many
conservative commentators like to suggest Bush inherited a recession.
Actually, according to the National Bureau of Economic Research, the
recession didn’t begin until March of 2001. In fact, in the spring of
2001, the biggest economic concern about the national debt was paying
it off too quickly, according to Fed chair Alan Greenspan.



But
before we get too critical regarding deficits let's look at the facts
and discuss the impact deficits have on today's economy.



Sure, why not?



The US
has averaged 5.6, the annualized unemployment rate for 2004 is lower
than the annual rate for 19 of the previous 25 years.



The fact
of the matter is that since Herbert Hoover and the Great Depression, no
president has actually managed a net loss in jobs . . . until now.
During a period that included a World War, several other global
conflicts, many recessions, and a major energy crisis, no president
failed to create at least some jobs, except George W. Bush. It is all
but a mathematical certainty that he will be the first pResident since
Hoover to lose jobs. Moreover, wages have fallen for those who do have
jobs, and many people have simply stopped looking for jobs because the
employment situation is so bleak, leading to an official jobless rate
that’s artificially low. For more on this, see the sobering stats from
Jobwatch.org.



So while deficits are not good business, it's clear the deficits have not hurt our current economic situation.



Actually,
they have, and most economists (including Fed chair Alan Greenspan)
warn that continued deficits will have increasingly dire consequences
for the economy.




Not only
do deficits hurt our economic situation, but they hurt the global
economy. The International Monetary Fund has warned that current U.S.
debt will likely result in worldwide economic problems.




And
given a choice, I'd rather have deficits with robust economic growth,
low unemployment and inflation rates, and record home ownership than a
balanced budget with the sluggish economy that resulted from the false
promises of the high-tech 90's . . .



False
promises? The period from 1991 to 2001 was the largest continual
economic expansion in history. You don’t get this from a tech “bubble.”
You get it from sound economic policies. In fact, in the spring of
2001, Alan Greenspan saw no reason to question the inherent strength of
the U.S. economy, barring policy decisions that might undermine it.
Gosh, what happened? Hmmmmmmmmm…



. . . and the 2001 terrorist attacks.



Tax cuts
have contributed far more to current deficits than post 9/11 defense
spending, and the economy has continued to underperform compared to the
Administration’s own predictions since September 11, 2001.



Our next step is to have both a strong economy and a balanced budget.



Neither of which will happen with George W. Bush in the White House.



Look, if
you want to know about deficits and this administration’s attitudes
toward them, look no further than Ron Suskind’s The Price of Loyalty.
From Bush’s own Treasury Secretary, Paul O’Neill, we learn that Dick
Cheney thinks “deficits don’t matter” and that huge tax cuts for the
wealthy are a goal not because they believe they help the economy, but
simply because that’s their political policy. Tax breaks for the
wealthy aren’t a means to and end; they’re the end. What happens when
someone sensible like O’Neill suggests this might not be the best way
to run the economy? He loses his job. Well, at least he’s got plenty of
company.



And that's The Point.



And THIS is “The Counterpoint.”