The Deficit: The Definition of Political Hypocrisy

by | Feb 18, 2018 | Features, Politics | 6 comments

For decades the political party in Congress championing concern for the deficit, at least rhetorically, was invariably the one relegated to the minority. With righteous indignation, it decried the invoice created by the present generation for their children and grandchildren to pay as nothing less than immoral.

Being in the minority allowed one to make principled arguments without the burden of taking tough votes. That’s not to suggest there were not people in Congress who took the deficit seriously.

There was a time when earnest deficit hawks walked the halls of Capitol Hill, like former New Hampshire Sen. Warren Rudman, for whom ongoing deficits were ominous, warranting immediate attention.

Lawmakers authentically committed to reducing the deficit may not be extinct, but they’re definitely on the endangered species list. We have mostly linguistic facsimiles addressing fiscal concerns.

There is something about being in the majority that makes one less apt to develop deficit concerns. Members of Congress in the majority become a re-enactment of “Ferris Bueller’s Day Off.” With the maturity of teenagers, they realize the keys to the Ferrari are within grasp, and their parents are conveniently gone for the weekend.

From 1970-1997, the U.S. government suffered through budget deficits, though nothing on par with today. From 1998-2001, the U.S. experienced a small glimmer hope as it returned to the daylight of surplus, only to be subsequently cast back into the shadow of deficits in 2002. But the current shadow that looms over deficit spending is like the winter solstice on the North Pole.

The current administration inherited a budget deficit of $600 billion. But according to the Committee for a Responsible Federal Budget, an independent bipartisan public policy think tank, the tax cuts and spending increases in the recently passed budget project the deficit will exceed $1 trillion by 2019.

The CRFB suggests trillion-dollar deficits will be with us “indefinitely.” And if one assumes an extension of spending and tax cuts, which is not unreasonable, America is looking at a projected deficit that will exceed $2 trillion by 2027.

The Congressional Budget Office (CBO) estimates the debt (not to be conflated with the deficit) will reach 101 percent of GDP by 2028. To put the CBO projections in context, the post-World War II rebuilding of Europe briefly placed the U.S. at a 103 percent debt-to-GDP ratio.

With $2-trillion deficit projections, why should China and others continue to buy U.S. debt at the current low interest rates? The short answer: They won’t! Moreover, higher interest rates could have an adversarial impact on the stock market.

As Richard Haas, president of the Council of Foreign Relations, stated recently, “it’s one thing to raise interest rates to cool an overheated economy, we’re already at the point.” Adding, “But now we’re going to have to raise interest rates to attract the type of financing we want.”

As Haas and others have recently opined, this formula will slow economic growth and curtail any prospects of infrastructure investment. The inability to invest in infrastructure means there can be no down payment on America’s future, making the current economic cloud a threat to national security and global competitiveness.

Dams, food and agriculture, information, water and transportation are among the vital sectors that are potentially placed in jeopardy if America is unable to invest in future development.

Like many others, I contend the U.S. won the Cold War with superior finances. The former Soviet Union could not feed its people and keep pace with the arms race. America is now on the verge of becoming the Soviet Union in the 21st-century version of the equation.
A trillion here and a trillion there, and soon we will be talking about real deficits. But in the meantime, what shall we do?

Such numbers are in effect incomprehensible. What we can grasp, however, is that the deficit and the debt are eating away the resources to sustain America. This type of fiscal irresponsibility makes America its own existential threat.

The deficit becomes another example where the narcotic of rhetoric numbs us to reality. We take solace in blaming the irresponsible tax cuts by Republicans or needless spending by Democrats as the lone culprit.
I do take issue with those who recently queried, based on the recent budget, whether deficits still matter to Republicans. The concoction of tax cuts without corresponding spending cuts and wars on the government credit card meant that ship sailed many years ago.

I suspect if Republicans were returned to the minority in Congress, the deficit would once again matter. The way it matters to Democrats today — rhetorically.

6 Comments

  1. Jay Ligon

    Enjoyed your column, Byron. Thank you.

    Deficits were front and center only once in the last 50 years.

    Before the “new” economics of the Reagan era, deficits, compared to the ones we see now, were modest. The United States borrowed heavily during World War II, but fiscal prudence was practiced until after 1980.

    The Reagan Republicans campaigned on amending the constitution to require balancing our annual federal budgets, then they took office. Borrowing sky-rocketed as a result of big tax cuts and lavish spending on defense.

    Reagan’s vice president, George H. W. Bush, who had called “trickle down” economics voodoo when he ran against Reagan, continued borrowing, but he did so nervously. Conservatives urged Bush to reign in the debt. The amount of debt was higher than we had ever seen in our history, and no one was comfortable with so much borrowing going forward.

    The issue of the debt became THE issue when a billionaire named Ross Perot threw his hat into 1992 presidential race. Perot triangulated the electorate enough to give Clinton, who did not win a majority, the presidency. Perot got his wish even though he lost. The Clinton Administration raised taxes enough to create a few years of surpluses.

    When George W. Bush cut taxes and spent heavily on defense, sending troops to the east, the growth in debt began to accelerate to scary levels once more. Had the Supreme Court allowed the Florida count to continue, Al Gore would have continued on the fiscally prudent path, because he had fought the fight to balance the federal budget, and he knew how difficult it was. America got Bush, and Bush gave the country trillions of dollars in debt.

    “Reagan proved that deficits don’t matter,” Vice President Dick Cheney said when the Bush administration sought a second round of tax cuts in 2003. This fits with a rich tradition of conservative tax-cutters abandoning deficit hawkery when they want to hand money to favored groups.” (New Republic, May 2016)

    Which is it? Are modest deficits and debt critically important to a well-run economy or do they not matter? I believe that Dick Cheney and his fellow tax-cutters are whistling past the graveyard. Deficits matter very much, and Republicans are playing a dangerous game of Chinese roulette.

    • Byron

      Dear Jay:
      Very good analysis! One historical correction the notion that Perot’s entrance in the race cost Bush is a conservative fairy tale. If you look at polling Perot pulled more from Clinton costing him the support to be over 50% which was used to deligitimize his presidency.

  2. TY THOMPSON

    “I suspect if Republicans were returned to the minority in Congress, the deficit would once again matter. The way it matters to Democrats today — rhetorically.

    Nailed it. Neither Party is serious on this one. Which is why things like Social Security benefits are at very real risk. More ominously, a recent Chairman of the Joint Chiefs opined that our spending and debt accumulation is the number one threat to national security. The old Soviet apparatchiks found that one out the hard way.

  3. walt de vries, ph.d.

    Excellent analysis, Bryan. I cannot write with the flourishes that you do, but when I did similar analyses of state problems for Governor George Romney (R-Mich.), he would always send my written description back with the note in large letters across the top: “O.K., Walt, now what do we do to solve this?” He did the same verbally. And, if I, or another staff member, did not send him solutions ranked in order of preference (and political and financial feasibility), the Governor would want to know why. It has been years now, but I have never forgotten his questions. It was a dilemma I always had with political science which many times, for me, was neither “political” or “scientific.” But, simply an avoidance of value judgments about governmental problems. Sort of reminds me of today’s discussions of gun violence; lots of bogus thoughts and prayers but no solutions or actions.
    Still, good work and peace.

    • Byron Williams

      Dear Sir:
      Thank you for your kind words. You might be interested know that I’m interview Alice Rivlin on my radio show tomorrow night.
      Best,
      Byron

      • Jay Ligon

        You are correct! FiveThirtyEight says so

        Perot’s strange third-party run won 19% of the popular vote campaigning on a single issue: the debt. He was, at one time, running first, ahead of Bush and Clinton. He forced the other candidates to address the national debt. He bought television prime time to discuss his charts and graphs and people tuned in.

        FiveThirtyEight says Perot took equally from each candidate, and his campaign energized voters that would not have bothered to vote.

        My point is that Perot’s crazy run was the only time in my lifetime that a candidate ran only on the debt. He was an entertaining debater and forced the two parties to discuss fiscal policy – something they have not done since. Clinton’s government addressed the debt issue and did better than balance the budget.

        I give Perot some credit for that, but I am glad didn’t become president.

Related Posts

GET UPDATES

Get the latest posts from PoliticsNC delivered right to your inbox!

You have Successfully Subscribed!