IBD editorial lends some much needed perspective.
by Tina Grazier
REPUBLICANS were recently tossed out on their ears by their constituency for abandoning conservative principles and jumping on the big government bandwagon. Their egregious sins included ridiculous examples of pork-barrel spending…they were definitely seen as a congress gone wild! Although spending wasnt the only issue that bunched our boxers, in terms of our fiscal sensibilities, it was the big one.
You can imagine my relief when I found a more possitive article with easily understood facts and a sensible perspective that allowed calm to settle in. It actually restored, at least in part, my favorable opinion of our republican representatives. This information and perspective does little good for now, of course. As a party we have already cut off our noses in the voting booth, ensuring in the process that those who have it within their means to destroy our economy are now in charge. So read on and gather in strengthgain in knowledge and feel a little better about some of what the republicans have done over the last seven years. The task now is to build a better grounding for determining choices in future elections. A few excerpts might whet your whistle:
Last year, the deficit hit $248 billion. Sounds like a lot, but in a $13.6 trillion economy, it’s not. It’s the equivalent of a $900 dollar credit card charge for someone with a $50,000 income. *** As a share of GDP, the budget deficit last year was 1.9%. That’s down from 3.6% in 2004 and below the long-term average of 2.5%. This year, says the CBO, the deficit will be about $177 billion, or 1.3% of GDP. If current trends continue, the deficit will be erased by 2010-2012 at the latest.
Those who accuse President Bush of “spending” the surpluses and creating “soaring” deficits miss the point. Bush took office just as both the stock market and the Internet boom were collapsing, taking the economy with it. As we’ve noted before, the stock market alone suffered losses of more than $7 trillion. The negative wealth effect from that hit alone was enough to tank the economy. *** The year 2001 was one of both recession and a major terrorist attack on our nation, which killed 3,000 people and destroyed hundreds of billions of dollars in potential output. *** Let’s go to logic 101: Given such a situation, what should Congress and the president do? Sharply cut spending to ensure that the deficit remains small, and risk sending the economy into a tailspin? Or keep spending, and maybe even increase it a bit, knowing full well that any discretionary spending that was made today can be cut tomorrow?
Using the most meaningful measure of the size of government spending as a share of GDP we see that in fact we’re today right where we were in 1996 about 20.3% of GDP. And it’s declining. This year, spending as a share of the economy is expected to fall to 19.9% of GDP. If you look at the chart, you’ll note that’s actually below the average of 20.7% of GDP since 1970. *** Revenues in 2000 were 20.9% of GDP; by 2004, they had plunged to 16.3% of GDP, lowest since 1959. This year, revenues returned to 18.6% of GDP, above the long-term average of 18.2%. *** So it was falling revenues, not higher spending, that caused the deficit. It may well be that by keeping spending within its normal range as a share of the economy, Bush kept a mild recession from becoming a very nasty one.
If you havent already done so, I urge you to absorb the full article, “Deficit Deceptions” over at Investors Business Daily. You will find the whole series of articles HERE.
Keep in mind that democrats in Congress only have to let the Bush tax cuts expire to spoil the gains we have made and reverse the positive trend. Unfortunately they wont stop at thattheir big plans to spend our money and expand government and its control over our lives are both wide and deep.
Vote wisely in 2008 or well soon find out what a real “spending boom” looks like.