"Democrats and the deficit," indeed - Dissecting Pop Culture

February 13, 2007

“Democrats and the deficit,” indeed

Back in 2002 when he was running for president, Howard Dean told Greta Van Susteren on her FNC show: “No Republican president has balanced the budget in this country in 34 years. It seems only Democratic presidents do that. And I have the credentials to do that because I’m a governor.”

And Governor Dean has repeated this statement ad nauseam ever since.

Dean was referring to fiscal 1969. He seemed to be giving credit to Nixon for the 1969 “surplus”. Only thing is: fiscal 1969 began October 1, 1968. So using Dean’s criteria, doesn’t LBJ deserve the credit for the 1969 “surplus”?

The reason for the quotation marks around “surplus” is fiscal 1969 was the first year of the so-called Unified Budget, which mixes general revenue with off-budget revenue from dedicated taxes, such as Social Security. It allows off-budget surpluses to offset and mask on-budget deficits. And indeed, 1969 saw an on-budget deficit of $507 million.

But the biggest problem with Dean’s statement is this: NO president—neither Democrat, nor Republican, nor Whig—has ever balanced the federal budget. It seems only Congresses do that.

Budgets are legislation. Bills. Presidents don’t write bills. Presidents only sign bills, which makes them laws. Or they veto them. That’s why Clinton needs to accept at least half of the responsibility for the government shutdown in 1995; he vetoed a budget that would have kept the government open for business.

Back when public schools taught civics most of us knew that the president proposes and the Congress disposes, and that Congress controls the purse strings. It’s been this way for the entire history of the republic. Why doesn’t Dean know this?

The Constitution (Article 1, Section 9) requires Congress to make appropriations and to produce the federal budget. Could someone please clue in the good governor about the mechanics of the federal government before his next run for high office?

Dean’s mouth has regularly gotten him in trouble. The man doesn’t seem to have any internal editor, and says whatever pops into his mind if he thinks it helps his case. But Dean isn’t alone, as most of the Democrat establishment has for years laid responsibility for the budget at the feet of the president, crediting Clinton and blaming Republicans. Since Congress writes the budgets, why do the Democrats continue to do this?

Because the only balanced budgets during the last 47 years occurred when Republicans controlled Congress.

That’s right. The last balanced budget produced by a Democrat Congress was in fiscal 1960. And going back to 1920, the only other times Democrats balanced the budget were in fiscal 1947, ’51, ’56 and ’57. And since Democrats controlled both houses of Congress for 52 of those years, it means their record is below 10 percent.

Since the top tax rate during the period when Democrats balanced the budget was 91 percent, you might conclude that that’s what it takes for Democrats to balance the budget—a tax rate of 91 percent. When the top rate was lowered in the 1960s to 70 percent, Democrats never again balanced a single budget.

The Republicans have certainly disappointed fiscal hawks lately, but let’s look at their record so we can compare it to the Democrat’s. The GOP balanced the budget in the 11 contiguous years from 1920 through 1930, and in 1948, 1999 and 2000. They controlled both houses for 27 of the years in question and so are averaging above 50 percent.

Truth is: neither party has been particularly good at balancing the budget. It’s just that the Democrats are worse—5 times worse, if you go back to 1920.

Democrats might object to the exclusion here of fiscal 1969. But we’re not including any years with Unified Budget surpluses if they ran on-budget deficits. That means we’re also not including 1949, 1998 and 2001, which would accrue to the Republicans’ benefit. Besides, many of the off-budget items are not really subject to the budget process.

If you’d like to verify the above data, here is the most current publication from the feds on the history of the U.S. budget. PDF ALERT: You’ll need Adobe Reader. And if you’re on dial-up it’ll take maybe 5 minutes to download. Section 1.1 is where you should look. And here are the histories of the party divisions in the House and the Senate.

But wait, the Democrats say it’s much more complex: it was the tax rate hike of 1993 that balanced the budget, not the actual budgets. We can all applaud the Democrats for their commitment to complexity, but the problem with their theory is tax rates had been much higher when Democrats controlled Congress and they still performed poorly at balancing the budget, even in peacetime. What is more troubling about this theory is its subtext, which is that budgets can only be balanced by revenue increases, and that nothing can be done about spending.

But now, after 12 years, the Democrats have another shot at balancing the budget. And they have more revenue to work with than they ever had before, a Trillion dollars more revenue than their last budget in fiscal 1995. They’re not used to such large sums. What will they do with all that money? Balance the budget? One would hope so. But the temptation will be to spend, to launch more programs, more entitlements.

Even before the new Democrat Congress was sworn in, the siren song to forget about cutting the deficit emanated from New York Times columnist Paul Krugman: “The answer, I now think, is to spend the money…and let the deficit be.” In terms of sheer whacked-out mendacity, this column, “Democrats and the Deficit”, sets a new Krugman standard. Krugman actually out-Krugmans Krugman, if that’s possible. Fortunately, economist Donald Luskin (Krugman Truth Squad) took Krugman to the woodshed.

What’s most repellent about Krugman’s column is his repetition of the same mistake that Democrat Congressmen make: giving credit to the wrong folks. Only in this case it’s not the president, but former Treasury secretary Robert Rubin. Krugman refers to “Rubin’s surplus”. But if it’s the Treasury secretary who balances the budget, why is Krugman exhorting the new Congress? Shouldn’t he be aiming his remarks at Hank Paulson? You know, the Treasury secretary?

Why does Krugman give the credit for the balanced budgets of the late 1990s to Rubin? It’s not as though Rubin were alone in advocating fiscal discipline. Can’t he muster the honesty to give a little credit to those who actually produced the budgets? People like John Kasich, and the Class of ’94 that campaigned on balanced budgets and brought in the first Republican Congress in 40 years. Why not give a little credit to Newt Gingrich and his Contract With America that featured a balanced budget amendment? It’s a marvel the contortions these socialists will put themselves through to give credit to anyone but Republicans. Talk about “truthiness”.

Krugman alleges: “The second President Bush quickly squandered the surplus on tax cuts that heavily favored the wealthy and then plunged the budget deep into deficit.” First of all, by the time President Bush took office there wasn’t any surplus; fiscal 2001 saw an on-budget deficit of $32.4 Billion. And the budget for fiscal 2001 was written by the previous Congress and signed by Clinton. The first budget Bush signed would have been for 2002. And secondly, federal revenue is now at record levels. Doesn’t spending ever enter into the equation?

Democrat congressmen who continue to lay the responsibility for the budget on the president—whether in crediting him for a surplus or blaming him for a deficit—are doing nothing less than abdicating their own responsibility. And since Congress can pass rescission bills, the Democrats are, as of now, responsible for all the waste, fraud and abuse in the federal budget. (At least the Republicans killed the “bridge to nowhere”.) Should the Democrat Congress be unsuccessful at balancing the budget, it will be interesting to see if they blame President Bush for it.

The ball is in the Democrats’ court. They must produce. They’ll be held accountable. Frankly, with their record at budget balancing and their penchant for spending one can’t hold out much hope.

But the most sobering prospect to come with the return of the Democrat Congress is they might cut off funding for the war. They did this in the Vietnam War, and it was the determining factor in our loss there. In his column, Krugman even suggests “the Democrats can free some money…by ending the Iraq war.” Would the Democrats actually compromise our national security just so they can free up money for their social programs? Would the Democrats really cause America to lose another war just so they can get their hands on the money they need for their agenda? If they do, the ensuing disaster in the Middle East would dwarf the chaos in SE Asia that began in 1975, and be far more dangerous for America and the world.