AmerCon : Deficits

We might call 1992-2000 “the Clinton Golden Years.” The Democrats don't garner enough
credit for this unprecedented period (eight straight years) of fiscal prudence. Not a single
Republican voted with the Democrats for the tax increases that were necessary in 1992 to
balance the budget.

You can also see the relatively tiny course adjustment that Bush I made in 1991. He broke
his "Read my lips, no taxes" promise -- with very small tax increases -- and it cost him political
backing with Republicans who would countenance NO taxes regardless of the needed
improvement in the national accounts.

A remarkably powerful single-issue right-wing initiative, Americans for Tax Reform, (which
publishes a "no tax" pledge here, along with the names of those who have signed) is
extremely successful at using political power to impose a single outcome that supplants all
other national priorities.

Currently (as of Dec 2004) 222 Representatives and 42 Senators have signed this pledge --
to never raise taxes no matter the need of the nation -- in return for financial support and
significant political support. This is a pledge to ignore fiscal responsibility, to ignore the
needs of the nation, to ignore their respective constituencies, and to always vote one way on
one issue. This single-issue group is very effective at targeting representatives who won't
sign the pledge (with waves of negative advertising), and they provide considerable support
to those who do.

The adherents of this philosophy (as financially and mathematically unsound as it obviously
is) are now well ensconced in the government. They are a major reason the wealthiest
nation in the world is the most in debt.

The moral preference of personal wealth over national wealth (infrastructure, educated
population, protected environment, etc.) reflects the Corporatist philosophy of "every person
for him or her self."

Republicans and Corporatists do not receive sufficient rebuke for their pretense of "fiscal
responsibility." The phrase is used simply as a rallying call for "no taxes." Bush II's deficits
began the year he entered office (2000). Republicans can't blame the Iraq war on the
subsequent deficit (which occurred immediately).

To create and leave a debt of this magnitude for the next generation is to betray
that generation. To do so in a time of cheap energy is unnecessary and immoral.

Making matters worse, the dollar is now weak and continues to fall, so this is a bad time to be
purposely running huge deficits as a philosophical adjunct to an already stressed monetary
policy.

Because more of our debt is held abroad, the dangers of deficits are increased. The weak
dollar makes American debt less acceptable to other nations, who may stop accepting them.
Since the dollar has fallen more than 50% in the last two years against the euro, it is less
than a risk-free investment.

The Reagan deficits, in addition to being one-half the size of Bush’s deficits, were employed
when we had three helpful conditions that don't currently apply: a huge demographic bulge
(people entering the work force and paying commensurately more taxes), an extremely
strong dollar (so that holding American dollars was a sound investment for creditors), and a
sudden peace dividend (allowing expenditures on defense to be reduced considerably).

As a nation, we have increased the size of our public debt 45% in five years, from just over
$5 trillion to $7.9 trillion (as of August 2005). [see Treasury, Bureau of Public Debt figures,
here).]

Perhaps ironically, Republican Corporatists who aggressively endorse no taxes increasingly
dominate the states that are net drains on Federal taxes—the Southern and Great Plains
states—while fading in the coastal states that produce a disproportionate share of federal
revenue. Those most in need of government assistance are the same voices that are
pressing hardest to bankrupt the government.

This is a serious political challenge for the Democratic states that is exacerbated by
demographic realities.

Because the red states are sparsely populated but have two Senators each, 16% of
the U.S. population selects 50% of the Senate (see cartogram here).

The red states must be engaged in a clear, open dialogue on what is happening to the
nation. Concentrating personal wealth in the hands of a few (see here) is not equivalent to
increasing national wealth that supports the national interest.

ehj2