I love the guys who run realclearpolitics, but I have to disagree with John McIntyre's column yesterday that compares Bush's fiscal record with Reagan. Noting the considerable criticism directed at Bush for profligate spending, and his departure from traditional conservatism as practiced by Ronald Reagan, McIntyre believes that it is unfair/overstated:
Well, let’s take a look at the Reagan legacy on federal spending and deficits. In 1980, the last year of Jimmy Carter’s presidency, government outlays were running at 21.7% of GDP and the budget deficit was 2.7% of GDP. (The economy was also a basket case, which is when you would expect budget deficits to be at their worse.) In 1988, Reagan’s last year in office, outlays as a percent of GDP were running at 21.3% with a deficit of 3.1% of GDP. The budget deficit over Reagan’s eight years averaged 4.2% and ran as high as 6.0% in 1983.
Bush entered office with an economy that was booming: in 2000 government outlays ran at 18.4% of GDP with a budget surplus of 2.4%. But the stock market implosion, 9/11 and the war quickly changed the budget dynamics and the surplus switched to a deficit of 3.5% in 2003 and 3.6% in 2004. In 2005, the budget deficit came in at 2.6%, with government outlays running at 20.1% of GDP.
The point here is that there is lot of hyperventilating about the Bush administration’s spending and “out of control” deficits, much of it by folks who praise Reagan yet trash Bush. But the most recent “out of control” Bush deficit at 2.6% of GDP is far below the eight-year Reagan average of 4.2%.
This is not meant to disparage Reagan, only to provide perspective. When you look at the numbers on a proportional basis - which is the only way to honestly compare different eras - Bush’s federal spending is not “out of control,” at least in comparison to Ronald Reagan.
Now while that's all true, it misses the point. As wikipedia notes:
Now, while both the tax cuts and defense spending hikes had an enormous short-term cost they also proved beneficial in the long-run. Less than 9 years after Reagan took office the Cold War was over. Economic growth also took off, in large part due to the impact of the tax cuts (although, in fairness, deregulation that began under Carter also played a role).
The frustration with Bush isn't the deficits per se, but that they aren't being used to fund conservative principles. If the current deficit was purely a result of increased defense spending and Bush's tax cuts I don't think anyone would be complaining. The problem is that the deficit should be much lower than what it is, with spending on the Medicare drug benefit, agricultural subsidies, education, transportation and plain old pork helping to drive it to its current depths.
Further, such spending gives ammunition to Democrats who claim that the deficits are purely a result of Bush's tax cuts (I believe they are actually responsible for somewhere around 1/3 of the deficit -- if I had more time I would go hunt the info down) and undermine support for future such reductions.
Now, it's true that while the deficit is massive in nominal terms that it's unremarkable as a percentage of GDP -- the more appropriate measure. But that's hardly a reason to give Bush a free pass on the subject.
The 1981 tax cuts, the largest in U.S. history, also eroded the revenue base of the federal government in the short-term. The massive increase in military spending (about $1.6 trillion over five years) far exceeded cuts in social spending, despite wrenching impact of such cuts spending geared toward some of the poorest segments of society. Even so, by the end of 1985, funding for domestic programs had been cut nearly as far as Congress could tolerate.Indeed, as the excerpt points out, spending cuts were made in a number of non-defense areas. The combination of the tax cuts (rates dropped from 70% to 50% in the first term and eventually went down to 28% in the second) and spending hikes drove up the deficit. Matters also weren't helped when the Fed, attempting to rein in inflation, jacked up interest rates that prompted the 1982 recession -- further cutting federal tax revenue.
Now, while both the tax cuts and defense spending hikes had an enormous short-term cost they also proved beneficial in the long-run. Less than 9 years after Reagan took office the Cold War was over. Economic growth also took off, in large part due to the impact of the tax cuts (although, in fairness, deregulation that began under Carter also played a role).
The frustration with Bush isn't the deficits per se, but that they aren't being used to fund conservative principles. If the current deficit was purely a result of increased defense spending and Bush's tax cuts I don't think anyone would be complaining. The problem is that the deficit should be much lower than what it is, with spending on the Medicare drug benefit, agricultural subsidies, education, transportation and plain old pork helping to drive it to its current depths.
Further, such spending gives ammunition to Democrats who claim that the deficits are purely a result of Bush's tax cuts (I believe they are actually responsible for somewhere around 1/3 of the deficit -- if I had more time I would go hunt the info down) and undermine support for future such reductions.
Now, it's true that while the deficit is massive in nominal terms that it's unremarkable as a percentage of GDP -- the more appropriate measure. But that's hardly a reason to give Bush a free pass on the subject.
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