GOP’s outcry over deficits disingenuous

Republicans in Congress and on the TV and radio talk shows claim to oppose the economic stimulus out of concern about the national debt and a moral conviction that we should not saddle future generations of Americans with such a burden.

But who do they think they’re fooling? Apparently they believe the world began anew at noon on Jan. 20, and that everything that occurred prior to that date had somehow been wiped clean from the national memory banks.

JAY BOOKMAN
MY OPINION

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Well, it hasn’t.

We do face a long-term problem. Our gross federal debt is at $10.6 trillion, with a good portion owed to lenders in China, Japan and the Middle East. But how did that number get so huge?

Well, of that $10.6 trillion debt — a figure that accumulated over more than 225 years — a shocking $8.35 trillion was racked up during the presidencies of Ronald Reagan, George Bush and George W. Bush. And much as their apologists pretend otherwise, those numbers can’t be blamed mostly on Congress. During the Reagan era, for example, final budgets approved year after year totaled almost exactly what Reagan had requested.

Now, raw numbers can admittedly be misleading. A more accurate way to gauge how much a president has contributed to the problem is to measure debt against the size of the national economy. If the economy grew a lot, debt could grow as well without creating a problem.

Under Jimmy Carter, debt declined as a percentage of gross domestic product, falling to 32.6 percent, its lowest in 50 years. Then came Reagan. By the time “the Gipper” left office, the debt had almost tripled in raw numbers; as a percentage of GDP, it soared to 53.1 percent, and it rose still further, to 66.2 percent, under the first President Bush.

Under Bill Clinton, it fell again, to 57.4 percent, but that reprieve would prove to be temporary. The second President Bush started two expensive wars, one a necessity and one a war of choice. He also became the only president in history to cut taxes in time of war, rejecting the quaint notion that a nation at war ought to sacrifice a bit to pay for it. Bush also created an expensive new entitlement program, the Medicare prescription drug benefit for seniors.

The result? The debt almost doubled under Bush, from $5.7 trillion to $10.6 trillion. As a percentage of GDP, it grew from 57.4 percent to 68 percent, the highest since the aftermath of World War II.

And of course, the same congressional Republicans now preaching the dangers of deficit spending were right at Bush’s side, writing and passing the budgets that drove us deeply into the red.

Now, past profligacy is not a good excuse for future profligacy. But most Americans would agree that these are not normal times. Economic activity has come to a halt, with very dangerous signs ahead. President Barack Obama believes — and most mainstream economists agree — that only a big burst of government spending can bring us out of this spiral.

To understand why, imagine that a good chunk of change just landed in your lap. Say you hit the lottery for $5,000 or an uncle remembered you in his will. What would you do with your windfall? Call a travel agent and book a vacation to Hawaii? Put a down payment on a hot new sports car?

A year ago, maybe. Today, most people would pay off bills or sock it away in the bank. In fact, that’s what the banks themselves are doing with their TARP billions. They’re sitting on the cash as a cushion against bad times. Nobody wants to spend.

That’s why tax cuts are not the solution. In this economy, tax refunds would be treated in the same manner as a lottery win or small inheritance; most people wouldn’t spend it, they’d use it to bolster their financial defenses. And that’s as true for businesses as for individuals. Most companies wouldn’t use new cash to invest in a factory or hire workers; they’d sit on it.

When consumers won’t consume and investors won’t invest, only government can step in to buy trucks and military equipment, and build roads and transit, and by doing so create demand for labor and material. That’s just a hard economic reality.

Here’s another one: For most of the past 30 years, huge deficits were not a necessity, yet under GOP leadership we incurred them anyway. With deficits now a necessary evil, this is not the time for them to try to reclaim their inner cheapskate.