Here’s an interesting analysis from an article "Talk about cash money, money" on a Washington Times article discussing the deficit. Courtesy of Mark Thoma, Economist’s View.
The Spending Spree Myth
I stopped reading the Washington Times for the most part (why doesn’t it come under more scrutiny for the things it publishes?), so I haven’t read this article. Fortunately I don’t have to:
Talk about cash money, money, Sadly No!: The Washington Times … shows it’s the go-to place for fine analysis of all budget and deficit-related matters. Especially when William F. Shughart II, the F.A.P. Barnard Distinguished Professor of Economics … is writing.
In February, the $175.6 billion deficit was a single-month record, 46 percent higher than the previous single month high (in February 2007), and nearly $14 billion more than the deficit for all of fiscal 2007, which ended last Sept. 30.
We’ve seen a lot of nonsense written about the deficit, but this is the first time we remember someone going on about the monthly deficit. Because once you start doing that, hilarity ensues. Such as us commenting that the government’s finances are in great shape because it ran a surplus of $159 billion in April. Why — that pretty much cancels out February’s deficit! Hooray!
the total deficit for fiscal 2008 (ending this Sept. 30) is expected to top $410 billion – with another $407 billion in red ink forecast for fiscal 2009, both within striking distance of 2004’s record annual deficit of $412.7 billion.
What is the world coming to when even economics professors fail to adjust for inflation or the size of the economy? $410 billion is a lot of money, but at 2.9% of GDP it’s pretty good compared to what St. Reagan managed (6% in 1983). Indeed, 2.9% would have been awesome compared to the typical Reagan year. Adjusted for inflation, 1983’s $207 billion deficit and 1992’s $290 billion deficit trump all others with 2008 dollars value of $454 billion and $452 billion, respectively. (Inflation figures here.)
Such irresponsibility is a relatively recent phenomenon. Total federal debt in 1940 – that is, all the government’s accumulated deficits from the time of the Founding until just before World War II – was just $50.7 billion.
Yes, those were the days: when federal debt amounted to 110.3 percent of GDP. Today’s 65.5 percent is, in comparison, not bad at all. Shughart does get bonus points for creativity:
For the last five years, Congress and the White House have been on a spending binge that would embarrass a sailor on shore leave.
Oh, that’s good.
It is a tired old line, but it’s still somewhat creative in that it’s not true, especially if you throw out increased spending on the war and security:
Some may think the President’s recent attempts to squeeze domestic appropriations are being made in response to an explosion of domestic discretionary funding during his Administration’s first six years. But this is not correct: there has been no such funding explosion for domestic discretionary programs. Between fiscal year 2001 (the last year for which appropriations levels were set under President Clinton) and fiscal year 2008, funding for domestic discretionary programs has been more constrained than any other area of the budget and has shrunk both as a share of the budget and as a share of the economy. In contrast, appropriations for defense and other security-related programs have increased more rapidly than any other area of the budget — even more rapidly than the costs of the “big three” entitlement programs: Social Security, Medicare, and Medicaid. (End of quote from Talk about cash money, money)
It’s in Republican’s interest to make the argument that Bush, with the help of congress, went on a spending spree – and hence abandoned true conservatism. That way they can portray McCain as a return to the true conservative path. But do you really think McCain will cut defense spending and security? And we’ve seen his budget. Even the Washington Post couldn’t swallow it, and they seem to be able to stomach quite a bit.
You’ll hear the spending spree myth again and again, both as a way to falsely paint Democrats as big spenders (it’s also used as an attack on social programs), and to try to separate Bush, et. al., from McCain. But there’s little difference between the two. When McCain or Republicans talk about the out of control spending under Bush, ask them if they mean we should cut back on defense and security, and see what they say. And when they answer, remember that spending on "domestic discretionary programs has been more constrained than any other area of the budget and has shrunk both as a share of the budget and as a share of the economy."
