Democrats & Liberals Archives

The Gamble-and-Spend Conservative

I am a Tax-and-Spend Liberal. Proud of it. It’s my honest belief that it’s our duty to ourselves and others to pay a fair amount of taxes, if we’re going to ask the government for the help we do.

Now, I’m not so in love with the idea that 70% top tax rates make me feel warm and fuzzy all over. But I do believe that if we’re going to spend for it, we might as well pay for it, with cash, and not loans if we can. Running a deficit should be a rare thing, reserved for emergencies.

My childhood took place during the Reagan and Bush years, so I was once used to deficit spending. It seemed a fact of life. Clinton's nominal balancing of the budget changed that perception.

It was nice to be able to say that we were breaking even, even producing surpluses. Of course, my brother would tell me that there was a bit of sleight of hand to it, a use of the Social Security surplus (called off-budget revenues, I believe) to even things up. But really, I was glad that my government was finally seeming to pay for itself. And if what my brother was saying was true, I wanted them to go that one step further.

Then came the 2000 campaign, in all of it's glory. Bush promised tax cuts and privatized Social Security, while Gore promised targeted middle-class tax cuts and Social Security in a lockbox. We know who we got. We know what we got. I think the question is can we afford to keep it?

I don't think so, not with the way Bush spends money. Bush has shown a willingness, a liberality if you will, to stack up the debts. The 3.7 billion for faith-based initiatives, 1.5 Billion on a healthy marriage initiative, and 23 billion in pork he signed into law are but a few examples. This wouldn't be half so bad if it weren't for the fact that Bush is waging a war costing in the hundreds of billions. This combined with an economic downturn in tax revenues has plunged us into the worst budget deficit in our nation's history.

Undoubtedly, there are Republicans who will defend this in terms of the GDP or some measure like that. We should stop for a moment, though and consider that our nation has never taken on this much debt at once in its history. And the only time in which we took on this much debt relative to the GDP was in World War II, a finite war that had a defined enemy which we could (and did) defeat once and for all.

Here, Bush came right out and said it would take a long time, and it would be unclear at times if we were making progress. That does not sound like a recipe for restrained, targeted spending.

In the middle of this, one sore thumb sticks out: the tax cuts. They were sold during a time of surplus as a return of the people's money to them. Okay, that could be argued. Even then, though, the P.R. for this tax cut relied on optimistic appraisals of future growth, which we now know have not come true.

Now, the goalposts have been moved towards aiding the economy. This is not the first time, nor will it be the last I fear, that Bush has sold a plan under one set of circumstances and justifications, and defended the same policies in an entirely different context.

What was once a rebate on an overcharge has become a loan to help us through tough times. unfortunately, loans come with interest, which means we are ultimately paying more for our expenditures than we would otherwise.

This is the crucial distinction. The first tax cut is our money, pure profit. The other one, while giving us immediate funds is essentially a net loss.

If you could guarantee some some sort of growth, this would be an okay risk if the economy got going. Bush though, couldn't even guarantee growth before 9/11 because of the corporate malfeasance.

We could not have guaranteed growth even if 9/11 hadn't come down like a hammer-blow on our economy. The corporate debacles developed independent of the terrorist plots and their influence turned what could have been a short panic and turned into a long term bear market.

Since Bush is unwilling to place substantial preventative regulation on finance, accounting, and corporate governance there is no guarantee that future investment will not fall prey to speculative stock bubbles. Investors, especially in the middle class, will be rightfully wary of a stock market that plays so callously with their money. Future growth could still turn out to be a bubble, waiting to burst and take much of the false and collaterally damaged real wealth with it.

If all this is the case, then it should trouble the conservatives out there. Bush's first proposal was based on the idea that growth current to that time would persist over the next ten years. That already has proved false. Bush wants to wager that his tax cuts will pay for themselves in future growth, but is that his bet to make?

The last three presidents have lost that bet. Reagan raised taxes. Bush did. Clinton did. One can always argue we'd be more prosperous if they hadn't but then, those three presidents oversaw the longest Bull Market in American history. Clinton oversaw the largest expansion of the economy in decades. If they were doing something wrong in terms of their tax policy, I'd sure like to make those kinds of mistakes.

But Bush, like an addicted gambler, is convinced if he rolls the deficit dice one more time, the growth he believes it will create will appear, and it will be jackpot time in America once more. In the meantime he spends our tax dollars as if Lady Luck stands on his shoulder already.

With all that has happened in Bush's three years and recent history as well, I think four more years of Bush in office is poor bet to make.

Posted by Stephen Daugherty at January 16, 2004 4:01 PM