Monday, January 17, 2005


Good News The SAEN Won't Print

This installment of Good News the SAEN Won't Print is called "Economics for Dummies (Liberals)." The SAEN has been using the deficit number to hammer the President on a regular basis, and rightly so, but now that we have good news as it relates to the budget deficit the SAEN is strangely silent. If you are in a hurry let me sum it up for you: Lower Taxes = Increased Revenue = Lower Deficits. Simple right...let's call it supply side economics just for fun! As of December 2004 the year-to-date FY 2005 budget deficit is $11 billion less than last year's and revenue is up more than 10 percent. Surely this will lead to a call by liberals to cut taxes so they can have more of our money to spend, right? Don't hold your breath. We can't even get our local "newspaper" to be unbiased long enough to report it.
Wow. There is so much wrong with this post, I’m not sure where to start.

I assume the figures you mention are from the Congressional Budget Office.
The reason this is not positive news is because of the minor detail you left out - that the budget deficit for that period was $114 billion. That is another $114 billion piled onto our record national debt. The fact that there was slightly less debt dumped on us than at this same time last year is hardly worth celebrating. If Bush were actually to start paying down the debt - as Clinton had done - that would be good news. But the reason he does not is because his economic policy is based on the false dichotomy that you describe as:

Lower Taxes = Increased Revenue = Lower Deficits.

If that were really true we would actually see lower deficits over time. But as this chart illustrates we have seen exploding deficits under Reagan and the Bushes all thanks to what Bush Sr. once aptly described as Voodoo Economics.

The real formula that has been borne out time and time again by the undeniable facts and figures available to everyone is this:

Lower Taxes = Lower Revenues = Increased Deficits

There are times when lowering taxes is necessary and useful. But in the middle of a war when we are already faced with massive deficits is not one of them.
Wow, there is so much wrong with that chart I don't know where to begin! First, you need to show who controlled Congress, not just who was President. BUT, the biggest problem with that chart is that it does not show revenues. I said revenues increased when taxes were cut, and they always do. The fact that deficits increase just means that expenditures increased at a rate faster than revenues. The solution: cut taxes and spend less!
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