Whither the Budget Deficit

Up, folks, always up.

Those who know me as a moderate (which I prefer) or as a liberal (which I am often called) may be surprised to know that I started my political activism by working in the campaign of Ronald Reagan in 1976 when he ran against Gerald Ford. It was the first presidential election in which I would vote, and I registered as Republican. I worked as a precinct worker, which is to say mostly that I stood at the polling place on election day and tried to get people to change their vote to Reagan. It was Maryland, and I found it an uphill battle.

The key thing that attracted me to Reagan was his $90 billion plan to balance the budget, as I remember it. I get a bit nostalgic when I think of those days, when only a $90 billion shift would have balanced the budget. It was a pretty controversial idea. Reagan lost, of course, though he did very well considering he was running against an incumbent president.

By 1980 Reagan was running again and he had discovered supply side economics. No longer was the plan so much to balance the budget by carefully planning your taxation and spending. Now we were going to solve all our problems by reducing taxes and watching the revenue grow as the economy expanded.

I don’t think supply side is totally without merit–quite. In general a less taxed economy is going to collect capital faster and grow faster. But it wasn’t the easy solution many thought it would be. It became the Republican excuse to spend without paying for it, and the deficit grew, and grew.

I’ve heard a good deal of talk about redistribution in this campaign, and the truth is that no matter which slate of candidates we elect, we’re going to be redistributing income. It’s worked all through the system. I find it pretty disingenuous to argue that one should vote for a particular candidate because the other favors redistribution. It’s really a question of whose money gets redistributed and who benefits (if anyone) from it.

In the case of deficit spending we’re doing some redistribution in a sense. We’re redistributing our problems into the future, and we’re doing so quite rapidly. The problem is that nobody wants to buckle down and actually pay the costs for the programs that they advocate, Democrat or Republican. Either telling people they can’t have certain things because there is no money, or telling them they’ll have to pay more taxes is generally a losing strategy in an election. At best, you can get by with what Barack Obama is doing by telling only a minority that they will pay higher taxes.

There’s an interesting analysis of the tax proposals from the Tax Policy Center, and the results don’t look all that good.

I don’t blame the current economic problems directly on deficit spending. Rather, I would suggest that we will face much worse problems in the future unless we start to be in a fiscally responsible manner. The proposals we have from the major candidates are not responsible, in my opinion.

Crossposted to RedBlueChristian.com.