Setting the Record Straight About Spending and the Deficit

Introduction by Mike Griffith, Staff Writer

You can’t fix a problem if you don’t know who and/or what is causing it.  Nor can you vote intelligently if you don’t know who in government is causing problems and who is making existing problems worse.

The article below sets the record straight about who "inherited" what, and who caused what, in relation to our current budget mess.  It also presents some sobering data on the challenges we face from excessive spending and debt.

Inheriting $4.8 Trillion Will Leave You Broke

By Kevin Hassett (Bloomberg.com and the American Enterprise Institute)

Democrats in Congress frequently blame their predecessors for runaway government spending. Yet when current spending projections are compared to the budget outlook from the year that Democrats took control of Congress, one can see the government plans to spend $5.6 trillion more between 2009-2018 than what was forecast in 2007.

Sometimes, a single word pops up so frequently in the mouths of politicians that you can be sure that it has been tested and retested with focus groups. When a word gets overused, it’s because political operatives have launched a blizzard of conference calls reminding everyone to recite the party line.

You can say one thing about House Speaker Nancy Pelosi and her party: They are disciplined. Their magic word is "inherited," and never before in the history of American politics has a word been so abused. The Democrats must have a kangaroo court somewhere that issues heavy fines to those who fail to use it when on television.

If you are a channel flipper, you might start on one channel where Pelosi is saying, "In 2007, the new Democratic Congress began to restore our nation’s fiscal health while inheriting a fiscal challenge of historic proportions." You might then flip and see Senate Majority Leader Harry Reid saying, "It’s going to take a lot of work to clean up the mess we inherited."

Turn to the next channel, and there’s White House budget director Peter Orszag saying, "We inherited these twin trillion-dollar deficits."

Here’s the problem. If something is the unvarnished truth, then party discipline is unnecessary. Every sensible analyst will state the key words over and over again anyway. It’s only when a party is on shaky ground that it relies on such transparent tactics.

So let’s explore that ground.

Democrats in 2007

The issue of inheritance is a bit muddy. President George W. Bush and the Republicans controlled all of the branches of government until the 2006 midterm elections. In 2007, the Democrats began their reign in both the House and the Senate. Policies adopted prior to 2007 could reasonably be dubbed an inheritance. Policies that changed thereafter could not.

There is an easy way, therefore, to establish how much of the current budget mess is accurately referred to as an inheritance. Just as Nancy Pelosi was taking over as House Speaker, the Congressional Budget Office made a long-run budget forecast. That forecast established the Democrats’ inheritance.

If we compare the current outlook to that one, then we can identify the impact of Democratic policies, and accurately assess the blame. While doing so, we need to remember that Bush shares in that blame, since he signed into law the bills passed by the Democratic Congress.

To be fair, it is important to note that a big part of the budget mess is attributable to a falloff in tax revenue that is largely the recession’s fault. To be conservative, let’s just look at what the Democrats have done to spending since they took power, and see what the current budget outlook would be if they had simply kept spending on the path that they "inherited."

Not Just Stimulus

Back in January 2007, the CBO thought that spending this year would be about $2.9 trillion. Instead, spending is now looking like it will be about $4 trillion. Sure, you might say, that’s the result of sensible Keynesian stimulus and the costs of the financial bailout. But what happens next is almost as striking.

In 2007, the CBO thought that spending would gradually increase from $2.7 trillion to about $4 trillion in 2017. According to President Barack Obama’s May budget numbers, we now expect to spend $4.7 trillion in 2017, about $800 billion more in that year alone.

Extrapolating out the 2007 CBO forecast, our government plans to spend about $5.6 trillion more between 2009 and 2018 than was projected to be spent when the Democrats took over control of Congress.

Trillions in Debt

To put that number in perspective, at the start of the 2007 budget year, Democrats inherited $4.8 trillion in outstanding government debt. That means that all of the deficits that have been run through all of history, funds that were used to finance the Vietnam War and the Iraq War and everything else in between, would be smaller than the spending increases of Democrats over the next 10 years if they are permitted to stay in power and keep up this pace.

Given how huge the Democratic spending binge has been, these numbers have an astonishing impact on the budget outlook. If the Democrats had simply kept spending on the same long-run course they inherited, the budget would show a surplus of $70 billion for 2019, assuming that revenue would be the same as currently forecast.

In Washington, it is unacceptable socially to assert that anyone is telling a lie–unless, of course, he is named Bush. So let’s say it is a pure, flat-out, bald-faced and shameless misstatement to claim that the budget outlook is an inherited problem. The mess is largely attributable to the Democrats’ own policies.

That’s why they keep saying "inherited" over and over.

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