Friday, April 17, 2015
The 1990s Prosperity and Balanced Budgets
Continuing my contemplations of the U.S. economy and my mistrust of the Republicans’ tax-cuts-only, shrink-the-government fiscal policies:
I recently stumbled across this article from the Washington Post, written back in 2011: “Barbra Boxer’s Blatant Rewriting of History.” The article arose because Democrats and Republicans were arguing over the bragging rights for the 1990s prosperity: Dems attributing it solely to President Bill Clinton’s 1993 budget (including its tax hikes on the wealthy), while the GOP ascribes it to their focus on balancing the budget once they gained control of Congress in 1994. According to the Post article, the prosperity was a mix of both these efforts, plus the economic upswing brought about by the technology boom. The article is very helpful by explaining in detail — using language comprehensible to the average reader — why the ’90s economy was so good.
My biggest takeaway from the Post article is how the congressional GOP insisted on a balanced budget under Clinton the Democrat, but they then gave away the resulting budget surplus (through tax cuts and greater government spending) once Republican George W. Bush was in the Oval Office. This, of course, unbalanced the budget again, undoing so much of the Republicans’ purported monetary goal. While Republicans said that the 2001 and 2003 tax cuts would shift the American financial system into warp speed, Bush presided over what the Washington Post calls “the weakest eight-year span for the U.S. economy in decades.” Economist Paul Krugman believes that the GOP amassed deficits again as a means to shrink the government. According to Krugman, the Republicans didn’t want a government the size that it was under Clinton to be able to pay for itself. By running up budget deficits again and then calling for a return to a balanced ledger — primarily via tax cuts — Republicans hope, says Krugman, that the government will be forced to jettison its agencies and activities (such as the Environmental Protection Agency) that the GOP doesn’t like. This is why Republicans today insist on balancing the budget — exclusively through cutting taxes, with absolutely no increase in revenues — after they had eradicated the budget surplus that marked the end of the Clinton presidency.
However, when Republicans talk about the need to balance the budget, they seldom acknowledge the budget surplus of the 1990s. Instead, they say (or at least imply) that the budget has always been unbalanced. They insist that the only way to stop “kicking the can down the road” is to shrink the government and slash taxes — as Republican House Speaker John Boehner of Ohio does in the above video clip — obfuscating the fact that the 1990s balanced budget was achieved, in part, by raising taxes on the wealthy .
I believe that this country’s economic experience over the last 25 years proves that Democrats are better custodians of the American economy than Republicans are. Most conservatives will disagree with me about that. But what this country’s monetary experience during the presidencies of Clinton and Bush does indeed prove is that at the very, very least, Democratic economic policies are not the fiscal kiss of death that Republicans say they are, and Republican economic policies aren’t the panacea that the GOP claims them to be.
In this video from his YouTube page, Republican Speaker Boehner says, “For 53 of the last 60 years, the federal government has spent more than it has taken in,” and that, to him, is a bad thing. What he doesn’t say is that the seven years that the federal budget was in balance were due primarily to Democratic fiscal policies, and that balanced budget was undone primarily by Republican fiscal policies. This raises the question: Why not return to those Democratic economic policies, particularly raising taxes on the wealthiest 2% of Americans? But the Republican Party’s refusal to consider any new tax increases precludes this possibility. (And don’t get me started on all of the obstinate Republican conspiracy theories about Benghazi.)