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Monday, June 19, 2006
 
On Deficits

The National review has a good editorial on the deficit. In a nutshell, strong economic growth is shrinking the deficit even faster than the President promised.

Through the first eight months of this budget year, the deficit is $227 billion—16.7 percent lower than this time last year. That’s largely because government revenues in these eight months have reached $1.545 trillion, up 12.9 percent from last year:

This huge revenue boost means that the deficit is going down even as an out-of-control Congress continues its spending profligacy. Federal spending has already swelled by $130 billion so far this fiscal year—a 7.9 percent increase compared with the same period last year. Such increases can’t be blamed entirely on the demands of the War on Terror, either, as Defense and Homeland Security together account for only 30 percent of Congress’s total spending increases since 2001.

Despite the strong updraft of federal spending, the deficit is on track in the next few years to continue falling until it approaches 2 percent of GDP. This is below the 2.5 percent that has been the national average since 1970, demonstrating that the president’s critics were simply wrong when they claimed that the Bush tax cuts would lead the country into economic ruin.

This doesn't mean I'm happy about spending, but it is a good thing. In regards to spending, I had a conversation recently with mmark (linked below in the discussion on our new headline image) in which I explained why Kasich is included among the six conservative guys on the top of the site.

My answer is that Kasich -- not Gingrich -- was the biggest loss of the last decade for GOP. His retirement hurt us terribly because nobody stepped up to replace his leadership on the issue of controlling spending. In fairness, nobody really stepped in to replace Gingrich either, but that's partly because that type of leadership is now coming from the executive branch (when it comes at all).

Economic growth is the solution to solving the deficit problem long term -- as Kemp argued. But without spending restraint (particularly in the area of entitlements), we aren't really slaying the deficit beast for good but merely delaying his return for a little while. Let's hope Congress figures this out and someone steps up to demand fiscal restraint. The porkbuster's project is getting some attention from the blogosphere, and I think the criticism is going to force lots of Republicans to start walking the walk. The recent shot at newly elected GOP Rep. Brian Bilbray (CA-50) bow from the club for growth (read about it here) is a good example of how the internet can be used to hold public officials accountable and that's obviously a good thing.

On an unrelated note: If anyone knows how to change the settings so that we get a unique address for each individual post (it is called a permalink in some programs, I guess), let me know. For some reason, ours just keeps defaulting to the main site name.


Comments:
I read the National Review article, and am glad the deficit is headed South. However, the amount of spending coming from Congress and the White House has been appalling.

Yes, grow the economy...but any leftover tax $$ should be returned to the taxpayers (the State of Colorado had something like this).
 
Spending like this gives me a very uncomfortable feeling. Like that night in Vegas back in 1998...reckless...fun...but reckless!
 
I'm incredibly concerned about the spending. I think that the current tax structure (thanks Mr. Bush) well positions the federal gov't to handle future ebbs and flows of the economy - but its all for naught if Congress doesn't get spending under control. I also fear that the morons will overreact at the slightest hint of a downturn, especially because of what it could do to their fat budgets, and increase taxes (deja vu 1990 - 1991). I'm also concerned about the lack of attention to the Soc. Sec. problem while the economy is good and worry about what Congress could do in a few years when more boomers are retired or retiring and when we are in a downward cycle.
 
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