As Democrats so often like to remind Republicans, the election 0f 2012 is over and, basically, they won. In actuality, it was not the Republicans who lost, it was the Democrats who managed not to lose. At the same time, for the past four years, the American people have been losing under Democratic policies. What happens in the next four years will be largely decided in the next six months. Of most concern to us, as it should be to every American, is the vast “fiscal gap” which opened up in 2009 and remains today, virtually undiminished. It is that gap which could potentially swallow the entire country. It is that gap which makes the coming “Fiscal Cliff” look like a minor bump in the road.
The fact is, If current trends continue, Americans will lose even bigger in the next four years. Not only are Democratic leaders determined to end Bush-era tax rates, they want more useless stimulus spending and yet another increase in the spending cap. Spending goes into infinity while the public sector drops into the abyss. Republicans in the House are dong what they can to address entitlement reform and to bring spending back down to Bush-era levels, but they face an uphill battle (no pun intended).
Preceding the Democratic takeover of the House and Senate in 2007, Nancy Pelosi and Harry Reid constantly talked of “failed Bush policies.” And Pelosi, Reid, and now Obama continue to repeat the same mantra. But, without talking about whose policies are better or worse, perhaps it’s better to look at the bare facts of federal tax receipts and federal outlays (spending). What do those two trends tell us of Bush-era policies vs. Obama-era policies? Chart 1 and Graph 1 below illustrate these trends.
As one can see, with all eight years of the Bush presidency marked as well as the first four of the Obama presidency the Bush presidency was largely one of solid growth in federal revenues accompanied by smaller but steady growth in outlays. Democratic leaders note, rightfully so, that the beginning of the Bush Presidency saw tax cuts and the end to Clinton-era surpluses. At the same time, an economic downturn at the very end of Clinton’s second term, coupled with the 9/11 attacks, were largely responsible for that change.
The downturn in revenues ended in 2003 when a second round of tax cuts boosted the economy and, thus, growth in federal revenues. Those cuts led to five solid years of federal revenue increases, while, as shown below, budget deficits shrank to just $160.7 billion in 2007, the first year of Democratic control of the House and Senate. Why can’t Democrats take credit for this? Because, of course, the budget for 2007 was set by the Republican Congress and President Bush in 2006.
The year 2008 saw the first year of Democratic fiscal control. It also saw the economic collapse which came towards the end of that year, which prompted President Bush and the Democratically controlled Congress to initiate the TARP program. TARP was a loan program which had allocated $475 billion for banks and financial institutions on the verge of collapse. TARP spent about $417, most of which has been returned with interest by the financial institutions who received the loans. TARP has been noted by many as one of the most successful economic recovery efforts ever undertaken by government.
The irony is, while then-Senator Obama supported TARP and voted for it, he had nothing to do with its creation. At the same time, as president he has taken credit for the program. The payback on those loans was recorded as federal income as they were repaid, which also benefited President Obama. The US in general and the federal government specifically are a net winner with TARP, yet President Obama never gives credit where it is due. But I digress.
In 2009 and beyond, we are looking at the real impact of vastly increased spending on the part of Democrats. Somewhere in the neighborhood of $800 billion to $1 trillion in new spending while Washington was under the complete control of Democrats. The gradual fiscal discipline Republicans were attempting to bring to Washington by lowering increases in federal spending and promoting long-term economic growth were erased in full, both by the economic collapse and by the nearly simultaneous surge in federal spending.
But while the economy has recovered, albeit at a slower rate than any other recession in American history, Democrats have not allowed a reduction in spending and instead have acted as if every dollar of spending were necessary. The question is, what value have we seen for that $800 billion? Ultimately, the so-called stimulus program stimulated very little in the way of economic recovery.
Did the economy come roaring back under an expanded federal government? No. Just the opposite. The economy limped back in 2010, with growth in GDP then slowing in both 2011 and 2012, indicating a possible return to recession.
Did we see vast improvements in the nation’s infrastructure? Look at what happened to NY and NJ recently when struck by Hurricane Sandy and the answer is a clear “NO”! Even President Obama has admitted that those “shovel-ready” programs were not so shovel ready.
What we have seen with the Democratic spending binge is increase in both state and federal spending for the benefit of… Well, mostly, state and federal employees.
Government has expanded at the expense of the private sector, and yet Democrats not only refuse to acknowledge this, they refuse to curb this addiction. Instead they expect those of us in the private sector to pay more.
It reminds me of a story told by Peter Hitchens (brother of Christopher Hitchens) in his excellent book, Rage Against God. Talking about the terrible privations visited upon those living under the corrupt Soviet government, he tells the following story:
A popular and bitter jest told the story of a conversation in a drinker’s home after the state announced a rise in the price of vodka. ‘Daddy,’ asks the child with hope in its heart, ‘will this mean you will drink less?’ ‘No,’ replies the head of the household, ‘It means that you will eat less.’”
This is a relevant description of the way President Obama has managed federal spending.