Let's Review Federal Deficits Briefly

It is common to hold the President accountable for everything the federal government does. He plays a role, but Congress holds the greater power in setting policy, making laws, spending money, and laying taxes. Let us consider the size of the deficit over the last 21 years and who held control of the presidency and of each house of Congress.

From 1989 through 1992 the deficit was increasing. During these years of President George Herbert Walker Bush, the Democrats controlled both houses of Congress. From 1993 through 1997, the deficit was decreasing, with Clinton president and the Democrats controlling both houses in 1993 and 1994, but the Republicans controlling both houses in 1995 through 2000. From 1998 through 2001, the government ran a rare surplus and actually was paying down the debt. In 2001 and 2oo2, the Democrats had control of the Senate, having achieved that in late May 2001 and George W. Bush was president. From 2002 through 2004, the deficit increased, when the Republicans held both houses and the presidency, except in the first year when the Democrats still held the Senate. In 2006 through 2007, the deficit decreased, with the Republicans fully responsible, except in 2007 when the Democrats controlled both houses of Congress. In 2008, the deficit soared with the Democrats still in control of both houses and Bush still president. In 2009, the deficit grew all the way down to China under Obama and with the Democrats in complete control of both houses of Congress.

Of the 21 years, there were 12 years in which the deficit was either decreasing or there was a surplus. In two of those years, 1993 and 1994, the Democrats can claim all the credit. In another set of two years (2005 and 2006), the Republicans can claim all of the credit. In 6 of the years (1995 - 2000) there was a Democrat President and a Republican Congress. In two of the years (2001, 2007) there was a Republican President and the Democrats held one or two houses of Congress. The most effective combination seems to be to have a Democrat President and a Republican Congress when it comes to minimizing deficit spending.

Why is this? It is because spending is more likely to be controlled when power is split between the parties and each has some ability to stop the other from spending. It is also because the Republicans are a bit less inclined to spend money than are the Democrats, so it is best to put them in control of the spending authorizations, which are done in Congress. It is also best if when power is split between the Congress and the President, that the Senate not have as many as 58 Senators from one party. That way, the majority party, even with a couple of defectors from the minority party, cannot prevent filabusters. It is also good if no party has as many as two-thirds of the seats in the House of Representatives, so they cannot override vetoes.

Balance of power is a very good thing. We do not have that now and we are paying the price with a trillion dollar plus deficit.

Ethanol From Corn Government Mandates

The Federal Government wants to use hundreds of billions of dollars in so-called stimulus spending to counteract the housing and financial problems caused by governments and to bolster many weak companies, some over-paid union workers and their over-paid union bosses, and those state governments which were most irresponsible in their spending. Do you suppose that there will be an ounce of wisdom in how the tax money of the responsible and competent will be used? Or, will the decisions be made simply to support the political careers of our elected politicians?

The answer is clear and can be observed from many past experiences and the direction many politicians have already signaled that they are taking. Among the signs, we should note that it was just a short while ago when the politicians were convinced, or tried to convince us, that ethanol refined from corn was the answer to energy independence and to air pollution. Science has clearly since, and had already in part at the time, shown this claim to be false. All the ethanol mandates and subsidies have achieved is to increase our gasoline costs, increase our food bills, increase the tax bill and the deficit, cause farmland prices to go up, made bundles of money for ADM and some farmers, hurt ranchers and other meat producers, and left many poor people in the world more hungry. This being the clear case, should we not expect our politicians to en masse rush to pass new legislation to remove the gasoline mandates and to remove the offending subsidies, both of which are clearly contrary to the general welfare?

Of course, we should expect this, if we believed that the politicians actually cared for the general welfare, which they cite as the reason for almost every piece of legislation. We understand that the welfare of each and every one of us individuals is not high on their list of values, however. So it is no surprise that the absurd ethanol mandates and subsidies are still on the books and are still hurting all of us who are not corn farmers, owners of ADM, or politicians. Knowing this, why on earth do we stand by and not only not squawk about this ethanol scam, but we are allowing the Federal Government to create many new massive frauds in the name of a recession stimulus package.

The Federal Government under both Hoover and FDR provided many stimulus packages, which did not only not prevent the Great Depression, but actually greatly prolonged it. They created massive uncertainty for investors by trying to pick the winners and the losers with constantly changing rules, just as Bush and Obama have done or are about to do. Hoover and FDR spent massive amounts of tax money and gave it to the unproductive, the incompetent, and the lazy, while taking it from the productive, the competent, and the hard-working. This is a sure way to destroy an economy and market system which a recession has momentarily staggered. Bush and Obama wish to do the same thing Hoover and FDR did. This is a repeat of history, in which a pragmatic Republican starts a mess and a socialist Democrat comes to the "rescue", only to make the mess much worse, because socialism is a massive loser to capitalism, even when it is crippled by unprincipaled pragmatism.

Obama on Taxes

Barack Obama warns that McCain's tax policy, spending plans, and energy plans will continue the economic slowdown he likes to pretend is a recession. However, his higher taxes on oil companies and wealthy individuals, even though accompanied by a $1000 tax break for most working families, will do much less than McCain's plans to straighten out the economy. The plans of either to institute carbon taxes are likely to send the economy into recession, if implemented, especially as some sort of additional tax.

Not happy to only make the economically absurd claims above, Obama claims that President Bush sacrificed investments in health care, education, and energy and infrastructure on "the altar of tax breaks for big corporations and wealthy CEOs." The truth is that the Bush tax cuts enabled the economy to grow so fast and steadily that much more money rushed into the government coffers and both Republicans and Democrats in Congress gleefully spent every last additional penny and then spent some a second time. Chris Edwards, The Cato Institute director of tax policy notes that the Department of Health and Human Services increased spending by 67% in 7 years under Bush, while the Dept. of Education increased spending 92%, the Dept. of Energy spending was up 42%, and federal capital investment outlays were up 35% for non-defense investments and 131% for defense investments. The big tax breaks for corporations resulted in an increase of 128% in federal corporate tax revenues. I suppose Obama's claim that they got those big tax breaks means that he thinks their taxes should have gone up much more than 128%! Hey, Obama, way to ship hordes of jobs to China and India!

The fact of the matter is that the Democrat goal of hugely expanded government expenditures was much better realized by President Bush with his tax cuts than it ever will be by Democrats with their punitive tax schemes on the higher income earners and windfall profit taxes on whichever industries earn the disfavor of the Democrats. Why do the Democrats never talk about windfall taxes on the movie industry? Is it because so many movie stars and producers are giving them a lot of campaign money? Just wondering.

Barack Obama has genius in fooling many of the people most of the time. Other than that, he does not know at all what he is doing.