The Budget/Bust Cycle

A shout out to   for getting the story right.

Is it any coincidence that deficits repeatedly get created under Republican administrations and cut under Democratic ones? Or is the pattern indicative of a deeper strategy?

The general effect of this pattern is that the Democratic Party ends up catering to the Republican proclivity to spend, spend, spend on corporate socialism, and the Democrats then get held accountable for those Republican excesses and then frantically work to implement the Republican agenda of making the most vulnerable Americans pay for the excesses of the wealthy Republican donors.

This pattern emerged even before the Reagan presidency, although it became pretty clear during his administration as President Reagan created the first structural deficits to funnel money, often illegally, into military boondoggles that made the fortunes of companies in the defense and related industries, as well as numerous others. The strategy of not paying for things is a Republican one, and the can is then kicked down the road until a Democrat is elected and has to take it out of the hides of the middle class and poor.

tax breaks

Dave Johnson points out that the equation is quite simple – as well as verifiable:

  • Low taxes on the rich = less money to use to do things that benefit We, the People.
  • Higher military budget = less money to use to do things that benefit We, the People.

He documents that, as we went from a large surplus under President Clinton to huge deficits under President George W. Bush, this was

 characterized by Bush himself as “incredibly positive news” because, he said, it continued the plan to use debt to force the government to cut back. He also documents that this was the plan

under Reagan as well, back when he called it Reagan called it “strategic deficits”:

The Reagan people said it too, back when they started the massive deficit spending.  It was the plan: force the country into massive debt, “starve the beast,” and use that to force the government out of business, or at least to be “small enough to drown in a bathtub.” They forced the tax cuts and Reagan said this was “cutting the government’s allowance.” The point was to use revenue cutbacks to force government to shrink, to get out of the way of the 1%.

Now that government is very much out of the way of the 1% we are seeing how things work out when the 1% dominate everything.

Be Wary of the Many Faces of the Beast

The beast has many faces: Blue Dog Democrats, New Democrats, Obama-esque compromise, today’s mainstream Republicans, the Religious Right, “Fiscal Conservatives,” the “Fix the Debt coalition,” and Libertarians (see the graphic below). It all adds up to one thing: poor economics – literally. It is the economics that creates wealth and income disparity, shrinks the middle class, and adds to poverty and social destabilization. It’s the economics that turns the United States into a warring nation, stirring up terror around the globe and creating an unsafe environment at home as weapons of mass destruction are sold freely without as much regulation as hairnets.

Ron Paul

The Solution

So why call attention to the problem? Because there are concrete, even obvious solutions. Dave put it quite pithily: stop repeating the cycle that creates these economic problems:

If you are so bothered by the deficits, then fix the things that caused the deficits. And then we can get back to the business of democracy: We, the People doing things for the benefit of We, the People.