The Democrats have a problem. They will do anything to avoid cutting spending, since the ability to tax and spend in massive amounts is where their political power comes from. But when you’re spending 25 percent of GDP, and running annual deficits of $1 trillion or more, it becomes increasingly difficult to keep making the absurd argument that federal spending is not out of control.
But they must make that argument! It is central to their being. They have to find a way to make the case that spending around $3.6 trillion a year while our debt soars to $16 trillion and beyond does not constitute a spending problem. How will they do that?
Democrats are clever, and determined. They think they’ve found a way.
The latest Democrat argument, as expressed last week by Congressman Steny Hoyer of Maryland, is that we don’t have a spending problem, we have a “paying for” problem.
What?
I know, but try to follow the “logic” with me.
According to the Democrats, federal spending of $3.6 trillion a year is not a problem because we are a very rich country, and we can afford it. The problem, they say, is that we’re letting too much money sit in the private sector (or as they would say, in the hands of “millionaires and billionaires”), when the government could and should be confiscating that money to pay for all of its spending.
And who is responsible for this problem? Of course you guessed it! The person who is responsible for every problem that has ever beset the world. George W. Bush.
Congressman Hoyer explained during an interview on CNBC Squawk Box:
“We haven't paid for what we bought, we haven't paid for our tax cuts, we haven't paid for war . . . Well, we spent a lot of money when George Bush was president of the United States in the House and Senate were controlled by Republicans. We spent a lot of money.”
So you see, Bush cut taxes and “started two wars without paying for them” as Democrats like to say, and this is why it’s not a problem that we’re spending so much. It’s only a problem that we’re leaving so much money in the hands of the rich people who could be forking it over to pay for all this.
Got that? Well. I hate to knock over the Democrats’ rhetorical house of cards, but there are a few things that need to be pointed out.
First, after Bush cut tax rates and undertook those wars, the deficit under him and the Republican Congress went into a precipitous decline. It was only $192 billion in 2007, which was the last year of budgeting under a Republican president and an all-Republican Congress. The Bush tax cuts helped to spur economic growth that had federal revenues on the rise. We were doing quite well with the whole “paying for” thing. But in 2007, Democrats took control of Congress.
Second, two factors drove annual deficits above $1 trillion, and they were not the wars (one of which is over and the other of which is almost over) or the Bush tax cuts (which Obama has now extended twice, by the way). The first was the Troubled Asset Relief Program (TARP), brought on by the 2008 mortgage market meltdown and put forward as a one-time measure, which it was. The second was Obama’s $862 billion stimulus plan in 2009, which was sold as a one-time measure but was quietly added to the budget baseline and maintained in the continuing resolutions that have substituted for actual federal budgets ever since.
So Hoyer’s facts are simply wrong. But his philosophical argument is wrong too. Even if it’s true that there is plenty of capital in the private sector that could be taxed and used to pay for all this spending, that doesn’t mean this is the best thing to do with that capital. Politicians tend to think there is nothing that will benefit the country more than whatever they would like to do with money, if only they had enough of it.
That is the conceit of politicians. The truth is that capital in the hands of private sector job creators generates far more wealth, spurs far more productivity and results in far more employment opportunities than anything the federal government would like to do if it got its hands on the money.
Sure, there is wealth in the country that the federal government hasn’t confiscated yet. But that doesn’t mean it should. The people earning that money do far more good with it – not only for themselves but for everyone else seeking prosperity – than Steny Hoyer would.
We have a spending problem, Democrats! Not only do you spend too much, and borrow too much, but you are spending it in ways that are far less beneficial than what would happen if you just left it in the hands of the people who produced and earned it in the first place. And stop trying to blame George W. Bush, whose wars are essentially over and whose tax cuts you extended. You guys have been in charge for quite a while now, and whatever we’re spending, it’s because you decided to spend it.
And we’re all paying the price.
