A Case for Democratic Budget Balancing

In my lifetime, (I am approximately middle aged), there has been one President who balanced the budget, Bill Clinton; there have been two Presidents who entered into war, both Bushes; there was one President who spent enormous amounts on defense without a war, Reagan; and there was one President who was just nice, Carter. I don't remember LBJ or Nixon, except as History Channel specials. This is a highly subjective over-simplification but it's where my memory starts.

I have always thought that Democrats seemed better at balancing the budget than Republicans.

I decided to put this idea to the test tonight. I decided to look for the facts (that's what this blog is about). Below is a link to the document I would have written had someone else not already done it. This article was written by Dr. Stephen Bloch of Adelphi University.

For those of you who can't bear to slog through a scholarly article, although easy to read and well written, let me summarize:

First, the information is derived from the Department of the Treasury. Dr. Bloch explains everything he did and why.

The last Democrat to show a budget deficit was LBJ. The last Republican was George W. Bush.

The largest deficits in history are all under Republicans, that includes FDR during World War II and the Great Depression.

Personal observations: Democratic economic principles allow the "little guy" to get off the ground. Witness the stellar economy under Clinton. The dot-com economy was bound to collapse under its own weight, but the Clinton administration policies made it possible for business people who are not established to get a start. It helps that Al Gore invented the Internet! :)

Republican/Conservative principles do exactly what the name says: they conserve the status quo. This means that those who are already successful will continue to be successful, but those who are trying to get a foothold will have a harder time.

One example is the idea that under Democrats, the Federal Government will provide more small business grants than under a Republican administration. This helps start-ups to get off the ground.

The "tax and spend" concept might make good bumper stickers or talk radio, but if you tax and spend on the right things, the economy gets better. The rest is simple: More people making more money pay more taxes therefore less deficit.

What does all of this mean for today... As the economy improves, the tax rolls will expand. Leaving taxation levels alone will go most of the way to solving the country's debt problems. Then we need to plug the heinous gaps in our spending, foremost of which is the wars that we are cleaning up, which at one point cost the US taxpayer $1 billion per week each!

Click here to read Dr. Bloch's article: U.S. Federal Deficits and Presidents Stephen Bloch.

Dr. Bloch's personal page at Adelphi University is here.

I would like to thank Dr. Bloch for his hard work and for showing all of his sources and methodology. 

Getting Back to Work

I was reading a blog posting by David Leonhardt about putting people back to work.

He made the point that the government is not really trying... I agree. I also think that placing some controls on the economic markets would be a great help.

There is a lot that the government, federal and state can do to help people get back to work. One of the major lessons of the post-World War II era was that education can give us a huge wave to ride. The GI Bill educated an entire generation. That generation, the so-called Greatest Generation, built the America of the 1950's and 60's. Education was the one of the largest contributors to the improvement of our economy.

There is no real effort to stop the Bank of England calls the "doom loop." Like a house that gets shaken by enough earthquakes, eventually it will fall and not get back up. What we need is some logical regulation of Wall Street. The Great Crash of 1929 was caused by Wall Street speculators and led to a real loss of wealth. The current rise in gas prices, that might cripple our recovery, is caused by speculators panicking. We need to stop the rampant speculation on necessities. Let Wall Street bet on Nascar or football. They need to stop betting on derivatives of  derivatives of imaginary markets.

Ayn Rand believed that free markets, truly free markets, would help make everyone richer. She didn't count on Bernie Madoff that same way the Bolsheviks didn't count on Stalin.

Our economy is on the upswing, things are getting better. Now is the time to stop the rabid gambling and thoughtless capitalism that got us into the situation that we are in now. A little logically placed controls run by someone other than the people who created these false markets might stop this destructive cycle.

Read more here: Economix

How Much of Our Fiscal Problems Will Be Solved By a Better Economy?

In this article by Simon Johnson, he talks about the real reasons for our current economic state and how we can get out of it.

The truth is:

• The deficit was not caused primarily by the stimulus, but by significantly decreased tax revenues.
• The Obama administration is continuing the time honored standard of pandering to the banking industry (and most other industries for that matter).
• Only bipartisan cooperation and vision can help us get out of this.

Check this article out.

I think you'll find it interesting.

Also, look on the lower right hand corner at the economic indicators. Things are looking up in almost all sectors, except new homes.