“The deep dark secret is Republicans like to spend money just as much as Democrats,” said Representative Jim Costa, Democrat of California and a co-chairman of the centrist Blue Dog Coalition. “They just want to spend it on something different.”
So true. But it really isn't a secret.
The only time our national debt gets any attention is when Congress needs to increase the debt limit. Then suddenly the opposing party (Republicans if a Democrat is President or Democrats if a Republican is President) seems to make a big deal threatening government shutdown.
Obama was absolutely correct when he said the debt limit bill was the wrong time for that debate. The money had already been spent. Or rather, the government had already gotten the goods and services and what remained was paying the overdue bills. The time for debating spending is during the authorization and appropriation bills. But Congress hasn't manage to pass any of those in a decade instead they just pass continuing resolutions.
Our national debt cannot be controlled without first controlling the annual deficit. I was a deficit hawk when I supported Ronald Reagan in 1980. Democrats like to run down Reagan for increasing the national debt. Yes, he did. He had other problems. He was fighting a national economic condition called "stagflation." A stagnant economy with double digit inflation. Imagine a car loan with a 20% interest rate. It took a recession to cure that.
He also had to fix the "hollow forces" of our military. The Soviet Union was still a power in Europe. The Iran hostages were held for 444 days. Our rescue mission had failed in route for lack of a helicopter. And, we had squadrons of brand new F-15s sitting on the flight line with no engines. The recession and increased military spending increased the deficit and the debt. But he also set the conditions that later lead to prosperity under the Clinton administration. He cut taxes to jump start the economy.
I was a deficit hawk when I supported Ross Perot in 1992. I couldn't tell the difference between a tax-and-spend Democrat or a borrow-and-spend Republican. I was absolutely disgusted with the entire mess.
I was a deficit hawk when I supported Newt Gingrich's Contract with America in 1994. After winning the House, Republicans later claimed to balance the budget. They came close but had to use accounting tricks to get it done. One of the things they did was to move federal paychecks one day from the last day of the month to the first day of the next month. That moved one month's entire payroll into the next fiscal year.
It took a while but I realized that the country would never (not ever) get a real balanced budget. I'm still a deficit hawk but I no longer chase the impossible goal of a balanced budget.
Economic theory suggests that our economy can prosper under constant annual deficits (and an ever increasing national debt) if economic growth is large enough to sustain it. The goal is to keep national debt a manageable percentage of Gross Domestic Product. I have come to believe that is the best we can hope for.
But It is impossible to support increasing debt with economic growth at 2% which is what economists were predicting. Many were saying that economic growth would never again be more than 2 to 2 1/2 percent. With those dire predictions it is just a matter of time before the United States becomes Greece where investors not only demand extraordinarily high interest rates because of the risk of default but also demand austerity measures that would cripple our military and all social programs.
So what do we do? We can't continue current spending on government programs with only 2% economic growth and there is no will in Congress to cut spending. Spending is votes. So the only alternative is to grow GDP. We can't get necessary economic growth if we are a service and consumer economy. Its not going to happen. The United States needs capital investment and good paying manufacturing jobs.
Economists say that GDP growth of 3 1/2% will support our increasing debt. Optimism alone drove GDP growth that high in 2017. The Republican tax plan should keep it going.
I'm still a deficit hawk. But I'm an older, wiser deficit hawk. Reality has tempered my goals. A balance budget is out of the question. Our only hope to avoid financial collapse is to grow the economy. I am hoping that the new tax plan will provide the economic stimulus necessary so that our next president can claim credit for a booming economy.
I find it very interesting that with Trump's election Democrats have suddenly become believers in states rights and fiscal responsibility. I wonder how long it will last.