Some old swarthy & hairy German once wrote that history repeats itself,
"first time as a tragedy, second time as a farce." The first time, it was
Hoover & the Republicans, who stood by fiscal austerity in the face of
world-wide slump (though even the sainted FDR tried hard to reject budget
deficits until Dr. Win-the-War took over). Now it's the Democrats --
seemingly to keep its Wall Street & white-suburban supporters happy -- who
have become the Stingy Austerity Party (SAP). If the British Tory Party can
self-destruct, why not the SAPs?
September 2, 2001 / L.A. TIMES
DEMOCRATS: Clinton's Budget Legacy Lives On
By ROBERT L. BOROSAGE,
co-director of the Campaign for America's Future and editor of the Next Agenda
WASHINGTON -- "I hate to say I told you so, but we told you so," crowed
Senate Majority Leader Tom Daschle (D-S.D.) when it became clear that
President Bush will dip into the Social Security and Medicare surpluses to
pay for his programs. Democrats are indeed salivating. The budget surplus
is evaporating, a victim of the slowing economy and Bush's tax cut. The
administration is using budget tricks to avoid admitting that Bush broke
his pledge not to raid the Social Security surplus. "This could be junior's
'read-my-lips,"' predicts Democratic advisor Paul Begala.
Only two problems with this Democratic offensive: It's both bad policy and
bad politics. It dangerously distorts fiscal reality and slights the global
economic slowdown. It cedes Bush credit for the tax rebate, which was a
Democratic initiative. Instead of urging action to aid working families in
economic distress, Democrats are attacking Bush for not paying down the
national debt fast enough. With the economy in deepening trouble, they
sound like Calvin Coolidge, not Franklin D. Roosevelt. In exposing Bush's
bad judgments and fuzzy math, Democrats are suggesting that fiscal
austerity is a commandment of biblical import. They are insisting that the
surpluses in Medicare and Social Security be "walled off" for paying off
the national debt. Last week, House Democratic leader Richard A. Gephardt
(D-Mo.) called on Bush to present a new budget that won't touch those
surpluses--and pledged to help make the spending cuts necessary, even if it
required cutting investment in education or health care. That is simply goofy.
The global economy is tottering on the edge of recession. Japan is sinking.
Europe is slowing. The "Asian tigers" are already in decline. The U.S.
economy is stalled. Manufacturing has been in a depression for a year. The
stock market has tanked. U.S. companies are cutting jobs and investments.
State governments are slashing spending to keep budgets in balance. The
Federal Reserve has lowered interest rates repeatedly, but the slowdown
continues. Consumers, burdened with record debt and growing insecurity, are
starting to tighten their belts. The "bust," as Business Week calls it, is
serious.
It is precisely in these conditions that the federal government should act
to help generate demand--and run deficits, not surpluses. Yet, even the
revised figures project the federal government with a $150-billion surplus
next year, the second largest in history. Democrats should be flailing Bush
for enforcing austerity in the midst of the economic slowdown, for turning
his back to working families. They should be pushing for greater tax relief
for middle-and low-income earners, expanded unemployment benefits, wage
supports for older workers who are losing their jobs and special assistance
to families of poor mothers, who are the first to be laid off.
For the medium term, Democrats ought to be making the case for badly needed
public investments: affordable health care; a real prescription-drug
benefit; significant investment in schools, preschool and after-school
programs; mass transit; toxic-waste clean-up; and affordable housing. These
investments will put people to work, generate demand and help get the
economy going again.
Some Democrats understand this. The tax rebates that taxpayers now enjoy
weren't part of the Bush tax plan. Democrats argued, correctly, for
front-loading a rebate to help kick-start the economy. Keynesian
economists, admittedly an endangered species, are suggesting that
significant deficit spending might be necessary to get us out of this
downturn. At the very least, government shouldn't be running a surplus in
the midst of a global downturn.
Sure, what is left of the surplus comes from Social Security and Medicare
payroll taxes, but so what? Spending the surplus doesn't "raid" Social
Security and Medicare. The trust funds are credited with government bonds
for every dollar of surplus, no matter what is done with the money. Both
parties "raided" the trust-fund surpluses for years without anyone saying a
word.
The Democrats' conversion to austerity is a perverse legacy of former
President Bill Clinton. <snip>
for the rest, see
http://www.latimes.com/news/opinion/commentary/la-000071027sep02.story
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
