Comparing the Cost of Iraq to the Cost of Vietnam – Why Does the Wall Street Journal Lie to Its Readers?
Deborah Soloman writing in the Wall Street Journal probably should receive from Karl Rove a big check for her latest (my thanks to Mark Thoma for putting up with the fact that I could access this WSJ piece but he could):
The Issue: President Bush has managed to wage a war, cut taxes and boost other spending without triggering Vietnam-era inflation.
The Background: The spending spree has been aided by foreign borrowing and a strong economy.
What’s Next: While economically painless so far, war and military spending will soon collide with looming entitlement obligations.
Lord – her article starts off as one of those stupid memos from the attorney types who I have to work with. But the comparison is obvious from the start. LBJ’s triple-whammy of tax cuts with more defense spending and more entitlements was bad, bad while Bush43’s version of the same fiscal irresponsibility was good, good. Solomon does not bother to inform the readers of the Wall Street Journal of two important facts: (1) the economy in 1966 was at full employment while the economy in 2003 was not; and (2) the FED increased interest rates in reaction of Bush’s fiscal irresponsibility. But the rest of this reads like Karl Rove wrote it himself:
What’s Mr. Bush’s secret? Ingredient one: strong revenue growth driven by an economy distinguished by surging profits and rising incomes at the top, which are taxed more heavily than incomes at the bottom. Ingredient two: tax cuts and spending increases, which arrived when the U.S. economy needed a boost. Ingredient three, and perhaps the most significant: the willingness of foreigners to lend to the U.S., which finances the budget deficit without pushing up interest rates at a time when Americans don’t save very much.
She continues by talking about Bush’s latest budget with a graph that was alerted to us by a comment under a post by Kevin Drum. Kevin and this Angrybear noted that defense spending currently is near 5% of GDP. But that’s not what the graph provided by Ms. Soloman displays. So let’s ask her and the Wall Street Journal provided them with this factually inaccurate diagram? And why did they publish such an incredibly flawed article?