by One Salient Oversight
If John McCain wins the November election and becomes president of the
United States, it is likely that he will continue to support Supply side
policies that have placed the government so precariously in debt. With
debt levels already too high, the effects of the Fannie and Freddie
bailout, along with declining tax revenue due to a recession, any
incumbent president must make difficult choices in 2009.
The only way to return the US government to a fiscally sound position is
to either increase taxes or cut spending or have some combination of the
two. Because of the sheer size of the possible 2009 deficit, cutting
military spending seems to be the only real solution.
If McCain and Palin win the White House in 2009, it is unlikely that
they would support either a rise in taxes or a cut in military spending.
Any other form of spending cuts are unlikely to reduce the deficit,
which means that a McCain presidency is more likely to exacerbate the
fiscal situation than solve it.
In 1984 Walter Mondale lost the election because he promised to increase
taxes to pay back Reagan’s deficits. Now his promise is coming back to
haunt the Republican party and the memory of Reagan.
The problem is that, for the last 25 years, the Republican Party has
been dominated more or less by Supply-side economics, a form of “voodoo
economics” which believes that tax cuts fund themselves by stimulating
economic growth and generating more tax revenue. While there is some
truth to be found in the more intellectual corners of this economic
system, it has resulted in a simplistic and effective myth – that the
government should just keep cutting taxes.
After 25 or more years, popular supply-side economics has resulted in
nothing but large federal government deficits. Ronald Reagan’s big tax
cuts in the 1980s were followed by increased tax revenue but also a
corresponding increase in public debt. It was not until George H.W. Bush
raised taxes after his “read my lips” promise that Supply side economics
began to lose its influence. But by that stage, the damage had been done
and the US government was deeply in debt.
So, fiscal irresponsibility + Fannie and Freddie Bailout + recession
equals a federal government with a massive debt burden that will most
likely exceed any comparative level of net debt in peacetime US history.
Of course, for regular readers, this warning of mine is nothing new. So
why am I repeating the fiscal alarm all over again? It is because I
believe that a McCain/Palin administration will continue the fiscal
irresponsibility started under Bush. Moreover, the inaction of the
Democratic-party dominated congress (elected in 2006) has allowed the
situation to deteriorate. If the White House continues to be Republican,
there is little chance that a Democratic Congress will have the
testicular fortitude to stand up to him and pass economically sensible
The only real chance for fiscal responsibility to return to Washington
is for a Democratically controlled Congress and White House. Republicans
have proven themselves too attached to Supply side economics for the
past 25 years (with the notable exception of the Gingrich years) while
the Democrats have not.
Which brings to mind the prophetic words of 1984 Democratic presidential
candidate Walter Mondale. When discussing the Reagan tax cuts and the
deficits that had resulted from them, Mondale said these fateful words:
“By the end of my first term, I will reduce the Reagan budget deficit by
two-thirds. Let’s tell the truth. It must be done, it must be done. Mr.
Reagan will raise taxes, and so will I. He won’t tell you. I just did.”
It was over ten years ago that The Simpsons episode “Trash of the
Titans” was aired. In that episode, Homer becomes Springfield’s
sanitation commissioner, defeating the incumbent Ray Patterson (voiced
by Steve Martin), and promises a lot of crazy things for the people of
Springfield. Homer’s policies soon end up bankrupting his department and
completely ruining the city. When Ray Patterson is unanimously voted
back in as sanitation commissioner, he gives this wonderfully short speech:
“Oh gosh. You know, I’m not much on speeches, but, it’s so gratifying to
leave you wallowing in the mess you’ve made. You’re screwed, thank you,
I can’t help but think of comparing Walter Mondale to Ray Patterson
here. Twenty-four years after his abysmal failure in the 1984
presidential election, Mondale could probably be justified in repeating
Ray Patterson’s short speech.
by One Salient Oversight