The New York Times, for some inexplicable reason, thought that John Kasich, former Congressmember and current managing director of Lehman Brothers Investment Banking Group, had something intelligent to say about Bush’s bloated budget. Thus, it engaged him to write a February 1st opinion piece awkwardly titled, Deficits, Fruit Flies and the Beltway. He writes a bunch of self-serving pablum reminding us that he and his Repubican chums in Congress were responsible for the last balanced U.S. budget (I guess he forgot the ‘minor’ part that Bill Clinton and Bob Rubin played). But the real howler is this tidy aphorism about deficits, taxes and spending: “To my Democratic friends: deficits are not caused by taxes being too low, but by spending being too high.” This phrase ranks right up there with Archimedes’ “Eureka!” as a signal of an earth-shattering scientific relevation. While it’s certainly self-evident that deficits aren’t caused by taxes being too low, once you have a deficit raising taxes is a valid and legitimate (though politically unpopular) means of addressing the fiscal imbalance.
Another piece of news I have for Mr. Kasich: the spending that’s breaking the back of Bush’s budget is not ethanol subsidies, foreign aid, fruit fly studies, the highway or farm programs (as he contends). The reason for the shortfall is Bush’s monumental tax cutting folly AND the dramatic increase in Pentagon spending included in this budget. Committing these two heinous economic policy mistakes brings you to the humongous deficits we now face.
If Kasich had acknowledged either of these issues I could respect his viewpoint. But as it is he remains the Republican hack that he was and apparently still is.
Oh, and I wonder how much he really knows about investment banking? I wouldn’t trust him with my money, that’s for sure.
Mathew Pruitt says
If what you say is true then how come we where running surpluses in 199, the same year that Bill Clinton proposed in the State of the Union and then signed into law a $124 Billion increase in defense spending, which I believe is about 30-40% higher than Bush’s proposal last year (I don’t know what his proposal is this year).
The fact is that the balanced budgets did have very little to do with Clinton and Rubin and more to do with the health of the economy. When the government takes in more revenue deficits shrink, when the economy goes south the deficits re-appear with the exception of the 1980s’ when the administration dramatically increased defense funding in order to keep the deficits around as a way to control congressional spending on social programs.
I am not defending Bush’s spending habits, I think they are terrible, and Republicans that defend them are hypocrites. I just don’t see the dramatic differences in how the two parties manage the economy. In bad economic times government spends, the Republicans by cutting taxes and the Democrats by increasing the size of social programs, this is mostly succesful because both methods improve the health of the enonomy.
The trouble is ,that in good economic times the politicians get greedy and continue to over spend, as opposed to preparing for a rainy day. Deficits are caused by bad planning in good economic times, not over spending in bad economic times.