Deficit delusions

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“I just can’t get my head around it.”

Dave was talking about the trillion dollar deficit.

He blames Obama.

Well, he wasn’t happy with Bush, either.

He was against invading Iraq.   Yes, he was even against invading Afghanistan, although – he grants – the Taliban had been harboring Islamic terrorists.   He knows that was all Bush’s doing.

For the moment, though, Dave is chiefly upset with Obama and all the money that’s been spent bailing out Wall Street and the auto industry.

In Dave’s defense, I should point out that he spent his career as a social worker.  He remains a great champion of kids and has no patience with those who want to take kids who commit crimes, lock ’em up and throw away the key.  He’s not indifferent to people who are suffering in this recession.

Besides, he’s an old friend from high school.  We share the same birthday.

But his anger over the deficit echoes the Tea Party movement.  I guess if there’s one issue that unites folk who identify with that group it’s the deficit spending.   To be sure, they don’t like the health care reform law, either.

I recall that for most of the years I wrote editorials for The Journal Gazette in Fort Wayne – nearly 30 – the federal government ran a deficit.   During the Johnson years, the deficit financed the Great Society programs and the Vietnam War.   Nixon ran up deficits.  So did Ford.  And Carter.  Yes, Reagan and Bush I.  It wasn’t until Clinton that the feds gave us a surplus. The second Bush quickly spent that, thanks in part to large tax cuts for higher income citizens.

Everybody hates deficit spending.

How often do you hear these days, “Why if I ran my household the way the president – you name him – runs the federal government, I’d be in the poorhouse”?

The truth is that most Americans, at one time or another, do run up deficits.  Granted, not on the scale of the federal government.   Car payments, credit card interest and mortgages – these aren’t tiddly-winks.  Those represent deficit spending.

We go into debt to buy what we think we need and, under the normal rules of the game, we can show our creditors that we’ll be able to pay off the debt.

In the deepest recession since the Great Depression, the government would be incredibly irresponsible not to run up the deficit.   Indeed, the huge amount of spending that Dave – and I suppose most of us – can’t get our heads around has helped prevent an even deeper recession.  In fact, we seem to be emerging from the economic crisis.  In some parts of the country, unemployment seems to be inching back down.   Other signs show improvement.

According to the Treasure Department, the deficit in June 2010 dropped  to $68.4 billion.  That’s down from $94.3 billion last June.

That’s impressive.  But it’s pretty simple math.

As more people go back to work, they start paying taxes again.  So the government collects more money and the deficit falls.   Obviously,  you want to see those big numbers whittled much further.  That’s the challenge once we’re really out of the recession.   For now, there’s plenty to debate about how federal dollars should be spent to prop up the economy.  But the reality is, deficit spending probably has been our country’s salvation.



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