Monday, January 27, 2014

Republicans and deficits

I think it's worth reposting this essay from 2001.  Time to think seriously about budgets and deficits.  Highlighting not mine.

[ although the following article was originally titled "Bush's River Boat Gamble—And Why Republicans Love It", I've renamed it to give potential readers a better idea of what is being offered for their consideration. The author is no relation to Steve Forbes. He is a lecturer in history and associate director of the Gilder Lehrman Center for the Study of Slavery, Resistance, and Abolition at Yale University,", it might better be called

"Why Republicans want your Government to be Broke"

by Robert Forbes
(sometime in 2001)

        Now that President Bush's $1.35 trillion tax cut has been signed into law, the pundits and the experts have declared that the surplus is dead–and that that's a good thing.  Suddenly, politicians and economists who have for years stressed the urgency of fiscal discipline and the need to slash spending have found a new fondness for deficits.  It's a strange turnaround, to say the least.
        Why do President Bush and his allies want to knock the federal budget into the red?.  It's a familiar claim these days that Bush developed his $1.6 trillion tax cut plan to fend off a primary challenge from Steve Forbes, and continued to push it out of a stubborn consistency.  Others say that the slowdown in the economy makes a federal surplus dangerous and counterproductive.  Such views overlook the thirty-year commitment of conservative Republicans to preventing the accumulation of a budget surplus.  The reasons for this seemingly irrational policy are not hard to find if one looks to earlier American history.
        A federal surplus, as nineteenth-century slaveholders knew and feared, carries with it the potential for social transformation on a huge scale.  James Madison suggested that the government emancipate the slaves and relocate them to Africa.  The cost he projected as a staggering $600 million; but "happily," he wrote, the expense was not a problem because the nation's greatest resource, its public lands, were worth three times that amount.  Nine northern states called for just this policy in 1825.
        John Quincy Adams, the most strongly nationalist president between George Washington and Abraham Lincoln, urged that the United States apply the tremendous power it derived from its liberty to "ends of beneficence"–toward building the nation's infrastructure, chartering a national university, promoting scientific expeditions, and responsibly managing the country's natural resources.  For his proposal, Adams incurred the wrath of reactionary southerners and their Northern allies, who believed that national spending constituted a deadly threat to the slaveholding status quo.
        Adams was replaced by Andrew Jackson, a staunch friend of slavery.  But Jackson's policy of fiscal restraint, which first endeared him to slaveholders, later terrified them as the federal debt diminished.  An ally of South Carolina senator John C. Calhoun described the imminent extinction of the debt as "a crisis in the history of nations" that would shatter Jackson's Democratic Party, because a surplus would invite steps to end slavery.  Many anti-tariff South Carolina "nullifiers" explicitly declared that it was not federal power that they most feared, but the federal revenues that an increased tax on imports would generate and that would serve as a tempting catalyst to social change.  For this reason, most Southern leaders supported giving away the public lands to settlers at virtually no cost. ( for those unfamiliar with its precise meaning, "nullification"means "the action of a state impeding or attempting to prevent the operation and enforcement within its territory of a Federal law".)
        Quietly and without fanfare, the Clinton administration reversed thirty years of deficit spending and put the government in the black.  One would think that this would be the ideal time to resume John Quincy Adams's conversation about the proper means of applying American power toward "ends of beneficence."  Some commentators have begun this discussion, moving beyond the usual formulas of paying down the debt and shoring up Medicaid and Social Security.  Groups like the Center on Budget and Policy Priorities have promoted such uses as extending health coverage to the uninsured, reducing poverty, and investing in education, research, and the nation's infrastructure as appropriate ends for employing the surplus.
        These ideas are unlikely to receive a serious hearing, however.  Federal Reserve Board Chairman Alan Greenspan, long an opponent of large tax cuts, cast a pall over spending for the common good by arguing that large surpluses "distort the structure of private economic growth."  Spending is bad, he asserted, because it leads to deficits – a somewhat Orwellian formulation when offered in defense of tax cuts.  Yet Greenspan made no objection to a hundred billion-dollar missile defense system that seems to have no feasible mission other than shooting down the nation's growing budget surplus.  Missing entirely from Greenspan's speeches has been any discussion of identifying common national priorities or addressing national needs.  Today, as the New York Times reports, "deficits are respectable again." Increased federal spending, even on basic human needs, isn't.
        What would an America look like that had the fiscal means to provide such benefits as health care, decent housing, and a first-rate public education to all of its citizens?  For the first time in our nation's history, we are on the cusp of finding out.  But as ever in the past, powerful forces are fighting to ensure that scarcity prevails.