Wednesday, November 17, 2010

Tales from the Decider - Pt 2

This story just gets better and better with every detail that emerges. I am talking about the fallacies of “Decision Points”. As I learn more, and read newspaper chippings, about this book which will rank among the greatest stories ever told; I can’t help but wonder if this veiled attempt to soften the affect his reign and its devastations will have on future thinking or at $35 dollars, just a way to get a little pocket change.

America was built on a strong economy that has made the United States the world's leading power going back to its beginning. This is like one of the founding principles of what the founding father had in mind when they took it and formed, what some call, the Hypocrisy of Democracy. The Decider, in the book, appears not to realize that he was responsible for the Federal debt that will soar in the coming years endangering the country’s prosperity and leadership.

The national debt will overtake the economy itself, increasing our dependence on China and other foreign lenders, draining our resources and reducing the living standards more than we see today. These risks are the result of the last eight years that threaten to turn America into not only a second rate power, but possibly a third world nation. African Americans have understood this as a result of being a nation of people living within a nation searching for a nationality. In short, “second class citizens”. What the Decider did was to impose this dubious distinction upon all Americans, but the rich.

Ok, I will digress.

I read an article today by Ruth Marcus called “Bush’s deficit spinning” in the Washington Post. I was so impressed with it that I want to share pieces of it in this “Thought Provoking Perspective”.

She starts with:

The imaginary but completely delusional: My inner Bush would not regret pushing for the tax cuts. But he would acknowledge - how hard could this be? … Alan Greenspan was right when he suggested a trigger mechanism to cancel the cuts if the promised surplus failed to materialize. If only . . . Like the surplus, my quasi-apologetic chapter evaporated in the face of reality. I read "Decision Points," and it turns out that Bush is the Edith Piaf of fiscal policy: He regrets nothing.” But he writes, "I took my responsibility to be a good fiscal steward seriously."

How's that? Bush chose to go to war, but, unlike any other wartime president, opted to pay the cost entirely with borrowed funds while pressing for additional tax cuts. He laments that he left behind "a serious long-term fiscal problem" of runaway entitlement spending but blames resistance from both parties in Congress - without acknowledging that he added an expensive and unpaid-for new entitlement, the Medicare prescription drug plan.

And those tax cuts. "It was true that tax cuts increase the deficit in the short term," Bush acknowledges. "But I believed the tax cuts, especially those on capital gains and dividends would stimulate economic growth. The tax revenues from that growth, combined with spending restraint, would help lower the deficit."

This is cleverer than the usual supply-side formulation but still suffers from the tax-cuts-pay-for-themselves fallacy. Bush's own chief economic adviser, Gregory Mankiw, has estimated that over the long run, cuts on investment taxes generate enough economic growth to make up only half of lost revenue.

Except Bush's averages are misleading. For one thing, he cherry-picks his fiscal years. He gives himself credit for the 2001 surplus, 1.3 percent of gross domestic product, even though that course was largely set when he took office. At the other end, Bush takes no responsibility for his piece of the ghastly 2009 deficit, 9.9 percent. Subtracting bailouts and stimulus spending, on the theory that much of the former will be repaid and the latter happened on President Obama's watch, the 2009 deficit would have totaled 6.8 percent of GDP, the largest since World War II.

More important, the trajectory tells a story that is less kind to Bush. He took office after three years in which Clinton had overseen surpluses. After 2001, Bush presided over seven straight years of deficits.

In short, Bush inherited a budget in healthy shape. He left it in tatters. The faltering economy played a supporting role, but the chief factors were of Bush's making: his tax cuts, his wars, and his prescription drug bill. Without these, the country would have been running surpluses during his tenure.

I found this article to be filled with reality, thank you Ruth Marcus; I wanted to share this assessment of a reality that I know and understand to be true. This commentary is certainly worthy of my “Thought Provoking Perspective” and how refreshing to know that someone else share my views.

God Bless America…

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