You know, Paul, Reagan proved deficits don't matter

[Xipe Totec]

Former Treasury Secretary Paul O'Neill was told "deficits don't matter" when he warned of a looming fiscal crisis.

O'Neill, fired in a shakeup of Bush's economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from "the corporate crowd," a key constituency.

O'Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. "You know, Paul, Reagan proved deficits don't matter," he said, according to excerpts. Cheney continued: "We won the midterms (congressional elections). This is our due." A month later, Cheney told the Treasury secretary he was fired.

The vice president's office had no immediate comment, but John Snow, who replaced O'Neill, insisted that deficits "do matter" to the administration.

Source: Reuters, on AOL News Jan 11, 2004

http://www.ontheissues.org/2004/Dick_Cheney_Budget_+_Economy.htm

[midnight]

1. I'm not an economist, and so can't understand how Reagan

proved deficts don't matter. But I do remember Regan destroying the economy with trickle down nonsense.

[n2doc]

2. In the political sense, he did

Reagan ran on the usual platform of "fiscal responsibility". After he proved that a republican could get away with total fiscal insanity and still be hailed as a "fiscal conservative", there was no more need to be tentative about looting the country. Bush II just took this to its logical conclusion.

Ahh.. the power of propaganda! People STILL think Repubs are the party of "fiscal restraint"!!!!

[mikekohr]

3. CREDIT CARD REPUBLICANISM

Bush’s economic policy is the single largest cause of the exploding national deficit. Federal domestic discretionary spending has exploded under Bush and his budget will add $1.3 trillion to the National Debt over the next decade. “The Saint Petersburg Times,” calls Bush’s debt reduction plan “Deficit Deceit,” noting that Bush’s proposed privatization of Social Security alone, would add an additional $2 trillion to the national debt over 20 years.

Bush’s economic policy, in his first year turned the greatest surplus in history to the greatest deficit in history, a swing of over $500 billion in a single year. Secretary of the Treasury, Paul O’Neil raised alarm but was dismissed by Dick Cheney who said, “Reagan proved that deficits don’t matter.”

Deficits do matter and have real consequences. Economic historian, J. Bradford DeLong of the University of California, wrote “Reagan’s economic policy was a disaster … and the deficits slowed economic growth in the 1980's significantly.” Reagan’s own member of the Council of Economic Advisors, William A. Niskanen, notes that deficits make us, “….terribly dependant and terribly vulnerable.”

Author Michael Kinsley writes, since 1960, Republican administrations have increased Federal spending by $60 billion a year, nearly double that of Democrats. National debt has increased by $200 billion per year under Republicans, twice the increase of Democrats. The results are predictable. GDP (adjusted for inflation) averages $212 billion for Democrats only $165 billion for Republicans. Democratic economic policy increases real per capita income for individuals at a rate 30% better than Republicans. Democrats outperform Republicans on inflation 3.13% to 3.89%. Republican policies result in increases in unemployment at an average of 6.38% as opposed to falling unemployment when Democrats take office, achieving an average of 5.33%.

Kinsley wrote, ”The party with the best record of serving Republican economic values are the Democrats. And it isn’t even close.”
Fiscal responsibility has its rewards beyond the numbers noted above. CNN reported that the Clinton administration balanced the budget, and paid off $355 billion of the National Debt. The interest saved on paying down this debt added 54 years to the fiscal solvency of Social Security. When Bush tells us he wants to save Social Security he is telling us in effect, he wants to save it from himself, hoping to be the hero of his own self-inflicted disaster.

The National Debt is over $7,762,096,350,500.00, growing by over $1.68 billion per day, a birth tax of $26,213.97 for every man, woman and child in the country. By 2030, Social Security, Medicare and Medicaid will grow to the size of today’s ENTIRE Federal budget. That light at the end of the tunnel is not day-light, it’s the headlight of a freight train named Credit Card Republicanism, coming to crush our children and grandchildren, to whom we are handing this crippling debt. Shame on us.

mike kohr
written 3/2004/ -It's gotten worse since-