National Debt

Crosswalk.com has an interesting post by Jerry Bowyer in its weblogs section today regarding our national debt.

Here it is:

Debt, Be Not Proud

Last week the congressional budget office announced their latest forecast for the deficit of this year. They said the deficit would be over $420 billion which is the largest in dollar-terms ever. That got a lot of play. What didn't get as much play was that it looks as though the deficit is going to be about 50 billion dollars less than the previous forecast made in May. Why is the deficit dropping? The CBO was very clear about this: The deficit is dropping because revenues are rising. By the way, almost no ink was given to the fact that their forecast showed falling deficits in seven of the next ten fiscal years.

That's last week's news. Here's this week's update: On Monday the federal government released the latest treasurer's report and it turns out at this point when we are just a few weeks away from the end of the fiscal year and there's practically no guess-work left to be done, revenues have risen even more dramatically than the CBO estimated. We're up over $80 billion this year.

There's a war aspect to this, too. It's clear that the "deficit growth is due to tax cuts" theory is blown away by the evidence. The deficit growth is due to spending increases, some of which is war-related. But so what? We've always borrowed money in times of war. In fact, the stock market was created in the modern world originally as a place to trade war bonds as Niall Ferguson demonstrated in his well-researched book, "The Cash Nexus." The founders did it,
and debated afterwards about whose debt it was. Lincoln did it, Wilson did it, FDR did it and so did Reagan. Critics who blast Bush for running deficits in time of war are holding him to a standard that they do not impose on presidents of the past. By the way, while we're on the subject, the oft-repeated Democratic talking point that we have never before cut taxes at the beginning of a war is simply false. FDR cut cap gains at the beginning of WWII (although he did raise marginal rates). Kennedy cut taxes at the beginning of Vietnam, and Reagan cut taxes at the beginning of the roll-back phase of the Cold War. On a smaller scale, even Clinton himself cut cap gains taxes at the beginning of the Yugoslavian conflict.

Sometimes I wonder where the mainstream media is more deficient: In their knowledge of economics or in their knowledge of history. I guess we'll call it a tie.

Provides lots of ideas for thought. What are yours?