Why We Have A Deficit

Deficit theater is coming to DC tomorrow, with a well-funded "fiscal summit." [1] The plot summary is that we have Deficit Trouble - Right Here In River City! [2] so to fix it we need to cut Social Security and Medicare and the things democracy does for We, the People -- while cutting taxes on the rich and their corporations to make us more "business-friendly [3]." (This musical is sometimes billed as "Simpson-Bowles" but it's the same old song.)

All of this deficit hysteria today - when just over ten years ago we had such a large budget surplus that we were projected to pay off our entire debt in ... ten years! That's right, Ten Years Ago We Were Paying Off The Nation's Debt. But Then We Elected Obama. [4],

Just ten years ago this country was running huge surpluses and paying off its debt. But then we elected Obama and all hell broke loose. Oh, wait... [5]

Between the time ten years ago when we had big surpluses and were paying off the debt and now when we are told the "Obama spending and deficit" mean we have to cut back on the things We, the People do for each other, something happened. Something changed. The things that happened, the things that changed, are being ignored in the current DC discussion about what we need to do to fix things.

Something happened. We had a surplus, and it was replaced by massive deficits. The last Bush budget year had a deficit of $1.4 trillion [6]!

Why We Have A Deficit

What happened under Bush? We cut taxes on the rich and doubled military spending. (And started wars.) And don't forget collapsing the economy, forcing people onto unemployment and food stamps. That is why we have a deficit. We have a deficit because of tax cuts for the rich, huge military budget increases and the consequences of deregulating corporations.

Here are some questions for [7] tomorrow's deficit theater:

• How large was the country’s yearly budget deficit and total debt in the “Eisenhower/Truman” decades when the top tax rate was 90%?
• Today we have an “infrastructure deficit” – the amount needed to repair our country’s roads, bridges, sewers, etc. – of somewhere upwards of $1.6 trillion. Was our infrastructure kept in good repair before the top tax rates were cut?
• Concentration of wealth is long recognized as a threat to democracy, and now we are seeing a low-wage, everything-to-the-top economy with the greatest ever concentration of wealth going to a few at the top. Was the problem of wealth concentration increasing or decreasing before the top tax rates were cut?
• When top rates were high people couldn’t take home vast fortunes in a single year. When it took several years to make a fortune did corporations depend on long-term or short-term thinking? Did the executives of corporations care if the infrastructure and communities their companies depended on were in good shape? Did large corporations fleece customers and exploit employees for quarterly returns as they do now?

How We Fix The Deficit

How do we fix this? Doesn't it make sense to look at what caused the deficits and fix that? There actually are budget plans that get rid of the deficit without cutting back on the things democracy does for We, the People. Here is a post about one of those budget plans: The People's Budget Balances The Budget -- Why Isn't It Part Of These "Deficit" Talks? [8] Here is a post about another budget plan that fixes the deficit without cutting the thing democracy does for us Every Progressive Should Know About The “Budget For All” [9]

So we know why we have a deficit, and we have realistic budget plans that undo the damage, maintain the things that democracy does for We, the People and invest in growing our economy. So why aren't these plans part of the big DC deficit discussion? Maybe progressive plans that cut the deficit are not part of the DC deficit discussion because cutting the deficit isn't really the point. This Deficit Story Can't Be Repeated Often Enough! [10],

So we went from big surplus to huge, huge deficits. Bush said it was "incredibly positive news [11]" when we went back into deficit spending. He said it was good news because it continued the plan to use debt to force the government to cut back. He said that [12]. It was the plan. (Don't take my word for it, click the links.)

The Reagan people said it too, back when they started the massive deficit spending. It was the plan [13]: force the country into massive debt, "starve the beast [14]," and use that to force the government out of business, or at least to be "small enough to drown in a bathtub." They forced the tax cuts and Reagan said this was "cutting the government's allowance." The point was to use revenue cutbacks to force government to shrink, to get out of the way of the 1%.

A Golden Oldie

From Dear Deficit Commission, It's Not Hard [15]: (Click through [15] to see bigger charts)

Dear Deficit Commission,

It's not hard to figure out why we have a huge deficit. It's so easy I don't have to use words. Here are some pictures:

Bill Clinton raised taxes on the rich. Bush cut them.

Now, about that huge national debt...

The second chart kind of explains itself. The third chart can help you find a place to get some money:

(Note: There is no more Soviet Union.)

In case that isn't clear enough, try this:

Let me know if you still have any questions.

We had a budget surplus. We were paying off the debt. Then something changed. If you want to fix the deficits, change it back.

Don't fall for it. Deficits were the plan. Run up the borrowing, then come back with a scare campaign that stampedes people into accepting cuts in the things democracy does for We, the People. It was the plan.

If You Happen To Be In DC Tomorrow: May 15: Stand Against Austerity [1]:

May 15, 2012 at 1 p.m. (Program starts 1:30 p.m.)
In Front Of the Peter G. Peterson Foundation Fiscal Summit
1301 Constitution Avenue NW, Washington, D.C.

Here's one of those charts again, larger:

[16] [17]