Posted by
Andrews on Tuesday, February 17, 2009 5:25:38 PM
Back when they were the party out of power during the Bush years, the Democrats used to be quite critical of the deficits run on his watch. Similarly, before they decided it was politically expedient to stop criticizing Reagan, they used to go on and on about Reagan's deficits as well. And when the inflationary exuberance and the Contract with America combined to give Clinton a surplus, the Democrats jumped on that for years afterward, using it to argue that Democrats were truly the responsible party.
So, why are they now content to let Obam promise an unprecedented trillion dollar plus deficit not just for one year, but for at least two, perhaps more? And let us make no mistake here, as Obama's supposed stimulus represents mostly either increased funding for existing projects or the creation of new projects, that $850 billion will likely need to be renewed year after year to maintain spending levels and keep those new programs alive. In other words, in addition to any new "stimulus" bills, we need to add on a new $800 billion in spending every year. Which means likely our debt will be not even $1 trillion, but double that. And as the financing comes due (even the Fed does collect on the bonds bought in open market operations), the numbers will balloon even more.
Considering that in his worst year Bush ran a deficit of $455 billion, and Reagan $221 billion, why is no one on the left raising questions about the negative effects of running a deficit in the trillions of dollars per year?
Then again, as such huge spending will doubtless require recourse to the printing press, launching an inflation which may even put Carter's to shame, perhaps Obama is counting on a trillion dollars at the end of his reign being worth what a billion was at the start. And won't that do wonders for all our savings and investments?
POSTSCRIPT
For those who think a "little inflation" is harmless, check out the spread between the Reagan and Bush deficits. Admittedly that last Bush deficit is abnormally high, but the average Bush deficit runs about 1.5 times Reagan's deficit. Some is explained by increased spending, but there were serious reforms during the early Contract With America as well.
In fact,
the CPI (not entirely accurate, but a good estimate), shows that between Aug 1, 1983 and Dec 1, 2008 prices more than doubled. That is the outcome of "slow" inflation. Just imagine what we have in store once the printing presses really start rolling.
Or maybe you don't have to. 1983 was after the recovery began from the Nixon-Carter inflation. We need only look at the prices in 1970, before the gold window shut, to see what rampant inflation can do. And we can see from the numbers that in those 13 years prices almost tripled.
And that was less dramatic an inflation than is likely when Obama adds 7% or more to the money supply every year.