The Difference Between Deficits, Debt and How Scott Garrett’s Fiscal Philosophy Dooms Us All
Scott Garrett wants his constituents to believe his brand of fiscal conservatism is a solution to the economic woes of the Federal government. After all, the United States has run an annual budget deficit of over $1 Trillion every year Barack Obama has been in office. WOW! That sounds really bad, and it is. But let’s stop for a few minutes to understand how we got in this position; what we’re doing about it; and the history of budget deficits over the last 30 years (after all, you can’t be expected to know where you’re headed if you don’t know where you’ve been).
Deficits are different from debt. Debt is the running total of all the deficits we’ve accumulated over time. Annual deficits are just that; annual. As an example, if I earn $300 dollars a year, but spend $400 a year, I’m running an annual deficit of $100. I need to borrow that $100 difference and let’s say further that you were kind enough to make me a loan. I continue my spending patterns for 5 years, and as a result I’ve had to borrow $100 from you every year and haven’t paid you back. So after 5 years I owe you $500 (to keep things simple I’m excluding interest owed on the borrowed money).
In year 6, I am still only earning $300 a year, but I was able to cut back on expenditures and only spent $375. Again, I have an annual shortfall, and you agree to loan me the $75 I need to pay off my obligations. My debt to you is now $575, but my annual deficit has actually decreased by $25. I’m still spending more than I’m taking in, but the difference between what I’m taking in and what I’m spending is getting smaller ($100 to $75).
There’s been a lot of talk about the budget surplus created during the Clinton years. By the end of Bill Clinton’s presidency, our government was taking in more money than it was spending. That said, we still had trillions in debt we had accumulated from previous years. By the way, our government didn’t just run a surplus in the last year of the Clinton presidency, we actually ran a surplus over the final three years of the Clinton presidency. So when George W. Bush was sworn into office, he enjoyed a fiscal solvency not experienced by any President since before the Civil War.
Instead of using that annual surplus to pay down the long-term debt, President Bush decided he was going to refund the money back to the American public via two tax cuts; one in 2001 and a second in 2003. Going back to my example for a moment, let’s say that in year 7 of my scenario I took in $500 (a $200 improvement) and only spent $350. I still owe you $575 from previous loans but now I am running a $150 surplus on the year. Instead paying back some of the money I owe you I go on vacation and not only spend the entire $150, but make some bad decisions which turned my good financial fortune into financial disaster the likes of which no one living or dead has ever seen before.
So leaving this example, we see that after the two tax cuts, two unfunded wars, the unfunded Medicare Part D prescription drug benefit and the crash of Wall Street, George Bush left newly elected President Obama with an annual budget deficit of over $1.4 Trillion. Over the 8 Bush years, the annual deficits rung up by the Republican Administration and the Republican controlled Congress (for 6 of the eight years) have been thrown onto the pile of collected debt the United States has incurred over many years. That collected debt is over $14 Trillion, and boy do we pay interest in this real-world example.
Barack Obama entered the White House and the country was already in a free-fall. Over the next three years, the annual budget deficit decreases. We’re still borrowing more than we’re taking in (roughly $1.1 Trillion), but the annual deficit is $300 billion lower now than it was when George Bush packed up and left Washington. We’re not running a surplus, but we are digging our way out of the crater created by Republican economic policy. In point of fact, over the last four decades, only two presidents have reduced the annual Federal deficit this much, this quickly; Bill Clinton and Barack Obama.
This election, like every election is about priorities. The President wants to bring down the annual deficit in a responsible and sustainable manner. The President wants to invest in our infrastructure and invest in technologies that will create the jobs of tomorrow. Scott Garrett just wants to stop as much Federal spending as he can so we can balance our books as fast as possible (For proof look at his vote and statements on the debt ceiling extension and his alternative Republican Study Group budget).
The problem is that Scott Garrett’s approach will balance the books by eliminating or crippling programs The United States needs to survive (Medicare, Social Security, Planned Parenthood, funding for regulatory agencies like the FDA and the SEC, etc.) The only area Scott Garrett does not want to touch is military spending. If Scott Garrett were a surgeon he’d be going into the operating room with an ax and not a scalpel. Would you let a surgeon with Scott Garrett’s philosophy operate on you or anyone you knew or cared about?
So the fiscal-conservative principles espoused by politicians like Scott Garrett are not just fictitious they’re also dangerous to the economic future of this republic. We can’t afford having Scott Garrett represent us in Washington. Scott Garrett has got to go.