Tina K. Russell

October 22, 2008

Fiscal responsibility

Filed under: Uncategorized — Tags: , , , , , , — Tina Russell @ 10:47 am

Op-Ed Columnist – Let’s Get Fiscal – NYTimes.com

Paul Krugman opines that the next president will have to do some serious spending, putting legitimate concerns about the budget deficit aside. I agree with him; deficit spending is often the only way out of a slump or a crisis. However, two things annoy me (as I’m sure they annoy him, too):

In order to spend like this during bad times, we need to be sure we save during good times. Today, we can’t just turn back the clock on the Bush years and pretend they never happen. But let’s remember 2000, when Bush kept arguing that the budget surplus should be shredded into tiny pieces to be sent to individual taxpayers, rather than saving it for a time like, oh, now. If we’re willing to spend into debt, we need to be able to hold off on big purchases when times are good in order to pay back that debt, and to save for future crises.

As Fareed Zakaria recently pointed out on The Colbert Report, recently, the further into debt you are, the harder it is to borrow money on good terms. Bush’s tremendous fiscal irresponsibility has hamstrung us at our worst time; $10 trillion of debt means that any country still willing to lend to Uncle Sam is going to offer high interest rates and other unfavorable terms. But, we must avoid whacking Bush like a piñata and remember who it is that bought the snake oil: us, who gave him a narrow enough loss in 2000 for him to be extra-constitutionally appointed President by the Supreme Court.

It was William McChesney, former chairman of the Federal Reserve, who described the Fed’s job as “to take away the punch bowl just when the party gets going.” It hurts, but you need to show restraint when times are good, and instead, Alan Greenspan slashed interest rates and told us all to gamble our livelihoods on dodgy mortgages. In the end, we all listened, grabbing the punch bowl with both hands and chugging furiously. We should all have regrets now that we could really use some of that punch.

In other words: knowing what could have been done with it—that we could have helped temper this mess, either using it to pay down deficits then or to spend now—does Bush’s $400 handout really seem all that great? And, when the crisis has passed, would you support a candidate who would increase your taxes to help pay down the national debt?

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