Democrats suddenly love deficit spending

The Wall Street Journal points out the blatant hypocrisy of the Democrats as they support Barack Obama’s plans to massively increase spending in order to stimulate the economy.

Remember when Dick Cheney was pilloried for reportedly saying, earlier this decade, that “deficits don’t matter”? We recall reading any number of press releases denouncing the Vice President for supporting tax cuts that contributed to short-term deficits but also helped the economy grow until the deficits shrank nearly away. Yet somehow none of those same voices are objecting now that the government is spending its way into deficits that are so large they dwarf any during peacetime in U.S. history.

The Congressional Budget Office released its latest budget forecast yesterday, and we now really do have red ink as far as the eye can see. Thanks to a 6.6% decline in revenues due to recession, a spending increase of some $500 billion or 19%, and assorted federal bailouts, the U.S. deficit for fiscal 2009 (ending September 30) will nearly triple to $1.19 trillion. That’s 8.3% of GDP, which CBO says “will most likely shatter the previous post-World War II record high of 6.0 percent posted in 1983.” It certainly blows away any deficit this decade, not to mention the Reagan years when smaller deficits were the media cause celebre.

But there’s more. None of that includes the new fiscal “stimulus” that President-elect Obama has promised to introduce upon taking office in two weeks. The details aren’t known, but Mr. Obama and Democrats have been talking about at least $800 billion, and probably $1 trillion, in new spending or various tax credits and reductions over two years. Toss that in and add more expected bailout cash, and if the economy stays slow the deficit could reach $1.8 trillion, or a gargantuan 12.5% of GDP. That 2006 Democratic vow to pass “pay as you go” budgets seems like a lifetime ago, which in political terms it was.

Ed Morrissey commented on the Journal’s reports and reminds us of Alan Greenspan’s “irrational exuberance” comment regarding a massive growth in consumer spending and notes that now we seem to have an “irrational despair.” He also notes that the Democrats have a vested interest in pushing this panic because they can get the expanse of government that they want to keep themselves in power for quite some time:

All of this hysteria goes to one purpose: to create a sense of panic that will make any government intervention seem rational and reasonable.  Instead of taking policy one step at a time, schemes and plans get made only to be eclipsed by even more grandiose schemes and plans without ever having tried anything else first.  The TARP plan was never even given the chance to work, thanks to a panicked Secretary of the Treasury who literally begged for its funding and then used the money to start nationalizing private enterprises.

What gets built in a panic will not get dismantled when the hysteria ends.  We are creating a baseline of expected government costs that the Wall Street Journal warns will endure as an expectation.  America saw this after FDR’s New Deal and LBJ’s Great Society.  Once Congress establishes a new level of confiscation and spending, it never reduces it — and only on occasion has kept it from growing.

He also opines that we’ve had it so good for so long because of Bush’s ability to keep us out of a long term recession after 9/11 that we don’t know how to behave when tough times descend upon us as they did in the 1970’s.  I think he’s right. Instead of hunkering down, saving what we can, finding ways to cut our own household spending, and waiting it out, we are now in a state of panic. We, with the media’s gleeful prodding, are convinced we’re facing an economy in dire straits unlike America has seen since the Great Depression.

Yes, it’s a great story to report for the mainstream media. They’re facing loss of profits, layoffs, and a dwindling market share, so if they can attract viewers and readers by reporting that the American economy is collapsing around our ears even if it may not be, they will. It doesn’t help that we, the American people, have completely lost touch with our sense of independence and rugged individualism that pulled us out of real economic hardships in the past.