U.S. National Debt: Deficit Hypocrisy

by: Matthew Goldstein

There’s something scary about big numbers. It’s one reason we in the media often like to put the biggest number we can find into a headline.

So it was no surprise that most media outlets went gaga over the Obama administration’s projection that the nation’s debt will grow by $9 trillion over the next decade. And sure enough, critics of the administration’s efforts to reform healthcare were quick to seize on that scary number as another reason to advocate doing nothing.

But without wading into the muck of the current debate over healthcare reform, it’s worth taking stock of just how much hypocrisy there is when it comes to the subject of government spending and those big bad deficits.

Let’s start with the Republicans. They talk a good game about reining in federal spending, but they bear as much responsibility as the Democrats for the nation’s $11 trillion in total debt.

It’s sometimes hard to remember that when President Clinton left office in January 2001, the federal budget actually was in surplus. Yet by the time President Bush left town, the federal government was running a nearly a $1 trillion deficit thanks to spending on the wars on Iraq and Afghanistan, the bank bailout and increased spending on prescription drug coverage for Medicare beneficiaries.

But the Republican deficit hawks didn’t really start squawking about government spending until President Obama took office and proposed a $700 billion stimulus package for the ailing economy.

In reality, no political party can claim title to being prudent fiscal managers. All that talk about reducing the deficit often is just a wedge issue that gets used by politicians — both Republican and Democratic — to score points and torpedo legislative proposals they oppose.

So while I’m no proponent of profligate government spending, the current budget deficit shouldn’t be used as excuse to squelch a potentially worthy government program that could benefit generations of Americans.

A proposal like health care reform should be judged on its own merits and not shelved simply because government spending is currently out-of-whack largely because of a need to stave off the worst economic crisis since the Great Depression.

In considering something like health care, there’s a need to take a long-term view-not the just impact on the federal budgets for the next few years.

And don’t be fooled by conventional media wisdom that the average American is concerned about the deficit. Sure, in an abstract polling question most Americans will say big federal deficits are bad. But the truth is most Americans don’t mind government spending when it provides a useful service or puts money in their pockets. If that was the case, the cash-for-clunkers program wouldn’t have run out of money so soon.

The current financial crisis is in large part due to the fact that we’re a society that loves to live beyond its means. It’s the American way to buy more home than is necessary and run-up the credit card bill to pay for a family vacation.

Credit became way too easy during the run-up to the financial crisis, but credit isn’t going away. It’s simply taken a breather. That’s because everyone in the federal government and on Wall Street is rooting — almost urging — for Americans to start spending again.

For good or ill, credit and spending is the lifeblood of a consumer economy. Yet sadly, the only real solution policymakers have for ending the economic crisis is to encourage people to starting living off their plastic cards again.

And that’s why deficit spending by the federal government is probably here to stay for a long time. The government is only doing its part to help.