Bush's Inherited Surplus

I've been hearing a lot about how Bush inherited a surplus and turned it into a deficit. And this is true, but there might just be a little more to the story.

Where did the budget surplus under Clinton come from? Were they spending more responsibly for social programs? Did he make reforms to the entitlement programs, the biggest drain on our federal budget? Did he set out to reduce the scope and power of the federal government and therefore the related costs? To a certain extent, he did. He slashed the budget as it pertained to our military and our intelligence agencies. The main role, the most important role, of our federal government is protecting our sovereignty, and this is where he targeted his cuts. Just ask yourself whether Bush would have inherited that surplus if Hillarycare had gone into place.

So what happened to that surplus? Well, for one, the country was in a recession when Clinton left office and Bush came in. The economy is cyclical and will have it's ups and downs. The only thing the government can really do to affect this, is to make it worse. Bush believed, and I agree, that when the economy is flagging you make government bite the bullet and let the people keep more of their money to put back into the economy. Obama believes that you make the people bite the bullet, and give their money to the government to put back into it where and however the government sees fit. Let's ignore for a moment that raising taxes in a struggling economy has only ever served to make it worse. I know many will say that government spending got us out of the depression. But what got us out of the depression was WWII. So maybe it was government spending on the war, but it wasn't new social programs. All those served to do was stabilize the unemployment rate in the double digits.

So Bush has a surplus, but the economy is on the downward slide, meaning revenues are going down and that surplus is being eaten up without any additional spending. And then what happened? We got attacked on 9/11. There was the recovery cost of that to deal with, while at the same time spending money to rebuild everything that Clinton had torn down. The CIA needed to be rebuilt so we could actually obtain intelligence that Clinton had deemed irrelevant now that the cold war was over. Setting aside the attacks on our planes, our embassies, and our Navy, we didn't need intelligence to deal with those. And the military? We were at peace so what was the point of having a strong military. Don't you know being proactive and prepared is way overrated?

And then we had natural disaster after natural disaster again eating away at the budget. Then Bush had the idea to create the new entitlement program that the country was clamoring for. Medicare part D. A new drain on the budget, a new entitlement program, and more spending.

After that the Republicans in Congress hit their spending stride. The economy was booming and revenues were climbing at a faster rate than ever before, but they fulfilled the old cliche of the more you make the more you spend. Setting none of these new revenues aside for the future, they kept a short-sighted vision on the expectation that the economy would never have another downturn.

At the same time, the banks were being put under pressure by the likes of Barney Frank and ACORN to give loans to people who didn't actually qualify for them. All in the belief that every American has the right to own their own home. A right I have as yet been unable to locate in the Constitution. This drove the housing costs through the roof. The banks were also being pushed to give other loans, and Americans went on a spending spree, emulating their government, and maxed out limits that were set way too high in the first place. As a result of the pressure put on the banks to make these loans, people's money was being taken up paying for the past with nothing left to spend in the now. Demand for products began to drop, meaning production went down, and the workforce was cut. And then the defaults started.

The credit crisis, the inflated housing market, and a cyclical slowing of the economy is what served to create the deficit. Much is made of the money spent on the war, but the truth is that if Congress had stayed the hell out of banking, and allowed the banks to operate the way they needed to instead of the way Congress thought they should, and had Congress focused on cutting the pork and payoffs in the bills they passed, then we would have been able to sustain the cost of the war.

The housing boom and bust is the center of our current troubles, and what has Obama and the 111th Congress done to address that? Not a damn thing!