February 11, 2010
Deception as a Principle of Governance
By James Long
The Democrats all agree that President George Bush received a surplus when he took office after President Clinton’s term, and then he passed a deficit to President Obama. Democrats are outrageous prevaricators.
David Axelrod in the Washington Post, 15 January 2010:
The day the Bush administration took over from President Bill Clinton in 2001, America enjoyed a $236 billion budget surplus — with a projected 10-year surplus of $5.6 trillion.
Hillary said much the same thing on “Meet the Press,” 15 November 2009:
It, it breaks my heart, David (Gregory), that in 2001 we had a balanced budget and a surplus; and if we’d stayed on that path, we were heading toward eliminating our debt.
Similarly, Senator Robert Menendez on “This Week,” 24 January 2010:
And, you know, I love my dear friend (Jim DeMint) talking about, you know, fiscal responsibility, but when George Bush came to office, he had a $236 billion surplus. Barack Obama was handed a $1.3 trillion deficit.
And a 07 February 2010 NYT editorial put it this way:
When President Bush took office in 2001, the federal budget had been in the black for three (four, actually) years, and continued surpluses were projected for a decade to come.
President Obama in his first State of the Union address also mentioned the large surplus that President Bush inherited in contrast to the deficit that Obama himself inherited.
Every one of the above statements is patently and provably false. The dot-com bubble crashed almost exactly one year before Clinton left office, and the value of the NASDAQ (symbol ^IXIC available on YAHOO!) fell by $2.5 trillion dollars (half its total value) before the end of the Clinton administration. When the dot-com bubble popped, as all
economic bubbles do, the NASDAQ fell sharply. Every economic indicator during Clinton’s last year in office turned decisively downward — the surplus, government revenues, and the markets included. Economic projections made at the very top of an economic bubble are foolish, but the dot-com bubble had long since popped, and everything was going south by the time Clinton left office. Consequently, the Democrats’ projections of surpluses years into the future at a time when all indices were falling are not just foolish, but dishonest.
A lot of things happened in the economy during Clinton’s last year, all of them bad. Besides the dot-com bubble crash in January 2000, the DOW also peaked and started down shortly before Clinton left office, and the S&P started down shortly after that. The NASDAQ continued to fall for an eventual loss of $4 trillion, and the collapse of the DOW
and the S&P also resulted in more trillions of dollars lost in the markets.
With the markets crashing, federal revenues were reduced, and GDP growth slowed as President Clinton left office. The vaunted Clinton surplus fell from $236 billion in FY 1999 (ending 30 September 1999) to $128 billion in FY 2000 (ending 30 September 2000), Clinton’s last year. Axelrod’s and Menendez’s claims that the surplus was $236 billion on “[t]he day the Bush administration took over” were off by just sixteen months, during which time markets, government revenues, and the “Clinton surplus” were falling like rocks. At the end of the first FY of President Bush’s term (2001), the budget had a deficit of over $157 billion. The “Clinton surplus” fell $393 billion in twenty- four months (FY 1999 to FY 2001) following the dot-com crash, and Clinton was still in office for sixteen of those months.
Empirically, if the American voters in late 2000 believed that the Clinton surplus was as high as the Democrats now claim, and if the long-term projection for the surplus was accepted as valid by those voters, Al Gore would have won the 2000 election in a landslide that would have rivaled President Reagan’s victories. In reality, the voters in 2000 were nervous about the economy, having just witnessed trillions of dollars lost in the dot-com fiasco, and Bush won.
Not only did Bush inherit a plunging economy, but given the magnitude of the dot-com crash, this was an extremely perilous time for the American economic outlook. In the event, President Bush applied the proper corrective measures and the damage was minimized, with unemployment limited to a relatively benign 6.1%. The economy went on to register solid jobs, growth, and productivity from 2003 to 2007 until the next Democratic disaster hit: the unaffordable housing bubble.
Sandwiched between the stupid Clinton dot-com bubble and the deliberate Democratic housing bubble, the Bush economy did quite well from 2003 to 2007, with deficits steadily being reduced and government growing at a slower relative rate than the economy. But President Bush had to pay for the considerable costs of Clinton’s dot-com bubble
(unemployment compensation, job training, lost tax revenues, etc.) until the economy began to recover in 2003, and then, at the end of his term, Bush had to stop the economic collapse that was triggered by the Democrats’ mortgage follies. Democrats have hung a bad rap on President Bush because they want to achieve power, and dishonesty is
one of the tools they have used successfully (and frequently) in their quest to tell us how to live.
Every economic crisis we have suffered since WWII has been the result of Democratic Party malfeasance or misfeasance. LBJ’s wasteful and corrupt War on Poverty did almost nothing to lessen poverty, cost $6.6 trillion over a thirty-year period, and ended when President Clinton signed off on a Republican initiative to end it. In comparison, the total national debt was $5.2 trillion at the point when the fraud- ridden, $6.6-trillion War on Poverty was mercifully ended. President Obama has now substantially reinstituted the War on Poverty with his non-stimulating stimulus package.
President Reagan and President Bush pulled us out of the first two Democratic disasters described above, but Obama’s disaster is much worse. Obama is adding fuel to the raging inferno as the economy melts down, rather than taking known corrective actions similar to what Reagan and Bush (and Kennedy, in a similar scenario) did.
If Hillary is really interested in “heading toward eliminating our debt,” then she could tell the Democrats to quit spending our money foolishly.
In the Soviet era, Pravda was the major official Soviet newspaper. The term “pravda” is usually translated as “truth,” but as Russians use the term, pravda would be more accurately translated as “the official word.” The official Democratic word and the official words of all declining mainstream Pravdas is that everything is President Bush’s
fault, even if the disastrous dot-com bubble and its inevitable crash happened during the Clinton administration.
James Long is a professional engineer and manager.
