Tuesday, July 20, 2010

The Deficit

I haven't posted in 2 weeks; sorry. I usually at least post on my day off from work but last week I spent the day taking Rachel to New York for the last meeting before the IMTA show. After the meeting, she and I walked around mid-Manhattan for a bit, including a walk past Times Square. The amount of people and activity in this area, and New York in general, on a Wednesday night was incredible. I can see Rachel living there some day even though even she is surprised by the number of people out and about in the streets. But such life and activity!!

I had another letter published in the News Herald 2 Wednesdays ago. As I have said, I am impressed by the energy of the tea party movement even though I generally disagree with some of the movement's positions. One of the main focal points of the movement is the growing deficit which I address in the letter to follow. One simple yet glossed over fact that I do not mention in this letter is the data which shows that much of the national deficit has been generated during the years of republican administrations, yet it is the democrats that are labelled as the party of irresponsible spending. Since the Reagan years, only during Clinton's terms has their been a budget surplus.

To the Editor:

A number of weeks ago, I challenged someone from the tea party movement to detail some specifics of what we should change to improve our country. While I would hope that many conversations took place, I didn't receive any feedback on my blog and didn't see any information in the form of a letter to the editor.

So I am taking it upon myself to touch on one of the topics that I believe has been a rallying cry of the tea party movement.

The Deficit

Despite what some might think, liberals and democrats are also concerned with the deficit. While I would agree that our elected officials sometimes forget that the money they spend belongs to the country, not them, I would also like to think that they truly feel there is a real need to engage in deficit spending.

Perhaps it would be easier to understand if we made it more personal. Let's place ourselves in the position in which deficit spending might occur.

For the most part, we are keeping up with our bills. But then the refrigerator dies. If it was the dishwasher, we could probably do without it for awhile, but not the fridge. So we break out the charge card and buy the best value we can. Yes, we have added a new monthly debt to the budget but we are still comfortable. Unfortunately, an unexpected medical or dental bill occurs soon after. Again, we can't put it off and so another new bill is created. And, since all bad things happen in threes, the car will cost about $700 to pass inspection. So we engage in deficit spending and hope that we will be able to get through those debts before something else occurs.

Now, imagine you lose your job. All your budget planning goes out the window and you are faced with a difficult debt problem. What was once somewhat manageable is now out of control.

Our current national deficit problem is not unlike this personal scenario. We had a small yearly budget surplus just 10 years ago. (Although we did have a national debt). Then, in quick succession we had the dot com financial bust and the terrorist attack on 911. Soon after 911, we went to war, on two fronts, and the yearly and overall deficit began to grow. But, most believed it was worth it. Then came the housing bust and the financial meltdown. But again, we spent the money (Wall Street bailout and stimulus package) because we thought creating more debt was better than allowing a possible depression.

Like the family above, we thought we were handling all the bills in a reasonable fashion but could not have counted on all those lost jobs. Remember, lost jobs mean lost tax receipts for the government and an already growing deficit blooms out of control.

In retrospect, perhaps we should have ended the wars in Iraq and Afghanistan and spent the money in this country. But would we be safer today or less safe? Or perhaps we should have allowed more of the big banks and financial institutions to go bankrupt and scuttled the stimulus package. But would we have more closed businesses, more unemployment and even less tax receipts?

It is easy to look back in hindsight and criticize, but when the refrigerator dies and your teeth hurt and the car has mechanical problems, you address them as best you can.

To me, it is as much a question of where to spend our money as how much. My impression is that the tea party movement is OK with spending money on the wars but not on corporate bailouts or health care. OK, we can certainly debate that, but let's not pretend we can reduce the budget without making some hard choices.

Personally, I am OK with a little deficit spending. I have faith that the recession will continue to fade, people will start working again, the tax rolls will improve and the tipping point will swing in the other direction. In the meantime, I encourage the tea party movement and its members to stay energized, stay involved. And let's hope that all our refrigerators, teeth, cars and jobs remain in good working order for the foreseeable future.

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