From Boortz:
ECONOMIC IDIOCY
Oh boy, aren’t the Democrats having just a wonderful time slamming Bush’s budget and his tax cut proposals. Yeah, I know .. I have problems with Bush’s budget too. The difference is, I’m honest about it. The Democrats aren’t. And there’s another difference: I want the economy to improve. The Democrats don’t; at least not until after the 2004 elections. To Democrats economic recovery and jobs for the jobless can damn well wait until they route the evil Republicans from those House and Senate seats that rightfully belong to Democrats .. not to mention the White House.
Anyway … back to the Democrats. They’re lying about the proposed Bush budget … and they’re getting away with it.
There are two principal areas where the Democrats are playing fast and loose with the truth. One is on the impact of the Bush tax cuts on the American economy and government revenues, and the other is on the size of the deficit.
Before we get into the details, let it be said that politicians couldn’t get away with their lies and half-truths about the effects of tax cuts and deficits if it were not for the fact that most Americans are economic imbeciles. Dare we blame this on our wonderful system of government education? How do you expect someone who can’t read a simple apartment lease or balance a checkbook to understand the most basic of economic principles?
We’ve talked about the effect of tax cuts before. Simply stated, every time there is a major tax cut revenues to the government increase. The reason is simple. When the profit from a certain activity increases, people have a tendency to increase that activity. If a taxpayer’s profit for each hour of work increases that taxpayer will be encouraged to work more hours. If the profits realized from a certain business activity increase, look for that business activity to increase. As the work hours and business activities increase not only do the profits from those activities increase, but so, too, does the total amount of taxes paid! Look, this is all so simple that almost any government high school graduate should be able to grasp it.
Secondly, the size of the deficit. To hear the Democrats describe it, the projected deficit under the Bush Budget is the biggest, most devastating deficit in the history of this country. This morning’s Atlanta Journal-Constitution is referring to the Bush deficit as a “record.” The truth is, it just ain’t so.
Consider your own family budget. Let’s say that your monthly bills exceed your monthly income by $200. You’re running a $200 per month deficit. That amounts to $2,400 a year. Now that’s pretty serious, isn’t it?
The truth is you can’t judge the seriousness of the situation until you have more figures. The best way to judge the seriousness of this deficit is to find out just how big it is in terms of a percentage of your total monthly or annual spending. If your entire budget is $1,000 a month or $12,000 a year, then you have a bit of a problem. Your deficit is $2,400 a year, or 20% of your budget. Not good. But what if your monthly budget is, say, $7,400, or $88,800 a year. Now your $200 deficit would amount, in percentage terms, to a deficit of 2.7% of your monthly or annual. That doesn’t sound quite as bad, does it? That, my friends, in terms of percentage, is the very deficit that is projected in the Bush budget.
Now --- is this deficit a bank buster? Is this an all-time high? Hardly. Here’s a handy little chart for you. It shows the year, the amount of the budget deficit, and the percentage of the total budget represented by that deficit.
Year Amount of Deficit Percentage of Total Federal Budget
2004 $307 Billion 2.7%
1992 $290 Billion 4.7%
1983 $207 Billion 6.0%
Do you see what I see? The proposed Bush deficit that the Democrats are describing as “huge” is actually about one-half of the deficit of the 1990’s and less than one-half the deficit of the ‘80’s. Where’s the Atlanta Journal-Constitution’s elusive “record” deficit? Try 1983!
Now … we wiped out that 1992 deficit not with tax increases but with the incredible technology dot com economic expansion. We killed off a 4.7% deficit. How hard can it be to eliminate a 2.7% deficit with a little economic expansion?
Yes, I have problems with the Bush budget. It’s way too large. It’s just sad that such vast numbers of Americans are so ignorant of basic economic principles and history that they can’t understand that tax cuts increase economic activity and tax revenues, and that the true measure of a deficit is in its percentage of the total budget.
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