Saturday, June 09, 2007

Deficit, What Deficit?

What Are the Democrats Going to Run on In 2008?

Well it won't be "...the Economy Stupid". They say pocketbook issues are what elect people to office. In 1992 even though the economy was already picking up Bill Clinton successfully exploited Bush the Elder's weakness. It was Bush himself who was the recipient of Reagan's economic policies as he sailed into the White House against a feckless Dukakis who could only promise to raise taxes.

Oddly the smoke and mirrors economy of the late 90's didn't seem to help Gore- of course Gore couldn't help Gore - no one could. But when it comes to 2008 the democrats won't be able to point to high unemployment, corporate downsizing or sky high inflation. They can point to sky high gas prices, but their only solution is to make them higher - that's not a winning strategy.

The question is will they even have that old standby called the "deficit" to bash the Bush presidency with? Current projections indicate, assuming current economic growth that the deficit will push into surplus territory by April 2008 (see the chart) -source, click here-

It would be an utterly amazing feat to have an economy racked by terrorist attacks, recession, corporate scandals and wars pull itself up by its tax-cut bootstraps and restore surpluses before the Bush presidency ends. It's hard to say what the democrats will complain about then. George Will does a nice job (for once) framing the democrat's conundrum in this Washington Post piece.

Of course all of this will be short lived. The democrats now in control will never extend any Bush tax cuts. When the child tax credit goes back to $500 from a $1000, the marriage penalty is restored, the estate tax goes back to 50+% and capital gains taxes return to their 90's level there's a good possibility the economy will tank - or at least deficits will return about a year or so after Bush is out of office.

Never fear: It will still be his fault!



Anonymous said...

The democratic congress won't let it happen. They're gonna do their best to kill the tax cuts, raise spending, and reduce government receipts before the election.

The press never mentions any good news that might be credited to Bush, so the democrats have free play to do their worst.