There's Landrieu's View -- and then There's Reality

Sen. Mary Landrieu has taken the offensive regarding her budget priorities relative to Pres. Bush’s. In her “The President’s Budget: Path to a Debt Society,” she tries to lay out the case that the president’s budget will lead to continued deficits and harms vital policies, and that the main culprit for this is tax cuts. But for observers who really understand this issue, the part of the report which deals with the overall budget situation is nonsense.

In the first page alone, the report makes a pair of breathtakingly inaccurate and/or misleading assertions. First, it argues that “[i]n each of the last four decades, the average size of the federal budget deficit relative to Gross National Product (GNP) has doubled.” Surely the Landrieu staffers had access to the same data that the Heritage Foundation had which is summed up in this chart. Either these people are stupid or they are deliberately trying to mislead the public. The data show that the total deficit to GNP ratio has hardly changed in the last 20 years and, in fact, at 38 percent is below the historic 43 percent level post-War World II.

While this is an error of fact, following closely is an error in logic. The report asserts that “[d]espite what has been said, deficits are not a function of government spending gone amok,” and then lamely tries to support this point by noting that “that government spending today is lower than under previous presidents. From 1980 to 2003, federal spending averaged 21.3 percent. Under Presidents Reagan and George Bush, Sr., it averaged 22 percent and under President Clinton it was 20 percent. President Bush’s budget calls for federal spending of 20 percent of Gross Domestic Product (GDP).”

Note the bait-and-switch tactic here. The report tries to equate a relative level of spending with the absolute criterion of whether government spends too much. Let’s use an individual-level example: suppose a family were running up credit card debt because they insist upon eating out all the time, and a lot, rather than preparing more moderate portions at home. A debt counselor might tell them to do the latter and they would save enough not to run a deficit every month. That’s what known as trying to spend efficiently and to set priorities based upon available resources.

(Then, of course, they’ll have health problems because of obesity – but, if they’re poor enough, Medicaid will pay for almost everything. One of the greatest myths in American politics is that there is not universal health care provided. There is, and for those defined as the “poor” it costs next to nothing through Medicaid. Meanwhile, middle-class and above Americans have to pay more for their health care and the taxes to support poorer Americans’ use of Medicaid. Take it from someone who’s had to deal with complex health issues and Medicaid for years. But this is a subject for another column.)

But, in Landrieu’s world, it’s not the inefficiency and poor choices of what to fund that define whether government spends too much or too little, it’s some mythical level relative to a GNP figure (21.3 percent?). With this logic, what would she do if we fell below the magic level? Increase government spending on programs with no proven public policy benefits or need just to say we were spending at the “appropriate” level? Her ideology apparently is just to spend (and that’s your money, not hers, that she wants to spend).

The same flawed logic is in effect with the statement, “[f]rom 1980 to 2003, revenue averaged 18.5 percent of GDP [Gross Domestic Product]. In 2004, it will be 15.8 percent of GDP” – again asserting that we have too few revenues coming into government, rather than focusing on the kinds of programs run by the government, the prioritization of these programs, the costs and benefits of these programs, and genuine need, if any, of them. That’s what revenue levels should be based on.

(Immediately after that phrase comes this patently false statement: “the lowest level since 1950, before Social Security, Medicare and Medicaid were ever enacted.” Two out of three on a player’s field goal percentage will make the NBA All-Star Game but we need 100 percent accuracy in public policy – Social Security was signed into law in 1935, and the first benefits were paid out in 1940.)

It is also through the revenue-GDP comparison that the report attempts to blame tax cuts for the lower revenue levels. But the reason why revenue as a percentage of GDP is lower temporarily is because this reflects a short-term phenomenon resulting from the recent Clinton recession and the temporary stock market-driven collapse of tax revenues from capital gains. The very same Congressional Budget Office data, used selectively and out of context in the report to try to make this point, estimates that tax revenues will soon be back at historical norms, averaging 18.1 percent of GDP over the 2007-2009 period. And anybody knowledgeable about the historical effects of tax cuts on economies and government revenues know that in the long run their benefits far outweigh their costs.

The remainder of the report goes into presumed effects that the president’s budget will cause that ignore the relative merits and demerits of the programs involved. When understood in the context of Landrieu’s policy preferences – decidedly out of step with Louisianans’ – it’s all the same recitation that the budget is bad because it decreases the power of the special interests and failed liberal philosophy of governance that Landrieu supports. Again, it’s hard to take any of this seriously when knowing the misleading way in which the criticisms of the budget are presented in the first place.

We must recognize this document for what it is, an attempt by Landrieu to deflect criticism that she, like most Democrats, are sticking their heads in the sand about the looming financial crisis of Social Security, Medicaid, and Medicare. Their approach of ignoring these problems until they are massive in dollar size and then to demand tax increases, or to have the tax increases now, are designed so that they can hold and collect more of the people's money. Democrats propose to cause a genuine deficit problem, not the president's budget.

While she may try to pass this off as valid, meaningful analysis, Landrieu needs to understand that there are thinking people out there that are not going to swallow this pap. And judging by recent election results, there’s a few too many out there for her liking.