By Foster Friess, Guest Blogger
Democrats are fond of talking about the Clinton era budget surplus President George W. Bush “squandered” and the terrible financial mess President Barack Obama “inherited.” Both arguments ignore a few basic facts. First, presidents don’t control spending, Congress does. Second, outside events have to be taken into account before you assign praise or blame.
President Bill Clinton had the lucky combination of a time of peace, a Republican controlled House of Representatives and a booming economy, including the gains from internet stock insanities. Since all spending bills originate in the House of Representatives, credit for the budget surplus could more fairly be given to Speaker Newt Gingrich and the “Contract with America” than President Clinton.
President Bush had been in office less than nine months when the cowardly 9-11 attack on the World Trade Center occurred. Blaming Bush for the deficits that followed is akin to blaming President Franklin D. Roosevelt (FDR) for the sudden increase in federal spending after the Japanese attack on Pearl Harbor.
The chart above shows the deficit when each party was in control of the House of Representatives. Democrats are blue while the Republicans are red. The graph indicates a clear trend. Since 1974 – the year the budget process began to implode – the Republicans controlled the House for 12 years and the Democrats 24 years.
In 8 of the 12 years the Republicans controlled the spending, the deficit went down the following year and the 4 years it went up were all in the years immediately after the 9-11 attack. Despite the huge blow to the economy and the expenses of fighting two wars, deficit spending peaked in 2004 and was declining sharply until the Democrats regained control of the House in 2007.
Meanwhile, in 18 of the 24 years the Democrats controlled the federal purse strings, the deficit rose the following year.
The Democrats, not the Republicans, have had firm control of both houses of Congress for the past four years. During their first two years, we had the near financial collapse on their watch. For the past two years, the Democrats have added the White House giving them carte blanche to promote their legislative agenda in Washington.
Instead of focusing on the economy, the Democrats have passed a series of unpopular and expensive bills, which added regulatory uncertainly to an already shaky marketplace. Until employers know how health care reform and the overhaul of the entire financial market structure will impact their business, they will not be hiring. Only four months from a new tax year, the people who actually create jobs and drive the economy have no idea what their personal taxes rates will be in 2011.
It seems to be dawning on the American people that President Obama and the Democrats now own this economy and blaming it on George W. Bush, whose name has not appeared on a ballot since 2004, is getting old.
President Obama certainly inherited a financial problem, but a case can be made that the tax and spend Democrats on Capitol Hill have only made it worse. A $1.6 trillion dollar deficit for the year, an ineffective and wasteful $800+ billion stimulus package and a 9.6% unemployment rate gives the impression that when it comes to boasting the economy the Democrats are out of their depth. During a recession, government should be encouraging small businesses instead of loading them down with new regulations adding to labor costs and raising taxes.
Are the Democrats in over their heads? With less than 60 days left in the current fiscal year, they haven’t even been able to write a budget for 2010, much less create a long-term recovery plan.
How did we get into this mess? The deficit spending death spiral began with the passage of the “Congressional Budget Reform and Impoundment Control Act of 1974.” Before its passage, other than times of war, deficits were rare and small. Presidents would routinely not spend money Congress had appropriated. This bill stripped the Executive Branch of the ability to “impound” funds, turning the U.S. Treasury into a cash cow that Congress is more than happy to milk.
Thomas Jefferson was the first president to impound funds Congress had voted to spend. He declined to build gunboats on the Mississippi River because he thought they were inferior. For the next 160 years nearly every president, including FDR, Harry Truman and John F. Kennedy, exercised their executive power by declining to spend money for military equipment that Congress had appropriated but they thought unnecessary.
In 1968, President Richard Nixon, horrified by the excesses of President Lyndon Johnson’s “Great Society” spending on domestic programs, began impounding funds on a massive scale never seen before. This fiscal restraint earned him no friends on pork addicted Capitol Hill. In 1974, with Nixon badly weakened by the Watergate Scandal, Congress passed the Impoundment Control Act which effectively ended any future president’s ability to impound funds once authorized by Congress.
The lack of fiscal responsibility has resulted in an explosion of “earmarks” for expensive and wasteful pork barrel projects being inserted into essential bills. With the ability to simply not spend the money off the table, a president’s only options are to either sign or veto. Since the shameless members of Congress have no compunction about attaching tons of wasteful pork to critical legislation, too often it is quietly signed into law with the hope no one will notice.
In 1970, before the passage of the Impoundment Act, the Defense Bill had 12 earmarks. In 2010 it had 1,720. When President Dwight Eisenhower proposed the first highway bill in the 1950s, it had two earmarks. In 1987, President Ronald Reagan vetoed the Highway Bill because it had 121 earmarks. His veto was easily overridden. The most recent highway bill contained an estimated 6,371 “special projects.” It passed 412 to 8 in the House of Representatives.
The party that controls the House controls the spending. When you go to the polls this November be sure to pull the lever for a true fiscal conservative, Democrat or Republican, and not someone who is trying to buy your vote with your grandchildren’s money.
EDITOR’S NOTE: Foster Friess promotes private-sector solutions to benefit society and curb an increasingly intrusive government. Through the Express Rider network of like-minded influence-leaders, FosterFriess.com provides a conduit to educate and empower citizens on issues transforming America. To read previous BMW posts written by or about Foster Friess, click here.