Junk Economics

Spending What Ain't There:
Budget Surplus Baloney

by Hanno Beck

That might or might not be junk politics. But it is definitely junk economics.

FACT: The federal budget has been out of balance for more than a generation. During the last 12 months, the government has apparently received more in taxes than it spent. Let's review -- 300 months of deficit, then 12 months of slightly better than breakeven. Does anyone, can anyone, seriously say that this heralds a new era of surpluses?

FACT: I got a tank of gasoline last week for two cents per gallon less than the previous fill-up. Aha! I guess this means we have begun a new era of gasoline price declines! What fun! Have you planned how you are going to spend all the extra gasoline money you'll have? Let's get a bunch of gullible journalists to report all about it! Yeesh.

FACT: When I drive, I seem to get a red light at the intersection of two roads near my home. Happened 30 times. On the 31st occasion, I got a green light. Aha! A new era of nothing but green lights at that intersection! Hurray!

Any American capable of looking beyond the superficial slop handed out by major media, can see a number of things. One, our nation's economy is overdue for a recession. That would cut tax revenues and bloat the federal deficit. Two, after 25 years of working at "creative accounting," our nationa's politicians have become good at it. They are crafty. They have succeeded in pushing large portions of federal spending activity "off budget," and if these were accounted for honestly, we'd still be showing large deficits. Three, this is an election year. Candidates are going to promise money, but they don't want to add to the deficit. Solution? Claim a surplus and never mind the truth.

You be the judge. If the economy has inflation for 25 years in a row, then has deflation for one year, will you run around telling people that the era of inflation has ended, and a new era of deflation has begun? (Well, in 2003 there are indeed fools running around saying just that, but I hope you are not one of them.)

Let me ask you a simple question -- what causes the federal deficit each year? Answer -- the federal government spending more than it takes in. Phrased another way, it's spending what ain't there.

Now, exactly what are these politicians like Clinton and Gingrich doing with their plans for handling a surplus? With their gleeful, greedy statements about new programs and new tax cuts, each trying to grab credit for his own policies? Seems pretty clear, they are continuing to spend what ain't there. So what has anyone learned during the last 25 years while we built up over $5 trillion in federal government debt? Where's the sober responsibility of not spending something until you hold it in your hand?

Oh, gracious sakes. The mail we received, by the way, proudly told us to look immediately at an article in U.S. News and World Report's online edition. Here's the link given -- http://www.usnews.com/usnews/issue/980112/12tax.htm (but as of 2003 that is no longer functioning). Make up your own mind. Does that article enrich your understanding, or merely pander to wishful fantasy?

Shame on the media, and on politicians, for overgeneralizing in a most unscientific way.