Richard Rahn Is Wrong
Former U.S. Chamber of Commerce Chief Economist Richard Rahn has a "don't worry be happy" piece in today's Washington Times that, at least when it comes to the federal budget and U.S. fiscal policy, is one of the best examples of selective memory I've seen in a long time.
Rahn says that, because the budget deficit fell slightly from 2006 to 2007, the Bush tax cuts have been a huge success. Here's what he's conveniently not saying:
- The deficit may have fallen last year, but the national debt rose to an all-time high and is getting higher.
- Interest payments on that national debt are the fastest growing part of the U.S. budget.
- The interest payments on the national debt will grow even faster in the futue because the Bush administration irresponsibly borrowed with short-term debt that will reset at higher rates in the years ahead. In other words, the federal government is in the same situation as many homebuyers with adjustable rate mortgages who are facing much higher payments in the future.
- The Bush administration wouldn't be able to take credit for reducing the deficit if it didn't first create one that had to be reduced. After all, there was a triple-digit surplus when the Bush presidency began.
- The deficit is projected by almost everyone to increase from 2007 to 2008 and to continue to increase thereafter.