Budget deficit as a political loser for the Democrats

Posted by: Michael Mandel on August 17

As I’ve pointed out repeatedly, harping on the budget deficit is a political loser for the Democrats…and it doesn’t make much sense economically either.

Max Sawicky, an economist at the liberal Economic Policy Institute for one, has begun to realize this:

….these deficits are not sustainable, but they are digestible.

They are not sustainable because they cannot continue indefinitely. But they won’t continue indefinitely, because they can’t. In the meantime, nothing horrible will result from them. If you want to get hysterical, there’s a stupid war to scream about. In the latter regard, a draw-down in defense spending from cut-and-run victorious withdrawal in a year or two would further lighten the deficit load in the near term.

In addition, if there’s still slack in the labor market, as Max seems to believe, then that’s part of the reason for the current deficit. An improvement in the labor market would send more people back to work and paying taxes, generating more revenue.

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Reader Comments

Lord

August 17, 2005 03:37 PM

It may not be a winner but that doesn't make it a loser. Consider how Bush harped about not nation building before he was elected and began doing it in ernest. Harping on all shortcomings is expected, just don't assume that is enough to get elected.

Michael Mandel

August 17, 2005 03:50 PM

The Democrats have made deficit-bashing the cornerstone of their economic policy for 20 years, since the unlamented days of Walter Mondale. Enough already! All it does is make them look stupid when the economy keeps growing.

Why not run on investment instead? It worked for Clinton in 1992.

Jason Wallace

August 17, 2005 09:22 PM

What Micheal Mandel does not seem to realize about budget deficit's not making economic sense is that the U.S. consumer base has been FLOODED with everything from a to z thanks to year after year of trade deficit's. Jobs are not created by Gov't policy etc. They are created by CONSUMER DEMAND & nothing else. When you flood any country with good's,regardless of what it is, demand in that country peaks & then goes down again. Now put all the problem's about our economy together with the budget deficit & it makes the problem worse than without one.

MM

August 18, 2005 11:44 AM

Hi Jason,

Certainly you are right..the nation's problems with a budget deficit are worse than without one.

But not that much worse. Our ability to compete long-term won't be solved by getting rid of the deficit, and may even be made worse if we cut R&D and support for education in the process.

Brandon Ammons

September 4, 2005 01:34 PM

With Budget Deficits of over $300 billion each year, that adds $15-20 billion dollars each year EXTRA that tax payers have to pay. Interest payments on the national debt alone is over $300 billion. To say that deficits don't matter is not just incorrect, it's Stupid!!!

ahmad zaidi

November 17, 2005 08:11 AM

If you dont border about huge dificit you will die in tremendous dificit

Thank you for your interest. This blog is no longer active.

 

About

Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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