When Dems were in the minority… their cause célèbre was the concept of PAYGO… where all spending increases (and even tax cuts–although the logic there is a bit perverse…) had to be offset by reduced spending. Funny how now that they are in the majority (and therefore can control how pork is spent)… they have conveniently forgotten all about the subject. Via WSJ.com:
But there’s more. None of that includes the new fiscal “stimulus” that President-elect Obama has promised to introduce upon taking office in two weeks. The details aren’t known, but Mr. Obama and Democrats have been talking about at least $800 billion, and probably $1 trillion, in new spending or various tax credits and reductions over two years. Toss that in and add more expected bailout cash, and if the economy stays slow the deficit could reach $1.8 trillion, or a gargantuan 12.5% of GDP. That 2006 Democratic vow to pass “pay as you go” budgets seems like a lifetime ago, which in political terms it was.
We’ve long argued that deficits per se are not worth losing sleep over, though we do recall when Robert Rubin and Larry Summers claimed that reducing them was itself an economic virtue because it reduced interest rates. With their acquiescence in the magnitude of these deficits, we trust they will now admit to burying Rubinomics as a serious economic philosophy. Democrats are once again all Keynesians now — at least until they want to use the deficits as an argument to raise taxes in a year or two.
Funny how quickly principles get thrown under the bus…