Yesterday’s Washington Post and today’s Boston Globe detail the fiscal mess that may lead us to a one year federal fiscal deficit of one trillion dollars, enormous by any of the traditional measurement standards. And yet the notion that there is no need to balance the budget seems to be taking hold on the left, with the argument appearing to be that Bush spent irresponsibly for eight years, and his train wreck of a fiscal policy was wrong only insofar as his spending priorities were wrong. The fact that you cannot just run these types of deficits forever is ignored on the premise that important needs have gone unmet for so long. So the fact that the spending is “good” means that fundamental math can be ignored, or that Democrats now buy into the Dick Cheney argument that “deficits don’t matter”. It is dangerous hogwash, and a goodly part of the notion that everyone seems to have that good programs, or a strong military, or wars may be necessary, but lets defer talk of how to pay for them until the future. For now we can just borrow the money and worry about the consequences later. It was insane when Bush put it forward, and would be insane for a Democrat to embrace that type of nonsense now. Lets look at some of the sobering numbers from the Post story.

The Treasury Department so far has borrowed nearly $500 billion from pension plans, foreign governments and other investors to replenish the coffers of the Federal Reserve. Since the end of August, the national debt has jumped from $9.6 trillion to $10.3 trillion, with borrowing for the bank bailout yet to come.
Meanwhile, the budget deficit — the annual difference between government spending and tax collections — has risen rapidly. It jumped from $162 billion last year to $455 billion in the fiscal year that ended in September, largely because of the cost of the stimulus package, as well as slowing tax revenues and rising expenses in Iraq and Afghanistan. The budget picture looking forward is even bleaker. While the deficit is projected to be about $550 billion for the fiscal year that began Oct. 1, budget analysts have yet to figure in the effects of a recession, which could easily tack on another $100 billion. They also have not included the first $250 billion being spent on the bailout plan, which the White House budget office said this week must be added, even though much if not all of the money is eventually expected to be returned to the Treasury.

And with options for a second round of stimulus spending starting at $52 billion — the size of the package proposed earlier this week by Republican presidential candidate John McCain — it’s not hard to imagine the deficit rising to $1 trillion. That would approach 7 percent of the economy, a yawning budget hole not seen since 1946.

The Post talks of some of the costs of both McCain and Obama’s proposed programs, and asks the question that has been asked repeatedly to both candidates. Does the fiscal situation warrant some retrenchment on costs, or a revision of the thoughts on how to pay?

The spending proposals come on top of promises by both candidates to dramatically cut taxes. In addition, Obama has pledged to pursue expensive new initiatives to expand health care coverage and improve education. The candidates’ top economic advisers, Jason Furman of the Obama campaign and Douglas Holtz-Eakin for McCain, said they have no plans to reconsider those promises in light of the new economic realities.

McCain has even said that he could balance the federal budget by the end of his first term. More nonsense!

In the final presidential debate on Wednesday, McCain even repeated his pledge to balance the budget by the end of his first term, though Holtz-Eakin acknowledged that “the events of the past few weeks have made that considerably more difficult.”

You cannot balance the budget in four years, or eight years, without making difficult choices. Making difficult choices is not on any radar screen anywhere. And leaving partisanship aside it is that mindset that has put us into a real difficult situation economically. If it is worth spending then it is worth taxing for. Read the Washington Post story here.