Federal Deficit Cut in Half

Of course Democrats are not impressed, according to Stephen Dinan. They look at the budget surplus inherited by President Bush’s administration and see nothing but failure.

"No amount of Republican Party spin can obscure the bottom line: The Bush administration and congressional Republicans inherited a projected 10-year budget surplus of $5.6 trillion in 2001, and in just 70 months turned that surplus into a projected deficit of $4 trillion," said House Minority Whip Steny H. Hoyer, Maryland Democrat.

It’s their right to ignore the recession and the tech crash and imagine that President Clinton gave the economy to President Bush in fine fettle.

But it certainly is impressive that, despite the huge increases in federal spending over the last six years, and despite the huge tax rate decreases, and despite the three years of economic flatline after the NASDAQ took its tumble we are back to a federal deficit of 1.9 percent of GDP.

Of course the real story on the federal budget is the $10 trillion unfunded deficit on Social Security and the $40 trillion unfunded deficit on Medicare. The smart assumption to make is that the government will renege on its promises. That is going to cause a lot of suffering.

But meanwhile President Bush can savor a small victory.

"We have now achieved our goal of cutting the federal budget deficit in half and we've done it three years ahead of schedule," the president said, crediting his 2001 and 2003 tax cuts with spurring economic growth and thus more tax revenue.

As he should, of course, he doesn’t take all the credit. It’s not just his fiscal policies but “the hard work of the American people” that did the trick.

Don’t forget supply-side economics, either. That’s the idea that when you reduce marginal tax rates you speed up the economy.