#balanced budgets

Summary: Note to government: Eventually you runout of other peoples money to spend and when the piper needs to be paid the pockets will be empty! And the burden on business and investors of all types to make-up the deficit can quickly become unsustainable! ‘Long Island’s Town Of Oyster Bay An Example Of What Happens When The Fiscal Music Stops!’ Note to the peoples representatives in local, state…

Johnny Carson: Video: NBC’s The Tonight Show With Johnny Carson: Ronald Reagan Talks About Balancing the Budget in 1975

This post was originally posted at The New Democrat on Blogger

I like and respect Ronald Reagan a lot, I’ve always had even though I’m a Liberal Democrat. Which might be like hearing how much a Boston Red Sox fan loves a player for the New York Yankees. But in my case my affection for President Reagan is real. Both personally and…

So you wanna be finance minister? Our game lets you try balancing Ottawa's books

Few issues stick to governments more than their ability to balance a budget. Today, Jim Flaherty releases a budget that aims to reassure Canadian taxpayers that his government is committed to returning to the black within a few years. But what does it take to eliminate the deficit? We've created a game that gives readers a taste of the decision making involved.

Americans regularly chastise President Obama and Congress for “not making the tough decisions” on the country’s ballooning debt. In many respects, we have every right to be frustrated. Obama has turned his back on the Bowles-Simpson plan, which included much-needed entitlement reforms, and Congressional Republicans refuse to consider raising revenue in a meaningful way.

But, what happens when our elected officials do make those tough decisions? George H.W. Bush learned the answer in 1992. Two years prior, he had pushed a budget deal that included tax increases alongside spending cuts and paid the ultimate political price: a one-term presidency. This was just one of the many decisions that showed Bush put his country first and political career second.

Under Ronald Reagan, the national debt tripled. Combined with the festering Savings & Loan crisis, Bush was left holding the bag of Reagan’s popular but fiscally unsound policies. Something had to be done to get the country’s balance sheet in order. Recognizing that a Democrat-controlled Congress would only accept a budget deal with tax hikes, Bush had to roll back his now-famous campaign pledge: “Read my lips: no new taxes.”

Bush knew the stakes, confiding to his diary that the budget “could mean a one-term presidency but it’s that important for the country.”

Sensing the chance to cull favor with arch-conservatives, GOP opportunists pounced. Newt Gingrich, House minority whip at the time, left the president at the altar after having agreed to the deal. And former Reagan staffer Pat Buchanan, who would later challenge the president in the primaries, sent out bumper stickers to his supporters with Bush’s “read my lips” tax pledge. They were bolstered by conservative groups such as the National Center for Policy Analysis, which made dire predictions about the budget killing 400,000 jobs.

Budget experts now agree that the Budget Enforcement Act of 1990, which was strengthened in 1993 by another budget deal that was opposed by all Republicans, deserves much of the credit for the subsequent improvement in the deficit, which shrank from 4.7 percent of GDP in 1992 to virtual balance in 1997 and gave us budget surpluses from 1998 to 2001. Economist Robert Reischauer, director of the Congressional Budget Office when the 1990 budget deal was enacted, told me it was “the foundation upon which the surpluses of the 1998 to 2001 period were built.”

But in 2002, Republicans abandoned the budget rules put in place in 1990 so that they could cut taxes without constraint. The result was a continuous string of budget deficits throughout the George W. Bush years.