Deficit Hypocrisy

Deficit Hypocrisy
By INVESTOR'S BUSINESS DAILY | Posted Friday, October 24, 2008 4:20 PM PT

Budget Policy: Call it the iron law of modern liberalism — deficits matter only when they're useful in defeating tax cuts. When time comes to unleash government spending, they can be ignored.



Indeed, two liberals who were most vocal about deficits as President Bush advanced his tax cuts are now wearily dismissing them.

In 2003, when the deficit was $377 billion, Rep. Barney Frank said Bush's dividend tax cut would have "negative long-term effects on the deficit," and that deficits "are over the long term a negative for the economy."

But just the other day, as the deficit has reached $455 billion and could go to $800 billion next year, Frank said: "I think at this point there needs to be a focus on an immediate increase in spending, and I think this is a time when deficit fear has to take a second seat."

Consider the deficit was about $377 billion in 2003, while it is now $455 billion and could go as high as $800 billion next year. If anything, deficit fear should be in the driver's seat.

An even more notable switcheroo is New York Times columnist, Democratic mouthpiece and freshly minted Nobel laureate Paul Krugman. In column after column from 2001-2003 he denounced the Bush tax cuts for leading to "skyrocketing budget deficits."

About-face! A week and a half ago Krugman wrote: "What we need right now is more government spending. . . . Now is not the time to worry about the deficit."

But let's not be too hard on Frank, Krugman and their ilk. They are giddily anticipating a President Obama and expanded Democratic majorities in Congress. For the first time in almost three decades a liberal wish list of government spending can finally be enacted. Why let a little thing like the deficit get in the way?

Liberals say new spending is necessary for the economy. "This is a time for a very important kind of dose of Keynesianism," says Frank. Krugman thinks "temporary" spending is good "to fight a recession."

Don't believe it. Government can only spend what it drains from the job-producing private sector. And "temporary" government spending is like a unicorn — it doesn't exist.

Ultimately, higher deficits will lead to higher taxes. According to Frank, "Later on, there should be tax increases . . . there are a lot of very rich people out there we can tax at a point down the road and recover some of this money."

In the end, Frank, Krugman and other liberals may not pay a price for their blatant hypocrisy. The taxpayer, unfortunately, won't be so lucky.