Burden on Our Kids? They Will Thank Us

Some people want to know, how can the Bush administration commit the moral perfidy of first squandering the Clinton budget surplus, then running up huge deficits that the “next generation” will have to pay for?

The assumptions beneath this question are all wrong. The looming deficit might or might not be important, but it has no moral implications of any kind. As for the economy, the president’s performance has not been perfect, but he’s done fine under the circumstances. The mistakes he has made would have been hard for any president to avoid.

It would be nice if the deficit were smaller. Then again, borrowing money is, at base, a bet that you will be richer in the future than you are today. Will this nation continue -- allowing for regular business-cycle fluctuations -- to grow richer? We don’t really know, anything could happen, who can say, no one can predict -- waffle, waffle, waffle -- and the answer is yes. So, it’s hard to get too worked up over the deficit. Most Americans agree. Anyone who thinks that the deficit is hot news in the sushi bars and Thai restaurants of Middle America has not been paying attention.

Facts on the ground: The president inherited a collapsing economy. (The recession kicked in seven weeks after President Bush succeeded Bill Clinton.) Then came Sept. 11, 2001, war in Afghanistan, war in Iraq and consequent huge increases in military and security-related spending. Meanwhile, the president cut taxes and increased domestic spending. Lower taxes were a reasonable response to a slow economy. Higher military spending was the only possible response to 9/11. Together, they produced a fiscal climate that was bound to cause deficit problems.

Today the deficit and the economy have both roared back. This year’s deficit might be something like $500 billion. The quarter ending in September saw the fastest economic growth in 20 years; job creation also seems to be picking up.

Let’s look at the basic nature of deficits. (Don’t worry, I’m no economist.) Some people say the administration, by running up the national debt, is saddling “our children” with our expenses. But if I take out a 20-year mortgage on my house, that doesn’t mean I’m inflicting my debts on my children or the “next generation.” Nor does it mean (although many people would once have interpreted it to mean) that morally I am a weak character. Borrowing money is a practical decision with no intrinsic moral implications.

Deficits and household mortgages are not the same. Neither are they wholly different. Twenty years from now, the adult population of America will be mostly the same as it is today. Granted, when a nation borrows, some of the eventual payers-off will not have been around when the original charges were incurred. But that doesn’t mean they won’t benefit from the long-ago loan. Had we chosen not to overthrow tyrants in Afghanistan and Iraq, the deficit would almost certainly be no big deal today. Overthrowing tyrants is a gift that keeps giving. Howard Dean’s grandchildren will bless George W. Bush. And if future generations wind up paying part of the tab, I doubt they will whine. More likely they will thank us, and write books about what a great generation we were.

Bush could have tried to cut discretionary domestic spending, and hasn’t. Instead, he has signed lots of pork into law and wants to sign more. That’s the American way. It’s not a part of the American way I’m proud of, but I don’t know how to fix it. Somehow I’m not absolutely certain the Democrats do either. If they have a solution, let’s hear it.

Yet suppose that, some time over the last few years, Congress had reared up on its hind trotters and announced: We must cut spending, or cancel some tax cuts, or raise taxes in some other way, because otherwise deficits are going to the moon. Most likely the American public would have yawned -- and would have added, by way of explanation: “Listen. On a percentage-of-GDP basis, we’re looking at deficits that might rival what we saw in 1983, the worst deficit year since the end of World War II. But what followed 1983? A strong and sustained economic boom, and in percentage terms, lower deficits. So, what’s your problem?”

Is the deficit unacceptably high? The richer you are, the higher percentage of income you can afford to pay in taxes. A related principle probably holds for nations: The richer they are, the higher the percentage of debt they can heft without hurting themselves. A “moderate,” “manageable” deficit is easy to define: one that doesn’t damage the basic soundness of the economy. One that doesn’t shake people’s or other nations’ willingness to take a chance on this country by lending it money, putting money into its ventures and investing their lives in its future. Under this theory, if interest rates are moderate (and they are) and investment rates are decent (and they are) and the net flow of manpower and brainpower is in and not out (as it is), then the basics are OK. We can expect interest rates to rise some, with the deficit. We can live with that.

And what about that famous Clinton surplus, that “legacy” we have blown? Legacy, hell. A federal government that is running a surplus is holding us up, strong-arming the nation. Suppose you were in the habit of handing someone money to buy you pizza. If you handed him too much (“Here’s $20, get me a medium with mushrooms”), you’d expect him to hand you the change back. Should he announce casually one evening, “By the way, I’m running a surplus,” you might want to know why. Should he explain that he’s got a few thousand of your dollars in his back pocket, having decided (in his wisdom) to set them aside for you instead of returning them, lest you blow the money on something stupid instead of more pizza ... he’d be out of a job.

The federal government is our agent. We give it tax money so it can operate the nation. If we hand it too much and it keeps the change instead of returning it -- runs a surplus, builds a national “legacy” -- it is acting like an officious, well-meaning crook. This is what John O’Sullivan, former editor of National Review, calls “Olympian” liberalism. We never asked the government to please hold some of our money lest we run out and waste it. It is ours to waste. On moral grounds, budget surpluses are far more likely to pose problems than deficits.

Nowadays, whenever we see Democratic caucus or primary campaigns on TV, we seem always to have tuned in the Bugs Bunny version by accident. You expect each distinguished candidate in turn to step up to the mike and launch a furious attack on the president that soars higher and higher into the pristine upper reaches of rage until he goes straight into orbit (shaking his fists and sputtering) and is never heard from again. (Next candidate, please?)

But on the deficit issue we get a break, and we deserve one. There is nothing ignoble or intrinsically wrong in the Democratic idea that we should raise our taxes for the long-term good of the nation. But worrying about the long-term consequences of today’s economic decisions is like worrying about the long-term consequences of spitting into the Atlantic. Yes, there are consequences, but ultimately they depend on all sorts of things that have yet to happen, and we are in no position to calculate them. I am not opposed to long-term economic planning; it’s just that history makes clear that there is no such thing.