The American philosopher George Santayana warned us that “those who cannot remember the past are condemned to repeat it.” These would be good words for Congress and the White House to ponder as they consider future budgetary matters for the country.
After three years of budget surpluses, the federal government appears to be heading toward deficit spending again. Last week, the bipartisan Congressional Budget Office released a report indicating as much as $9 billion of the Social Security surplus may be needed to cover federal spending in 2001.
This followed not long after the approval of President’s George W. Bush’s $1.35 trillion tax cut, and right on the heels of his request for more than $18 billion in additional military spending, not to mention a continual slowing of the economy.
The current political situation bears a harsh resemblance to the one that existed 20 years ago when President Ronald Reagan, faced with a dull economy, called for and received his own massive tax cut, which he followed by an equally massive increase in military spending.
Like Reagan, President Bush believes his tax cut will spur economic growth which, in turn, will grow tax revenues. Bush, however, should remember his own father dismissed Reagan’s theory of “trickle-down economics” as little more than “voodoo economics,” and predicted they would lead to economic disaster instead.
The years following Reagan’s tax cuts proved the elder Bush correct. The United States slipped from its position as a creditor nation to a debtor nation, the national debt tripled, and the country spiraled into a deep recession with double-digit unemployment.
Reagan was forced to concede the failure of his economic policy, and ask Congress for the largest tax increase (in constant dollars) in U.S. history , an increase that subsequently had to be followed by equally historic increases pressed by Reagan’s successors.
President Bush, of course, isn’t alone in promoting government spending. Just as in Reagan’s days, both sides of the aisle in Congress keep pushing for spending on their own pet projects.
That’s why Washington politicians , Republican and Democrat alike , should take a long, hard look at the trail behind them. A tax cut may provide some stimulus to the economy, but unbridled deficit spending can be disastrous.
Our national leaders need to be cognizant of past failures and avoid traipsing down the same doomed paths as before. As Santayana also warned, “when experience is not retained infancy is perpetual.”
