Liberals implicitly acknowledge that the so-called budget-balancing of the Clinton era was based on subterfuge and outright lie.
The Wall Street Journal editorial page notes the passing of one aspect of the sanctimonious liberal-progressive blather about fiscal prudence during the Clinton administrations (see Rubinomics R.I.P.)
I disagree strongly with the Journal’s insouciance about Federal deficits. Those deficits inescapably lead to inflation. The only question is how high inflation will be in any given year.
Despite what the Journal writes, interest rates are not the same thing as inflation rates. Interest rates can decline in periods of budget deficits induced by lower taxes. But, if the Federal budget is not reduced correspondingly, inflation is inevitable.
Assuredly, however, the Journal is correct in its observation of liberal-progressive-socialist readiness to abandon its feigned economic pieties and revert to Keynesian economic measures.
With regard to liberals’ Clinton era pretensions of fiscal prudence, several things are to be remembered.
First, President Clinton balanced the Federal budget in the short run by massively cutting our military budget. That left our armed forces, at 9/11, with severe constrictions in manpower, armaments, ammunition, and other supplies that forced us to use fewer troops in Iraq than standard military doctrine projected.
Second, the Congressional Budget Office’s (CBO) politically propagandistic projections of continued balanced budgets far into the future depended upon continuous economic expansion at faster sustained rates than ever before in history.
Third, President Clinton initially proposed one of the largest tax increases in our history. Only election of a Republican majority in Congress stopped the madness and gave us, instead, tax reductions. Thereafter tax revenues rose, rather than declined as the CBO estimated, because economic activity burgeoned under the stimulus of tax cuts.
Fourth, the Clinton administration, fronted by Treasury Secretary Robert Rubin and Vice President Al Gore, repeatedly lied to the American people, claiming that the Federal debt was being paid down. In fact, the Treasury’s own website simultaneously displayed the amount of Federal debt, which never stopped rising. What Secretary Rubin and Vice President Gore hoped the public would not discover was that the Treasury was simply retiring Federal debt held by the public and replacing it, dollar for dollar, with non-marketable debt held by the Treasury. The funding for that operation came, not from reduced Federal spending, but from fiat money created by the Federal Reserve system.
In short, the Clinton administrations’ liberal-progressive-socialist economic policies were no more substantive than a street-corner three card monte scam.
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