Pay As You Go: The Great American Myth Exposed.

If you live long enough you’ll start believing that Santa Claus and the Easter Bunny are real. No doubt, at which point you’ll be getting spoon fed at the nearest nursing home from a strapping young attendant doing their best to assure you that you weren’t really losing your mind. Everyone believes in Santa Claus and the Easter Bunny! But, among the more predominant myths still in vogue and taking its place alongside the one about Baseball, Apple Pie and Chevrolet all being inexorably tied to our American heritage, none have been more damaging or just flat out erroneous as this inane belief among conservatives, and greatly enhanced by a gullible and ignorant media, that the Pay As You Go approach is desirable, much less workable, when it comes to the federal government. Anyone with access to a computer or an encyclopedia would immediately know better.

And yet, in the midst of an imploding economy, with the spigots all but shut off, supposedly intelligent people, and the bulk of the Republican party, are still talking about “fiscal discipline” as though the solution to all our problems would be to cut spending and balance the budget. Never mind that Herbert Hoover tried it during his term, with disastrous results. Never mind that in the entire history of the United States, once, and only once, did the nation have zero debt: January 8, 1835 under Andrew Jackson. A check of my blog about a month ago will tell you everything you need to know about what I think of him; suffice to say, with respect to his talents on the economy, he had a rather undistinguished presidency. He seemed far more concerned with growing his own little empire (see the Indian Removal Act of 1830) than with being a good steward of the country.

Even at America’s inception as a nation it owed more than it had on hand. As of January 8, 1791, the debt, owed principally to the Revolutionary War, was reported at just over $75 million, a significant number given the value of currency in those days. Thanks to the Civil War, the debt grew from $65 million to over $1 billion between 1860 and 1863. After the War, it reached $2.7 billion. The next two huge growth spurts in the debt occurred between 1940 and 1945 (World War II), from $51 billion to $260 billion and between 1980 and 1990 (the Reagan / Bush years), from $930 billion to $3.2 trillion. And while the Clinton Administration could claim some measure of solace in balancing the budget – in deed producing a surplus in its last year – the debt continued to mount, thanks to the interest owed on it. By 2000, it was $5.6 trillion. While fiscal conservatives touted prudence, one of their own – George Bush – doubled that debt to just under $11 trillion. Debt spending, regardless of party or circumstance, has a long history in U.S. domestic and foreign policy. As a percentage of gross domestic product (GDP), the debt from 1940 to 2008 ranged from a low of 33% in 1980 to 123% in 1945. Currently it is around 75%. Even with the proposed budget by Barack Obama, it is not expected to exceed the 1945 ratio.

Given the above statistics, one wonders how any rational person could make a case for pay as you go, spending policies. In deed, one could conclude that without deficit spending, much of our history would be considerably different. The Revolutionary War, the Civil War and the Second World War would’ve had significantly different outcomes for America had it been required to balance its annual budgets. Claims by fiscal conservatives, like the one that appeared in the Wall Street Journal on February 27th that the Obama budget “signaled a historic shift in the ideological direction of U.S. economic policy…to expand government activism," and that “Obama is attempting not merely to expand the role of the federal government but to put it in such a dominant position that its power can never be rolled back,” are not new; similar claims were made during Roosevelt’s Administration when he rolled out the New Deal. Not only were they incorrect, but the opposite was true. Deficit spending brought the country out of depression and allowed for the single greatest post-war boom in American history. Without the “irresponsible” spending that deficit hawks decry, baby boomers today would have a much different life story to tell their children.

This past week, the nation got a chance to hear from the Right at the annual Conservative Political Action Conference, or as I like to call it, the Can’t Produce Anything substantive Consortium. Speakers from Mitt Romney to Rush Limbaugh titillated the minions with tales of the by-gone days of laissez-faire capitalism, and personal heroes like Ronald Reagan. Never mind that Reagan tripled the debt; accuracy was not high on the priority list of the faithful. All week long they reveled in their exaltations of a time that sadly for them never existed; a time when people and government alike lived within their means, and debt was something to be shunned. Laudable if delusional, as though the federal budget and a personal checking account at Citibank were synonymous. But delusion is all the Right had at CPAC; it is all they have ever had. Year after year they trumpet supply-side, trickle-down economics and good old-fashioned family values, and roll out the Gipper for old time’s sake. They are the ultimate cheerleaders for a team that never existed, except of course in their fantasies.

Bush betrayed them, yes that was it. They need to be resolute in their resistance to the socialist agenda of emperor Obama and the liberal horde in Congress. Though they continue to shrink in size and significance as a major political party in the country, they are defiant, if nothing else. The louder they shout, the more asinine and irrelevant their stances become. Common sense and truth are not what is at work here. Be they evangelicals looking to imprint their religious doctrine on society, or the neo-cons who would have us invade every country on the globe, or 2nd Amendment fanatics who oppose any restriction on gun owners no matter how reasonable, or the supply-siders who see nothing wrong with the continuing purge of the middle class and the accumulation of wealth in the hands of the power elite, this is a sad and pitiful bunch of miscreants, devoid of sanity and conscious. They rest their morbid hopes not in the health of the nation, but in some twisted Gothic calamity, which will no doubt permit them an opening to come to our rescue, like some tired and worn out John Wayne movie. Predictable and contemptuous. The Pharisees of Christ's time had nothing on these clowns.

Obama may or may not lead us out of this economic malaise. If he does, he will go down in history alongside FDR and Lincoln who met their respective crises not by burying their heads in the sand, but by rising up to the challenges of their times and having the courage to act decisively. Not only is he not steering the country in a direction toward unprecedented “government activism,” he is following in the grandest of presidential traditions by calling forth the full powers of the only entity in the nation capable of succeeding at the task: the federal government. If anything, the danger is that he might not go far enough. While the Republicans wail about the size of government, many economists are warning about the dangers of not being bold enough. They point to Japan in the 1990s as an example of a government that didn’t act swiftly or sufficiently enough when their economy started heading south; the result was a lost decade. The analogy with the United States is striking. When you add into the mix that we now live in a global market place where our actions, or lack thereof, could have a profound impact on the rest of the world, the prospect of a world-wide depression is a real possibility.

So there you have it. Like Custer at Little Big Horn, the Republicans continue to march onward, holding onto a edict that is as old and mythical as Old Saint Nick himself. So if you happen to look up in the sky one evening and you chance upon a merry old man bellowing “ho-ho-ho” on a minature sleigh led by eight tiny reindeer, don’t be concerned; he’s just headed toward next year’s CPAC. No doubt the bearded one will be the key-note speaker. Look out Rush!