Deficit Politics

A small story, getting smaller all the time, is the deficit. It stands now slightly north of $200 billion, or about 1.2 percent of the gross national product. The historic rate is about 2.4 percent. In wartime, the historic percentage is much higher (for example, during the Second World War, the percentage was in the upper 30s). Take away spending for the war, and we probably would have a small surplus. Imagine what spending programs the Democrats would propose if we actually did have a surplus!

The war drives the left crazy because they want to spend the money on bigger government. When the Democrats say they want to bring the troops home, they mean that they want to bring the troops home so they can spend more of the taxpayers’ money on universal healthcare, midnight basketball, windmills and stuff like that.

The deficit numbers aren’t all rosy. While discretionary spending has stayed relatively flat, entitlement spending threatens the future viability of the federal government. Social Security is going to go broke in the relative near term, but the Democrats refuse to even look at innovative ways to prop up retirement security outside government mandates. The view among the Democrats is simple. Wait until there is a real crisis and then force through a plan that includes higher taxes and lower benefits.

One bright spot in the entitlement picture is in Medicare Part D, the prescription drug benefit designed by Republicans. While fee-for-service costs have skyrocketed inside the Medicare program, Part D is actually coming in at a lower cost. Amazing what competition can do to keep costs down.

Of course, the Democrats would love to repeal the prescription drug benefit. They didn’t design it, they won’t get credit for it, and so they want it gone. But they can’t repeal it now, because it is too popular.

Outgoing OMB Director Rob Portman did a great job of keeping the lid on spending without going out of his way to poke his finger in the eye of the Congress. A savvy political operator, Portman was well liked in both bodies and on both sides of the aisle. He is moving back to Ohio, but don’t be surprised to see him back in politics, hopefully running for president in 8 to 12 years.