President wants to believe deficits don't much matter

Having allowed the law that was designed to bring some discipline to the federal budgeting process to expire in 2002, President Bush has now become a partial convert to the doctrine of Gramm-Rudman.
In his 2005 budget -- which projects a deficit of $364 billion, not counting an estimated $50 billion that will be added after the presidential election to cover the cost of the war in Iraq -- President Bush proposes that Congress re-enact a series of spending limitations.
The president's proposal is similar to the Balanced Budget and Emergency Deficit Control Act, better known as Gramm-Rudman after two of its three principal sponsors, which was enacted in 1986, when the deficit was $221 billion.
Gramm-Rudman didn't work immediately or exclusively to keep deficits in check. They fell initially, but had risen to $221 billion in 1990 when Congress enacted the Budget Enforcement Act. The deficit peaked at $290 billion in 1992 under Bush senior (a record until 2003 under the current Bush) and then began to fall.
These deficit reduction measures relied generally on pay-as-you-go provisions, which roughly required that any new spending or tax cuts be balanced by offsetting spending cuts or tax increases. They governed the congressional budgeting process for 16 years and, imperfect as they may have been, they worked.
Four good years
Under President Clinton and a Republican Congress, the budget went into the black for four straight years. In fiscal 2001 when President Bush took office, there was a $127 billion surplus.
The budget act expired in 2002. Had it not, the president could not have gotten the big spending increases and sweeping tax cuts included in his budgets through Congress.
This fiscal year, the deficit is estimated at $521 billion. About one of every five dollars the government is spending is borrowed -- added to a multi-trillion dollar deficit that will have to be paid by our children and grandchildren.
Obviously, that's a borrowing pace that is immoral from the standpoint of the burden it places on the next generation and unsustainable from the standpoint of the tension it places on the economy.
Vice President Dick Cheney became recently famous for telling former Treasury Secretary Paul O'Neill that president Reagan proved that deficits don't matter. But of course they do. Eventually, deficits bring increased interest rates and cripple economic growth. Eventually, the foreign nations that are carrying much of that debt stop investing in U.S. securities. Inevitably, deficits do matter.
Which explains the president's willingness to begin talking about fiscal restraint. But he's only willing to talk about it in half-sentences. The president has endorsed that part of a Gramm-Rudman type bill that would require offsetting spending cuts for any spending increases. But he refuses to budge on altering his tax cut package, which adds $1.2 trillion to the deficit over 10 years, and he continues to keep the Iraq war costs off-line.
The president has stopped telling the American people that they can have it all. But he continues to send a message that they can have almost everything. And that's not realistic.