I laugh every time a republican says “Deficits do not matter.” Obviously these republicans do not work in a bank. I don’t know about you but my bank hires hundreds of people to call and tell creditors the exact opposite every day. Outrageously, if banks followed Republican mantra, this country would be, not just between a rock and a hard place, but in a rock itself………..

Not to sound naive, but there is a propensity to use borrowed money in order to finance growth. Realistically, without borrowed money, economic stability would be a broken dream. Borrowing provides a framework to spread expensive costs over time and make those high ticket items, finally affordable. Translated to real time: one can buy a house much easier by getting a loan and making payments over thirty years, than they can by pinching pennies for thirty years and buying the house with cash. Plus they actually get to enjoy the result over the time they are paying it off, despite the fact that the total amount paid over time with interest, will be much higher. So borrowing is not “all bad.”

So in this capacity, when financial maggots crawl all over the federal budget figures, one can consider where this remark is coming from. It comes from Dick Cheney.

“Deficits Don’t Matter.”

The average American in 2005 paid $3179.00 on something that doesn’t matter, if one takes the original author of the remark seriously. (Hopefully no one but E-ZPass Mike Castle is taking him seriously anymore). Let us hope we can all get our creditors to agree.

“I don’t care how much you say I owe! National policy under a separate entity (Vice President’s Office) of the Federal Government, dictates that whatever I owe,… doesn’t matter!….Go ahead! …Sue me!…..I’ll bring up that the very government you are using to sue me, itself doesn’t even subscribe to the principals on which you are suing me. It will never make it to court… …….”

Dream on.

So we are stuck with a deficit. Is that all bad?

Get this, and with tongue in cheek, I say this sounds so partisan it literally scares me…….. Deficits do not really matter under a Democratic president, but they do under a republican president! I am laughing even as I write this.

What? Is that not the most partisan statement ever written on a Delaware blog!……I can hear Dave now……”Got the facts to back that up?”

Sort of……

Now I know no republican will have respect for this person: Joseph Stiglitz, Professor, Columbia University and Nobel Laureate, economics 2001 for he has not been officially “approved” by “the party”, but the rest of you might…..

[W]e shouldn’t focus on deficits themselves. What really matters is the country’s balance sheet, its assets and its liabilities. Consider a company. You would never say, oh, this company is borrowing a lot and therefore, it is a bad company. You would always say what is it borrowing for? Is it for investment? You want to look at both its assets and its liabilities. You want to look at its balance sheet. Well, when we talk about the deficit, we’re talking about only one part of that balance sheet. We’re talking about what’s happening to the liabilities, what it owes, but not to what it’s spending the money on.

Now republicans…..that wasn’t so bad, was it?

Anyone who has ever looked at a balance sheet would implicitly recognize that the borrowing costs, or interest paid upon a debt, fall into the liability column. So using Stiglitz and analysing the Cheney Tax Theorum throught that programming, one can assume that the following is true:

$1.6 trillion in tax cuts? Doesn’t matter, and not just because of the revenues they bring in, but because, really, what is an extra GDP percent or two worth of deficit? A comma in history. No matter. Greater spending increases under this administration than any in the history of the country? No worries — we can borrow to pay for it and our credit is good (until it isn’t). The additional borrowing costs? They don’t matter (see Theorem).

So why are deficits good under Democrats and not good under republicans? It depends on what one spends the money on, stupid…….

Some of us are blessed with a spouse having a fine business sense. After we turn over our money to them, they invest wisely, and wow, we have done quite well…….Others of us, are less fortunate……..once our spouses have their fingers on our money, they spend it on stupid stuff. In both cases our income stayed the same. (“Honey, here’s my check.”) But there is a great difference between the two net worths over a period of time …..(We are how much in the hole?”)

So when money is borrowed for investments it is good. When it is borrowed for frivolousness, it is not.

Therefore in the current political environment — or until the next election — republicans like E-ZPass Mike Castle, or those who are deficit-indifferent, with much fanfare, applaud the leveraging our of our national resources to support the policy priorities of this administration!

Truth hurts! Doesn't it?  Democrats rule:  republicans drool

And if you are borrowing money, which the United States has done, to finance a war in Iraq or to finance a tax cut for upper-income Americans, then the country is being left worse off. The balance sheet does look worse. You have a liability, but you don’t have any asset on the other side. But if you are borrowing money to invest in education, technology, or, say, the safety net, then you may have a stronger economy.

By the time he leaves office, President Bush under the Saruman influence of Dick Cheney, will leave us paying upward of $50 billion more a year in deficit financing costs than when he took office. And for what?

Hurts, (my fiscal conservative friends), doesn’t it…..

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