The Economy

From whence comes the deficit?

Usually when I write a "controversial" column, the comments I receive are more or less equally divided pro and con. However, my column "Who taxes, who spends?" (Sept. 6), saying that the deficit is always larger under a Republican President, yielded a near-record number of responses that all said the same thing: It's the Congress, stupid. As all empirical social scientists should say, let's look at the numbers. I calculated the Republican or Democratic majorities in the Senate and House from 1945-46 to the present and correlated it with the government deficit ratio based on the budget they passed. In other words, the 1945-46 Congress was responsible for the budget in FY 1946 and FY 1947, and so on. There isn't room in this column for all the numbers, but I can send them to anyone who wants to replicate these results. First I calculated a relationship between the size of the deficit ratio as a function of the Democratic majority (or minority) in both the House and the Senate. The results were surprising in the sense that the more Democrats in the House, the bigger the deficit. In the Senate, the more Republicans, the bigger the deficit. When I combined the effects of the House going one way and the Senate the other, I found no correlation of the party of the Congress to the size of the deficit at all. I thought that perhaps the size of the majority played a role, so I altered my variables to accommodate that. However, the results were virtually identical. Finally, I went back and factored in whether the President was a Republican or a Democrat. This time I got precisely the same results reported in my earlier column: The deficit was larger under Republican Presidents. So, the size of the deficit is not related to who is in the Congress, but correlates solely with the party of the President. Stated in another way, these results show that the alleged power of Congress is far overstated. It is a rare time indeed that Congress has an independent economic agenda. The President is still by far the most important political figure in the country. Some people may take issue with this statement, especially in view of the recent vote of the Senate against the nuclear-test-ban treaty, and the guilty vote on the impeachment proceedings in the House. Yet these are mere flyspecks relative to the economic performance of the country. The test-ban treaty was a joke in any case; let us not forget the Kellogg-Briand peace pact of 1929 that outlawed war forever. When he came to power, Hitler was somehow not impressed; only the French thought it would save them from another invasion. And finding Clinton guilty of lying merely codified what every American with an IQ over 60 already knew; the President has great difficulty telling the truth. Otherwise, nothing changed. When it comes to economic decisions, the President invariably gets what he wants -- no matter who is in charge of Congress. Eisenhower wanted a balanced budget, and the Democrats gave it to him. Reagan wanted the biggest peacetime deficits in history, and the Republicans gave it to him. Clinton wanted to turn the deficits back into surpluses, and the Democrats started the ball rolling, although the Republicans continued the pattern. Clinton recently vetoed the Republican bill to cut taxes by $795 billion over the next decade. As readers know, I favored the tax cut, but that's not the idea here. It was the Republicans in Congress who wanted to reduce the surplus, and the Democrats who wanted to maintain or even increase it. So I will repeat my forecast: If George W. Bush gets elected in 2000, we will see a smaller surplus than if Al Gore gets elected, regardless of who controls Congress. The surplus reduction under Bush may well come through lower taxes rather than higher spending. He may be under some personal as well as political pressure to reverse the errors of his father. Nonetheless, the pattern of the past will continue. If you want higher taxes and a bigger surplus, vote Democrat. If you want lower taxes and a smaller surplus, vote Republican. Michael K. Evans is president of the Evans Group and professor of economics at the Kellogg School of Business, Northwestern University, Evanston, Ill. His e-mail address is [email protected]

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