This is an interesting story from Bloomberg.com (http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=azGzPwIGPlR4) that analyzes how different the federal budget situation for the USA would be if the Chimperator (and the Republican controled Congress) had used a little fiscal constraint. The Republicans like to depict the Democrats as the big spenders who cannot balance the budget. The reality under the Chimperator has shown the exact opposite to be the case. Here are some story highlights:
Feb. 11 (Bloomberg) -- If you could go back in time to President George W. Bush's inaugural address and add one economic statement, what would it be? For me, there is an obvious answer. If Bush had promised in January 2001 that the baseline of government spending that he inherited when he took office would be the cap during his term, then we would have a big budget surplus today. It would have been easy to do.
With government spending still out of control, the gap between where we are and where a disciplined nation could have been is getting bigger and bigger. With a recession looming, the policy implications of the spending explosion are serious. If a deep recession occurs, we will have less wiggle room.
To see how different the world could have been, I gathered data from a number of sources and ran an alternative history. In that wishful place, government spending was set equal to the spending envisioned by the Congressional Budget Office in the January 2001 long-run forecast, plus the spending for the war in Iraq and to fight terrorism. This simulation assumes that the war would have happened in spite of Bush's spending promise, and wouldn't have induced him to seek cuts elsewhere.
The difference between that spending path and the one we are on is huge. Today, we expect federal spending in 2008 will be $2.9 trillion. According to the alternative history, spending would be $2.5 trillion. With spending at the lower level, we would have a surplus of $152 billion if revenue were equal to what it is currently projected to be. Running the simulation forward, the gap between revenue gets wider and wider. By 2017, we are scheduled to spend almost $1 trillion more than we would have if we had stuck to the Clinton baseline. With the low spending baseline we would have a surplus in 2017 of $1.1 trillion, instead of the $151 billion surplus that's currently forecast.
A simple way to start would be this: Whoever is elected president this November should pledge that he or she won't spend $1 more than we currently plan to. If Bush had done that seven years ago, we would be in a different world.