Cheney, Deficits and tax revenue

"Reagan proved that deficits don't matter."

Everybody remember that? Cheney spoke again about the matter on MTP with Tim Russert late in '03:

We’re still about 4.7 percent of our total GDP. So the notion that the United States can’t afford this or that we shouldn’t do it is, I think, seriously flawed. One of the reasons the deficit got as big as it did, frankly, was because of the economic slowdown, the fall-off in deficits, the terrorist attacks. A significant chunk was taken out of the economy by what happened after the attacks of 9/11.

MR. RUSSERT: And tax cuts.

VICE PRES. CHENEY: Tax cuts accounted for only about 25 percent of the deficit.

MR. RUSSERT: But we see deficits for the next 10 years, big ones. How do you deal with that, when you have Social Security, Medicare, coming up?

VICE PRES. CHENEY: We anticipate even with the added spending that we’ve asked for now we’ll cut the deficit roughly in half from where it’ll be next year over the next five years. So we’ll be moving in the right direction. We’ve got to have—without question, we’ve got to make choices, we’ve got to have fiscal discipline on the rest of the budget. But the idea that we can’t defend America or that we can’t go do what needs to be done in the Middle East with respect to Iraq and Afghanistan, support the troops, rebuild those countries so they never again become safe havens for terrorists to threaten our safety and our security, is silly. The cost of one attack on 9/11 was far greater than what we’re spending in Iraq.

Fast forward to May 2006:

The Monthly Treasury Statement, published yesterday, made the fiscal budget trends look even better than they did last month. At this rate, the unified budget would move into balance on April 4, 2008. Here’s the chart; click to enlarge.I’ve decided to start calling it “Victory for Growth Day” (VG-Day) because if it happens, it would be a balanced budget achieved through economic growth instead of tax rate hikes. According to the doom peddlers, that’s supposed to be some kind of Walter-Mitty-style pipe dream, worthy of sarcastic ridicule and dismissal with a wave of the hand. [How long have they been saying “We’ll never grow our way out of it”? There’s probably some entertaining stuff along those lines at the Blue Dog Democrats’ web site, I bet.]

Last month, “VG-Day” was October 12, 2008, but that was based on the March ’06 MTS. The new April statement improved the deficit trend (tax receipts relative to outlays), and moved VG-Day earlier by six months. In other words, we might get to watch the deficit doom peddlers stutter like Porky Pig for seven full months of the 2008 presidential campaign—instead of just three weeks.

Maybe, maybe not. But it certainly testifies to the point that you can grow yourself out of many a tight spot!