Friday, September 28, 2007

How Soon We Forget (Under the Power of Political Prejudices)

Scott at Powerline commenting on the Dems debate:
"Senator Clinton recalled that President Bush's desire to avoid "eliminating the debt" (I think she meant deficit) "was one of the excuses he gave when he voted for [sic] those horrible tax cuts in 2001."The absence of any reference to the toll of 9/11 is striking, as well as the animus against reduction in income tax rates."
I think if he would check in early 2001, when Bush pushed his first round of tax cuts (before
9/11:
  • First, there was no deficit. There was a surplus.
  • Second, surpluses were projected that caused people like Greenspan and the Treasury to worry there might not be enough debt to fulfill the functions of the Treasury market. That's one reason they dropped the 30-year Treasury bond auctions(which I had bought earlier).

As a matter of fact, with a little googling, I came up with this piece from May 3, 2001:

"This is why the Treasury Department under the Bush administration will have to make some important decisions about the future of the Treasury market by November. In that period -- which includes the three quarterly Treasury auctions in May, August and November -- the Treasury is going to have to give a clear indication of what it wants to do with the government bond market. It can let this market fade away in the most organized and least disruptive way possible. Or it can do its best to keep the market alive.

Because of large budget surpluses, the government is expected to have no real need to borrow in a few years. And if the government ceases to issue bonds and notes, the Treasury market would lose its role as a benchmark for interest rates, a haven for worried investors and a tool in many of Wall Street's regular financial transactions."

Now Hilary may well be wrong that Bush ever connected his 2001 tax cut to the need for debt. But she was right about the rest. And Powerline's memory is demonstrably vague (as we all are when we don't like the facts).

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