Today we are going to post an article written by the “best” economist in the world today, Thomas Sowell. In my opinion, he is by far the smartest man in the world when it comes to economics and you will see why by reading the article below.

In this first article, Mr. Sowell explains the real truth about Clinton’s so-called budget surplus and also the Obama/Bush budget deficits.

In this time of utter importance in our history, we need to hold those to account for this misdeeds and not get caught up in all the empty rhetoric that is being spewed from the current administration.

In other words, do not take any politician’s word for anything. Investigate what they are saying and if they are lying, call them out on it.

The current administration is one of the worst culprits of this in recent memory. They want to take credit where it is not deserved and they want to lay blame for things which they have contributed to as well as former administrations.

It is completely ridiculous…and now for the story.

Thomas Sowell

Thomas Sowell

President Barack Obama boldly proclaims, “The buck stops here!” But, whenever his policies are criticized, he acts as if the buck stopped with George W. Bush.

The party line that we are likely to be hearing from now until the November elections is that Obama “inherited” the big federal budget deficits and that he has to “clean up the mess” left in the economy by the Republicans. This may convince those who want to be convinced, but it will not stand up under scrutiny.

No President of the United States can create either a budget deficit or a budget surplus. All spending bills originate in the House of Representatives and all taxes are voted into law by Congress.

Democrats controlled both houses of Congress before Barack Obama became president. The deficit he inherited was created by the Congressional Democrats, including Senator Barack Obama, who did absolutely nothing to oppose the runaway spending. He was one of the biggest of the big spenders.

The last time the federal government had a budget surplus, Bill Clinton was president, so it was called “the Clinton surplus.” But Republicans controlled the House of Representatives, where all spending bills originate, for the first time in 40 years. It was also the first budget surplus in more than a quarter of a century.

The only direct power that any president has that can affect deficits and surpluses is the power to veto spending bills. President Bush did not veto enough spending bills but Senator Obama and his fellow Democrats in control of Congress were the ones who passed the spending bills.

Today, with Barack Obama in the White House, allied with Harry Reid and Nancy Pelosi in charge in Congress, the national debt is a bigger share of the national output than it has been in more than half a century. And its share is projected to continue going up for years to come, becoming larger than national output in 2012.

Having created this scary situation, President Obama now says, “Don’t give in to fear. Let’s reach for hope.” The voters reached for hope when they elected Obama. The fear comes from what he has done since taking office.

“The worst thing we could do is to go back to the very same policies that created this mess in the first place,” he said recently. “In November, you’re going to have that choice.”

Another political fable is that the current economic downturn is due to not enough government regulation of the housing and financial markets. But it was precisely the government regulators, under pressure from politicians, who forced banks and other lending institutions to lower their standards for making mortgage loans.

These risky loans, and the defaults that followed, were what set off a chain reaction of massive financial losses that brought down the whole economy.

Was this due to George W. Bush and the Republicans? Only partly. Most of those who pushed the lowering of mortgage lending standards were Democrats– notably Congressman Barney Frank and Senator Christopher Dodd, though too many Republicans went along.

At the heart of these policies were Fannie Mae and Freddie Mac, who bought huge amounts of risky mortgages, passing the risk on from the banks that lent the money (and made the profits) to the taxpayers who were not even aware that they would end up paying in the end.

When President Bush said in 2004 that Fannie Mae and Freddie Mac should be reined in, 76 members of the House of Representatives issued a statement to the contrary. These included Barney Frank, Nancy Pelosi, Maxine Waters and Charles Rangel.

If we are going to talk about “the policies that created this mess in the first place,” let’s at least get the facts straight and the names right.

The current policies of the Obama administration are a continuation of the same reckless policies that brought on the current economic problems– all in the name of “change.” Fannie Mae and Freddie Mac are still sacred cows in Washington, even though they have already required the biggest bailouts of all.

Why? Because they allow politicians to direct vast sums of money where it will do politicians the most good, either personally or in terms of buying votes in the next election.

Be sure to check out his other articles by clicking Here.



11 Responses to “The Truth Behind Clinton’s Surplus and Obama/Bush’s Budget Deficits”

  1. Elmore says:

    While your post may be more or less factually correct, your conclusions aren’t. As you say, together Clinton and the Republican Congress balanced the budget. Then for six years George Bush and the Republican Congress busted the budget, and Obama and the Democratic Congress have continued to bust it. In your post, you then lump all of this spending together and somehow blame the Democrats for our current predicament. You should remember that Bush and the Republican Congress set us off down this path by getting us into two hugely expensive wars without having any way to pay for them. Bush called and every Republican followed, no exceptions. (Many Dems also voted for this expensive debacle, but not Obama) The gargantuan Bush-created Department of Homeland Security is the largest department in US government history. Not even counting the wars, we spend more on the military than all other countries combined. Bush also bailed out the banks at an enormous cost with no strings attached. On the other hand, Obama bailed out the auto industry with mandates to clean up their management and save a million American jobs. The banks are still not lending money into our economy, but the auto manufacturers are profitable again, we still have those jobs, and the “bail-out” is being paid back with interest.

    It’s not how much you spend, it’s what you get for your money. We spent a trillion dollars for the Iraq war. What have we gotten for that? A dollar’s worth of tax cuts for the richest 1% returns .70 to the economy, while a dollar of unemployment insurance returned to an unemployed person returns $1.50. Which has the best bang for the buck?

    We agree that we are in a crappy position right now, with way too much debt and way too much spending. In fact, if you cut out all federal discretionary spending you still could not balance the budget. By all means cut out the things that don’t help us recover, but to cut spending on the things that bolster the economy when the economy is hurting is crazy. The only thing that can save America is a strong economy. Healthy businesses and a strong middle class are the only way to pay back all this debt (and a little inflation wouldn’t hurt either). Spending some money to help America recover is not a bad thing. If we follow Republican and ConservaDem advice though, by cutting back even more and doing things to further hurt our businesses and our people, we may never recover.

  2. Elmore says:

    And about Thomas Sowell; he’s a laissez faire libertarian. The current economic crisis is the result of the libertarianism we’ve tried in this country for the last forty years or so. What? How can a huge and intrusive government and massive borrowing be the result of small government libertarianism? Libertarians are just like Communists. They are starry eyed idealists who are easily taken advantage of by unscrupulous interests. Communism has never worked because it is idealistically dependent on the knowledgeable people putting the system in place to eventually give up their power to the people. Joe Stalin and Mao had other ideas.

    Libertarians idealistically assume that if government goes away, markets will play fair and the economy will be better. Unfortunately, competition is anathema to making lots of money quickly and powerful interests want to make lots of money quickly. Monopolies work much better than competition for that. There are many fewer irritating extra costs to bear when there is no competition. Monopolies destroy societies in many ways. They stifle creativity, drive wages down, hamper new business and consolidate power into a few hands; all the things that libertarians want to avoid.

    Intelligent regulation prevents monopolies while allowing competition, but libertarians want to give up regulation, thinking that all regulation is bad while hoping that everybody will play fair in an unregulated market. Libertarians are just as naive as Communists. The hands-off libertarian policies we’ve tried to follow since Reagan have led businesses (especially banks, the media, healthcare insurers, and defense contractors) to consolidate into near-monopolies; too big to fail without massively damaging the economy while using their overwhelming power to influence and control government, making it bigger and bigger so as to channel more and more money into their pockets. Where do you think the trillion dollars we’ve spent on the Iraq war went? It certainly didn’t go to the Iraqis.

    Mr. Sowell still naively believes in an idealistic libertarian economic system that has no chance of success, and therefore his opinion on this topic is suspect.

  3. [...] Feel free to read the comment section of the post by clicking, Truth Behind Clinton’s Surplus and Bush/Obama deficits. [...]

  4. [...] Feel free to read the comment section of the post by clicking, Truth Behind Clinton’s Surplus and Bush/Obama deficits. [...]

  5. [...] Feel free to read the comment section of the post by clicking, Truth Behind Clinton’s Surplus and Bush/Obama deficits. [...]

  6. [...] Feel free to read the comment section of the post by clicking, Truth Behind Clinton’s Surplus and Bush/Obama deficits. [...]

  7. Boo says:

    Hi Elmore and thanks for the long comment. We appreciated the dialogue on our blog posts.

    Libertarians are laissez faire capitalists and for you to suggest that America has had a laissez faire capitalist system is simply not true.

    Instead of posting an equally long rebuttal in the comment section, we posted a 4 part series (courtesy of Geore Reisman) who explained in great detail the fallacies in your thought processes.

    Feel free to indulge in the 4 part series and rebut as you see fit.

    I think it’s pretty cut and dry myself.


  8. Mary Gatt says:

    The buck should stop with President Obama. After all, it had to stop with president Truman–all’s fair in war. So Boo, stop your whining. Get on with your life and begin to make some money so you will not be crying in your beer instead of in your champagne.

  9. Mary Gatt says:

    oops sorry it was not Boo I was responding to, it was Elmore. Sorry Boo

  10. Boo says:

    That’s ok Mary. We appreciate your comments and from reading your response, I assumed you were speaking to Elmore.

  11. Worker says:

    Hola, – da mejor. Guardar va!

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