Home > General, Political, Politics, Pre Pulse Ramblings > Congress Controls Fiscal Policy

Congress Controls Fiscal Policy

…not the president.

If there is one thing I’ve been trying to relay is the fact that, per the Constitution, it is the CONGRESS that appropriates and dictates Fiscal Policy, NOT the President. When we talk of deficits and spending, blaming Bush, or Reagan and giving credit to Clinton is absolutely inaccurate. 


To be sure, the President has a role to play: he will, for example, submit a spending plan to the Congress to consider. More often than not, that spending plan is dead on arrival, especially if the two bodies are from different parties. Congress doesn’t own unilateral power however. If the Congress cannot override the President, then they must craft a bill that the President will sign. The President can lead the charge against spending as well. If George W. Bush had one weakness, he did not lead the charge against spending, even when the Dems took power, he signed many egregious spending bills, pork and earmark infested. 


Senator McCain was one of the few senators that did not bloat spending bills with his pet pork projects. He is one of the very few fiscally restrained legislators serving today. 


The same cannot be said of Obama. He used his senatorial position to throw gross money toward the hospital his wife worked for. The economic package he promises is rife with MASSIVE increases to federal spending, which will be paid for by massive tax increases. Do not believe his rhetoric, we all will pay higher taxes under an Obama administration because he will have a like-minded party controlling the spending. And, count on this: a recession will come. Just as George H. W. Bush’s tax increase deal he made with the Democrats in 1990 resulted in a recession, so too will Obama’s. The recession will come under his insane economic policies. The question will be this: how bad?


Recession? Stagflation? Or Depression? Misery index, here we come. 


One point the Cato piece does not consider is Debt-to-GDP Ratio which is the measure we must all consider when discussing fiscal policies.


While Cato correctly blames the Republican Congress for increased spending, they again use the same ole tired mistake by identifying single-column accounting when discussing the deficit. While the deficit did increase (thanks to a Clinton recession, attacks, increased defense spending, and wars) so too did our earnings (GDP). In fact, when the supply side tax cuts began to “take” our growth rocketed to almost an increase if $1 Trillion per year and eclipsed whatever was happening with the deficit. 


In essence, you cannot JUST talk about DEBT without talking about assets. If your earnings increased by $100,000 a year, and your debt increased by $10,000 a year, are you better off or not? Clearly you are better off. So too is the US. So, keep in mind, when they discuss deficit spending that goes from here to the moo n, don’t forget that assets (GDP) stretches from here to the next galaxy. $14.5 TRILLION. 


What is NEVER mentioned as well is the fact that the tax cuts resulted in the largest amount of federal receipts in our history. In layman’s terms, because taxes were cut, the Federal Govt received the most money it ever received, the problem has been the out-of-control spending by Congress.


The Economy and the Congress 


by Richard W. Rahn 



  1. Marissa Southards
    February 15, 2010 at 10:42 pm

    Ran across this while researching fiscal policy – isn’t it safe to say that we were headed towards recession prior to Obama coming into office?

  2. Michael Wright
    February 9, 2011 at 11:15 am

    Yes; his point exactly. What he’s pointing out is that fiscal policy is controlled by congress, and a Democratic majority has a longer history of deficits than a Republican majority. The fiscal policy that stoked the fire of recession was led by a congress with a Democratic majority.

    What I’m seeing, if history is any indication of future outcomes, is that a Democratic president and a congress with a Republican majority is a winning combination for the economy, I.E. Clinton and the Republican congress of ’95-end of his 2nd term.

    Also, the majority of recessions/depression from 20th-Century-Today happened under a Democratic majority of congress.

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