Keith Hennessey responds to Chait:
Three things can be done with a dollar of surplus: return it to the taxpayers, use it to pay down debt, or increase spending on a government program. Team Obama and its allies suggest that if we had not cut taxes and the surpluses had remained in Washington, then all these surplus revenues would have been used to pay down debt. I think it’s far more likely that Congress would have figured out ways to increase government spending (yes, sadly even with Republican Congressional majorities). For me tax cuts vs. debt reduction is a tough call. Tax cuts vs. (an uncertain mix of debt reduction and government spending increases) is a much easier choice.
Chait fires back:
While Democrats pushed for reserving the surplus to reduce the national debt, Bush always insisted there were just "two choices": leave the money in Washington, or return it to the taxpayers. This was a rhetorical trick designed to define out of existence the option of paying down the debt. It's nice to see Hennessey admit there are actually three choices. But he recycles Bush's old dodge that somehow the debt wouldn't have been paid down and that spending would rise. This is nonsense. Debt reduction was the default policy in the absence of Congressional action. If Bush wanted to pay down the debt, he could have vetoed any spending bill above his desired amount. The decision not to pay down debt was not taken away by Congress. It was removed by Bush because Bush preferred tax cuts.
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