As long as we're on spending. Got one for the conservatives on the board.

Read a book recently by Bob Woodward on the early days of Clinton's administration, specifically on the budget. (I posted this earlier.)

It was the "It's the economy, stupid" election, and Clinton wanted to get the economy going so as to be re-elected.

They looked at the US economic advantages. First, it was the infrastructure, the educational system, the economic system, the roads, airports, the stuff which makes the society work.

Next, investment. People investing money which allowed the infrastruture to function to produce.

The biggest impediment to investments, the single item which slowed investment, according to his advisors, subtley guided by Greenspan, was the long-term bond market. When the bond market offered high interest rates, investment suffered.

And the bond market is exquisitely sensitive to deficit spending. When the government is running a high deficit, interest is higher and there is less confidence in long-term economic stability.

So, Clinton set out to cut the deficit and provide aid to the infrastructure. Cutting the deficit became sexy, and a lot of folks jumped on the bandwagon. They cut it so much there wasn't much for the infrastructure.

Over time he took some chances, including a couple of standoffs with the Rs over deficits, and the government was shut down. That was politically risky. But he stayed with the goal of reducing deficit spending and restoring confidence so as to reduce the long-term interest rates.

And the economy boomed. There are folks who won't give the Clinton administration for a thing. These same folks credit Bush with avoiding a recession which was inevitable.

Some people say that Bush' spending has done that, and the borrowing with it's problems to pay for that are to come.

As long as the deficits were down, things were going well. Start running deficits, long-term interest goes up, bonds (including government bonds, which do not generate money for investment) become more attractive than investments, and the economy suffers.

Cut taxes, increase spending, deficits go up, long-term interest rates go up, investment goes down. Growth slows.

Let's see what happens. For all I know that may be off, but it sounded good.

Arf