Third Way Dispatch

Vice President Dick Cheney reportedly once said that “deficits don’t matter.”

Cheney now disputes having used these very words, but there’s no dispute about his boss’s record or conservatives’ careless attitude toward spending in the red. By 2011, President Bush and the Republican Congress will have racked up more than $1 trillion in deficits.

Unlike the Vice President, we think deficits do matter, and that they have a major bottom-line impact on middle-class pocketbooks. How big? Try up to $1,700 in excess interest costs if you happen to own a home, use your credit card, get a car loan or borrow for college. If you borrow to start a small business, make that up to $3,000 in potential extra costs. A 2003 study by the Federal Reserve under Alan Greenspan discovered exactly how far interest rates could rise as the budget deficit grows. Using the Fed’s analysis, the increase in deficits under the President’s watch will eventually add a full percentage point to long-term interest rates.

Moreover, deficits spell wasted taxpayer dollars. Currently, one in 12 taxpayer goes down the drain on interest payments.

We think deficits do matter, especially for the middle class.

Click here for our detailed analysis on the impact of deficits on the middle-class.