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The Daily Utah Chronicle

The University of Utah's Independent Student Voice

The Daily Utah Chronicle

The University of Utah's Independent Student Voice

The Daily Utah Chronicle

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Bush administration official: Deficit won’t hurt economy

A top Bush administration official said concern over the rising national deficit is misguided.

Randal Quarles, undersecretary of domestic finance for the treasury, spoke on “Tax cuts, the deficit and the economy,” to a full audience in the Hinckley Institute of Politics on Friday.

He used a number of figures to suggest that the current deficit is manageable and does not have any negative economic consequences.

Quarles pointed to the rate of economic growth as an indicator that the economy is performing well despite the current deficit.

The U.S. gross domestic product grew 3.5 percent last year, which is very strong when compared with the GDP growth of other developed countries, he said.

Quarles said that increases in average income and productivity, as well as a decrease in the unemployment rate, contribute to paint a positive picture.

He said that critics too often ignore positive figures such as these.

“Our economic debate has come to take these outcomes for granted and to focus instead on what are sometimes technical questions of domestic and international finance,” he said.

What are these technical questions?

Quarles said that critics believe that U.S. economic growth has been generated at the cost of our long-term financial health and that the deficit is already impeding economic growth.

Quarles tried to discredit these criticisms by comparing the deficit to past presidencies and other nations.

He said that the government net debt is about 46 percent of our GDP, which is almost a third less than the 66-percent average for the rest of the Group of Eight (G8) countries (Canada, France, Germany, Italy, Japan, the United Kingdom, Russia and the U.S.).

Quarles compared the Bush administration deficit with that of the Clinton administration. He said that the deficit acquired during the Bush administration is a smaller percentage of the overall GDP than Clinton’s.

Quarles blamed opponents of the Republican Party for trying to exploit the deficit to gain political capital on other issues, such as the Iraq war.

“For some, particularly in Washington, raising alarms about our ability to finance our policy decisions is a way of avoiding a direct and unbiased discussion of those policy issues themselves,” he said.

He urged that every issue be examined on its own terms rather than in terms of the deficit. For instance, he said that his party’s efforts to slash spending for social welfare programs has more to do with its ideas about the role and scope of government than concerns over the deficit.

Nathan Hatch, a graduate student in economics, said he doesn’t buy everything that Quarles had to say.

“He’s probably sent on his tour to show the rosy picture and dodge the problems,” he said. “I agree that the economy is overall fairly strong, but I think to say that the problems we have are not economic questions and are merely financial questions is a great understatement.”

Hatch said he is concerned about funding cuts to education-something he sees as a good long-term economic investment.

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