It's politics, not political party. Neither is correct. Both are guilty.
Big Business transfers its loyalty, money to the Democrats
The two major political parties have been shifting their coalitions for a while now, as higher-income Americans move closer to the Democrats, despite the prospect of tax increases on high-wage earners. The Iraq war, which unsettled global markets, and the conservative social agenda combined to alienate many Wall Street executives from the Republican Party even before the recent financial meltdown. In the recent presidential campaign, the financial sector, long the biggest backer of the Republicans, actually gave more money to the Democrats, by roughly $65 million to $59 million, according to the Center for Responsive Politics.
But if the financial sector split the difference between the two parties in 2008, it will probably skew toward the Democrats in succeeding elections, as Obama becomes the chief advocate of the Wall Street bailout. Such a development would be shocking considering the animosity between Big Business and the Democratic Party that began during the New Deal of the 1930s, which drove up taxation and slapped new regulations across many industries.
Higher federal taxes account for half of the decline in the deficit. In fiscal year 1992, federal revenues consumed 17.8% of gross domestic product (GDP), according to the Office of Management and Budget (OMB). In 1999, federal taxes are expected to eat up 20.1% of GDP, an increase of 2.3%. With GDP estimated to be $8.8 trillion next year, this means Americans will be paying an additional $200 billion more in federal taxes than they would if they remained at their pre-Clinton percentage of GDP.
It is too soon to say what price we will pay for Clinton's shift in budgetary priorities. But it is worth noting that the nation's last balanced budget was closely followed by a sharp recession.