This Argument Works for a Libertarian...
I think this kind of argument might work for a libertarian, but I am not sure it is a very strong argument for a liberal Democrat that wants to do more rather than less of what Congress and the GWB administration did over the last 8 years to worsen the recession.
Personally, though, I'd say Obama has been remarkably restrained about the whole thing, especially when it comes to our disastrous fiscal situation. In a mere eight years, George Bush and the Republican Party managed to take a thriving economy and a federal surplus and turn it into a hair's breadth escape from Great Depression II and an endless fiscal sinkhole. Rome may not have been built in a day, but it didn't take much longer than that for the modern Republican Party to bankrupt America.
Particularly hilarious is that Drum blames the cost of the useless but expensive stimulus bill on GWB. Huh? And blaming Republicans for Fannie and Freddie is a real joke.
As you might imagine, the deficit in his world is all from tax cuts and not above-inflation increases in spending. The basic picture he shows is absurd - money is fungible, so any trillion dollars of the government spending could be blamed for the deficit - it just depends on what spending you consider incremental. Stupid analysis. Though it is interesting that at least two of the major drivers even by their slanted analysis - Bush tax cuts and Afghanistan - are policy issues Obama was presented with opportunities to reverse and chose not to.
Mark:
As if there was not a recession at the end of Bill Clinton's term that was followed immediately by 9/11 that caused tremendous economic turmoil.
Issue number two is the talk of the "budget surplus". The Clinton budget surplus was caused by two factors.
1. The winning of the Cold War allowed for defense spending to be reduced from an average of 6% of GDP to 3% of GDP. IF you change this parameter to even a lower end Cold War defense spending level of 5% GDP the budget surplus disappears.
2. The Internet bubble caused tax revenues from the capital gains tax to soar. Prior to this stock market bubble annual revenues from capital gains taxes varied from $30 to 50 billion. But with the massive gains made by some individuals in the stock market rally capital gains revenues exceded $100 billion.
The other myth about the Clinton surpluses is that we had an "on-budget" surplus exactly two years, 1999 and 2000. It isn's as if the entire Clinton years were some sort of balanced budget paradise.
December 16, 2009, 12:22 pmMichael:
Bush came in to office with a debt ceiling of 5.9 trillion and left with a ceiling of 11.3 which was kicked up from 10.6 trillion for TARP right before he left. The ceiling got kick up to 12.1 trillion in February and were looking at another 2 trillion to get us though the 2010 elections.
The irony is that many of the Democrats that got elected in 2006 and 2008 got there by using the "Republicans are reckless spenders" mantra.
December 16, 2009, 12:53 pmmorganovich:
one of the most persistent american political myths is the "clinton surplus".
it never happened. the whole thing is just misrepresented facts publicized by bubba himself.
the national debt went up every single year of the clinton administration and was already shoing a market increase in rate before he left.
national debt = external debt + intergovernmental debt. clinton DID reduce external debt, but he did it taking money from social security etc. the net result was more debt.
this is an excellent explanation with links directly to the treasury data:
http://activerain.com/blogsview/855368/the-clinton-budget-surplus-fact-or-fiction-
further, this is just the cash debt. if, as is required under GAAP, we include unfunded liabilities, there has not been a balanced budget since eisenhower.
December 16, 2009, 3:18 pmepobirs:
Whenever anyone refers to that era by saying 'surplus' instead of the correct 'projected surplus' (an extraordinarily improbable projection, at that), I know the speaker is full of crap and can be ignored.
December 16, 2009, 4:11 pmMesa Econoguy:
Please. Kevin Dumb talking about economics is a stand-up routine.
Obamalini is responsible for the single largest postwar recession deficit spending stimulus.
As the WSJ observed today:
The Audacity of Debt
And now they're about to jack up the debt ceiling another $2 trillion.
Kevin Drum and his mentally challenged cohorts have no credibility on anything, much less economics.
December 16, 2009, 5:33 pmO Bloody Hell:
The concept of "balancing the budget" is utterly meaningless unless you first pass laws, pref. a Const. Amendment, requiring that all government agencies must adhere to GAAP in their accounting practices. Unless and until that point, there will be no balanced budget of any kind.
A case in point is New York State. New York has a balanced budget amendment. They had a shortfall in 1991. How to solve it? They sold Attica Prison... to themselves:
In 1991, the State of New York sold Attica prison to none other than itself. The buyer was a state agency that financed the $200 million purchase price by issuing bonds. The agency then leased the prison back to the state, with the lease payments being equal to the debt service on the bonds.
In substance, of course, the transaction was nothing more than a borrowing arrangement — the equivalent of borrowing $200 million from the buyers of the bonds. Nevertheless, the state booked the entire sale price as revenue for the year. The previous year, the state sold the Cross Westchester Expressway to the New York Thruway Authority — in other words, to itself.
This kind of chicanery is what gets you thrown in prison if a private business does it. In the government, though, it's not only allowed, it's SOP.
December 16, 2009, 8:10 pmme:
I find this an interesting example of tribal thinking - each party's proponents point fingers happily at the other and points out that they are to blame for the current economic situation while loudly denying any responsibility.
Bush was a reckless spender whose policies were a direct contributing cause to the downturn. Obama is a reckless spender whose policies are directly contributing to making the downturn much worse (and, personally, make me sick considering future prospects).
There's a trend here, and it's not a trend that could be reversed by hoping that "one of our own" gets to control the executive and legislative branches again, doing a lot of reckless spending for "our tribe".
Meanwhile, we are and will be involved in two wars that so far have managed to damage the US economy and reputation and turned two countries from terrorist breeding grounds into terrorist breeding grounds, we've got impending healthcare reforms that won't do a thing to improve the situation of Americans and no meaningful reforms to the failings of our financial system - all of which are coming at absolutely tremendous costs.
Going around blaming the other party on this mess is demonstrating an unnerving degree of similarity to metaphorical ostriches approach to fear. Nothing will improve if "our guys" are back in office, the only way we can make improvements for the future is to find and vote people into office who have no affiliation or love for current power structures but instead are willing to face down the actual problems.
December 17, 2009, 12:22 amepobirs:
Me,
You are, as always, full of crap. The policies that created the economic downturn have been thoroughly dissected. Nearly all of it was proposed and championed by Democrats. The fault for disastrous policy is deeply rooted within one party and one can only claim otherwise by ignoring the history and the fact that nearly every bad guy has a (D) following his name.
Nobody is claiming that all of the problems originated within one side of the aisle but without the mountain of malfeasance on their part the screwups from the other side would barely amount to a minor downturn instead of the worst economic conditions in my lifetime. And it's early yet on how bad it can get with the current clowns running the circus.
December 17, 2009, 5:50 amLink:
On ABC with Charlie Gibson last night, Obama said "... we have a structural deficit. We take in 18 percent of gross domestic product in taxes, and we spend 23 percent."
We're actually pushing spending much higher than 23%. Post WWII, federal government revenue has been 18% of GDP every year no matter the particular tax regime we had in place -- it's been like a law of nature.
Tax revenues may start to come in lower than 18% as taxation is skewed to rely on the top 5% earners -- they're not doing as well as they used to. Because of tax progressivity, there's actually a leverage effect imbedded in this.
Both parties have had a hand in it, the Democrats more so, but the federal government has expanded way beyond its historic ability to tax. Something has to give here, it's unsustainable.
Any predictions as to how this plays out?
December 17, 2009, 6:55 amO Bloody Hell:
> Bush was a reckless spender whose policies were a direct contributing cause to the downturn.
The latter part of that is a claim not justified by the evidence. I think his spending policies were less than spectacular, but...
Oh, wait -- CONGRESS makes the budget, not the PotUS.
So let's correct that statment:
NONE of that claim is justified by the evidence.
About the closest you can come to "blame Bush" is the fact that he never vetoed a spending bill. I'll give you THAT part.
> Meanwhile, we are and will be involved in two wars that so far have managed to damage the US economy and reputation and turned two countries from terrorist breeding grounds into terrorist breeding grounds,
Again, a dubious set of assertions not justified by evidence.
While the spending in Iraq has been anything but trivial, it's been done in an effort to rebuild the Iraqi infrastructure, not just what we destroyed but also what Saddam neglected while spending profligately on building the world's fourth most powerful army. As to the damage to US reputation, the only people who thought ill of the USA as a result were people who ALREADY thought ill of the USA -- those predisposed to terrorists and, of course, the terrorist sympathizers around the world, including a large chunk of US and Euro libtards.
As to them being "terrorist breeding grounds", well, I'd debate this but you sort of don't have a point -- "turned them from terrorist breeding grounds to terrorist breeding grounds"? I am certain that this activity we have performed can be distorted and abused by some parties to justify terrorism. Since said parties really don't need justification to distort and abuse ANY action by the USA to justify terrorism, I'm not all that concerned with its effect on their actions. What does concern me is that the USA did something literally and utterly unprecedented in their experience -- we came in, took over the place, and then DID NOT set up a strongarm puppet. This has been "the way" in that region for far longer than the USA has been in existence. And I believe that the long-term affects of that -- especially if we DO support them in maintaining their balanced status for long enough for it to stick, is a game-changing factor in this ideological struggle. The biggest complaint is not that we have done these things but that we have not utilized an effective information dissemination process (call it "propaganda", if you want, but there are implications of untruth there which we do not need to utilize -- "spin" is better but still not correct) in order to win a sweeping victory over the hearts and minds of the people in the ME.
The facts are there, blatantly self-evident -- we have been GOOD to those people in the long run, and any idiot could see it (which excludes most sub-idiots like liberals), and they stand to immensely benefit from our presence and influence if they choose to accept and encourage it. Or they can do what the Palestinians have done with the Gaza strip, and turned it from one of the most functioning areas of the ME into another ME s***hole.
They've got a long way to go to catch up to the West, but their former path, which is the one certain parties are determined to restore them to is nothing less than their own self-destruction, taking millions of others with them. Kinda like Nazi Germany in that respect.
This time around, some of us would like to station a few soldiers on that bridge -- the one that would have deposed Hitler and saved millions of lives.
.
December 17, 2009, 8:26 amO Bloody Hell:
> Any predictions as to how this plays out?
Hyperinflation and a collapse of the government.
Whether we follow the Wiemar path past that point remains to be seen.
Our grandchildren will damn the boomers for the f***tards they are.
December 17, 2009, 8:28 amLink:
How it might play out.
Our public debt / GDP ratio isn't high when compared to Italy and Japan. The trend line is worrying obviously. We should have at least a couple of years before this becomes a crisis.
I expect the true private sector to stall, so we'll have little or no GDP growth. Unemployment is high, especially in the true private sector and among the young. I expect it will stay high, breeding discontent.
We have a political problem, driven by the growth of federal government. It's setting up a clash between (A) the political class and those who get government checks vs (B) the rest of us. Included in this divide is a fault line of old vs young. At some point, the young should wake up to this politically. As soon as they're forced to buy an expensive health care plan with their beer money, they'll achieve class consciousness.
As you look at the federal budget we could either (A) raise taxes to unprecendented levels or (B) gut Medicare/Medicaid radically. There's not much other choice here.
The GOP isn't necessarily the answer. If the GOP weren't hung up on social issues, the young are there to be won over. When they're in the minority, the GOP can become oblivious to reality. By scaring seniors over Medicare cuts to attack Healthcare, they're boxed themselves out from making cuts down the road.
In may take a decade, but the young could force the necessary political change.
December 17, 2009, 10:15 amMesa Econoguy:
The GOP at this point is only incrementally better than these abject retarded amateurs running things right now. The Republican Party has failed the taxpayer miserably, as you have said yourself before Link.
I do not know how this will play out macro, but I’m primarily concerned with/preparing for 2 possibilities: 1) another financial calamity in 4-5 years, dwarfing the one we just went thru, or 2) a 50-100 year slow implosion, like the Soviet Union. I think the latter is more likely, but both are very possible.
And yes, if the WWII generation was “The Greatest Generation,†baby boomers are The Worst Generation. Hands down.
December 17, 2009, 5:24 pmme:
@epobirs, Oh Bloody Hell
Great examples for exactly the kind of thinking I was refering to - ad hominem argument to start with, followed by a tribal "clearly it was all the bad (D)s doing bad things that all the good (R)s couldn't undo in their years in office and the (R) certainly only did good". Hint: you're part of the problem.
Ask yourself how beneficial another few years of the good (R)s instead of the bad (D)s would be, *if* indeed the (R)s couldn't do anything in their 8 years.
Do you really agree with all of the policies? The war spending, the bailouts, the demontage of the constitution? If so, why are the new bailout, the continued war spending and the continuing war on the constitution any worse?
We're living in a time when there is no true opposition, and you get two bad choices you can feel are "your people" based on your socialization. Get some perspective.
December 20, 2009, 7:04 am