Coyote Blog

Via Kevin Drum

Dave Weigel notes a conundrum today: according to a new poll, 54 percent of the public disapproves of Barack Obama's handling of the deficit. And yet, as the chart on the right shows, the deficit is shrinking dramatically. Last year it dropped by $200 billion, and this year, thanks to a recovering economy, lower spending from the sequester, and the increased taxes in the fiscal cliff deal, it's projected to fall another $450 billion.

Weigel notes that this has deprived conservative yakkers of one of their favorite applause lines: "You don't hear Republicans lulz-ing at Obama for failing to 'cut the deficit in half in my first four years,' because he basically did this, albeit in four and a half." That's true. It's also true that contrary to Republican orthodoxy, it turns out that raising taxes on the rich does bring in higher revenues and therefore reduces the deficit.

The logic here is that Obama has been diligent about cutting the deficit, so therefore Republicans are wrong to try to use the debt ceiling and continuing resolution as a vehicle for forcing more cuts.

It is just possible that a person from another planet landing today might buy this story, but how can anyone who has lived through the last 5 years read this without laughing their butts off?  Every one of Obama's budgets have been dead on arrival, even within his own party, because they have raised spending to such stupid levels.  There has not been even a hint of fiscal responsibility in them.  And the Democratic Senate has passed one budget in something like five years**.

The only fiscal discipline at all has come from the Republican House, and they have only had success in keeping these deficit down by ... using continuing resolutions and debt ceilings as bargaining chips.  This is the President that treated the almost insignificant sequester as if it were the end of the world, and now these sycophants from team Donkey are giving Obama the credit for the deficit reduction?

PS-  This is not an advocacy for Republicans as much as for divided government.  The Republicans when they had years of controlling the Presidency and both houses of Congress under Bush II did zero to get our fiscal house in order and in fact with the Iraq war and Medicare part D, among other things, showed a profligacy that belies their current pious words.

PPS- Kevin Drum needs to have the balls not to play both sides of the street.  He has made it clear in other articles that he thinks it is an economic disaster that the government is spending so little right now.  When he shows a deficit reduction chart, if he were consistent, he should be saying that Republicans suck for forcing this kind of deficit reduction against Obama's better judgement and we need the deficit to go back up.  Have the courage of your convictions.  Instead, he plays team loyalty rather than intellectual consistency, crediting Obama for deficit reduction while at the same time hammering Republicans for austerity.  Dude, its one or the other.

PPPS-  For the first time during this Presidency, both the President and both house of Congress offered a budget:

[The] House passed a budget calling for spending $3.5 trillion in 2014, the Senate passed one calling for $3.7 trillion, and Obama submitted one calling for $3.77 trillion

So the actor that submitted the highest budget gets the credit for deficit reduction?

So the head of the IOC declares the Olympics over, the flame is out, but there still seem to be people on the stage.  It seems that Canadians, so long without an overt sense of nationalism, have decided to use the stage to hold a pep rally for their country.   Can you imagine how unbelievably creepy, and probably scary, it would have been had the Chinese closed the Olympics in a similar China-uber-alles manner.  But since the Canadians are thought to be (mostly) harmless, I suppose its OK.

Postscript: Not 30 seconds before this started, I was lamenting the fact that Rush was not a musical act, with the silver lining that we had not seen William Shatner either, when lo and behold he rises onto the stage.

PPS: I thought the way they opened the show, with the clown fixing the broken torch, was much more consistent with the Canadian style, and more flattering in a sense than the goofy show at the end.  It is particularly funny, to me at least, to see that all the people who they have chosen so far to extol the virtues of Canada actually left the country for the US to make their fortune.  What are they selling, that Canada is a great place to be from?  They couldn't have found someone like Jim Balsillie who actually mad his fortune and reputation, you know, in Canada.

PPPS:  OK, it was only the talking quasi-celebrities I thought was odd.  Who couldn't love the giant inflatable beavers that followed?

I am starting to wonder if Barack Obama crossed the thin red line between traditional American liberalism and socialism yesterday.  Traditionally, liberals in the US have taken pains to generally argue that the rich need to pay for their programs because theyare most able to pay.  This differs a bit from socialists, who would argue that the rich should pay because they are guilty.    For a libertarian like myself, it tends to be a pretty subtle difference, but I think it is important -- are taxes on the rich enforced charity, or are they reparations?

I woke up this morning profoundly depressed, which is unusual for me.   I have a good friend who is having some personal problems, so it is hard for me to separate effects in my mind, but I really feel like Obama stepped over a line yesterday.  TARP pissed me off, but we have bailed out companies before (though not for this much).  The stimulus bill absolutely offended me, but we have seen stupid pork spending insanities before (though not for this much).  But Obama's plan to remake tax law and the budget began with this paragraph:

This crisis is neither the result of a normal turn of the business cycle nor an accident of history, we arrived at this point as a result of an era of profound irresponsibility that engulfed both private and public institutions from some of our largest companies' executive suites to the seats of power in Washington, D.C.

From the rest of the rhetoric in this document, and that of Obama and his supporters, the overriding message is that "the rich are being taxed more because they have sinned.  This is pennance."  This is all the more amazing to me because Obama (and to be fair, his predecesors in the Bush administration) have gone out of their way to interrupt the normal market processes that punish failed behavior.  Normally, if you take out a mortgage you can't afford, you default and lose your home, and are hopefully wiser the next time.  If you lend to someone who can't pay, you lose your principal.  If you make products no one wants to buy, you go bankrupt.

But every one of these market mechanisms are being interrupted.  Its as if Obama and the feds not only want to hand out penance, they want to have a monopoly on the process.  No longer will the market dictate winners and losers -- we in Washington will.  It's thoroughly depressing.

Postscript: I guess I am the last person in America to believe it, but I DO believe that this is "a normal turn of the business cycle," or at least that it started out that way until everyone from Paulson to Obama worked to convince folks otherwise.   It is clear that there was an international over-exuberance of lending that goes far beyond just CDO's as the culprit, or even mortgages in general.  And such bubbles do occur from time to time.

PPS: It will be interesting to see which race is tighter -- Obama's race to spend money so he can take credit for a third quarter recovery which is going to happen anyway, or Obama's race to put in CO2 limits in time to take credit for the global cooling cycle many solar observers are starting to predict.

PPPS: I really didn't want to open global warming discussions in general with the last bit of snark.  I have a whole website for that.  I have a subtle enough understanding of the issue to know both that 1) CO2 is causing some warming 2) warming estimates are likely way overblown, for a variety of reasons that include feedback assumptions and 3) behaviors of temperatures over decade-long periods are not necesarily indicative on long-term trends.  If we want to talk about climate modeling and model accuracy vs. current trends, see this post or this post.