With the White House budget poised to be released, we're likely to see a reprise of a familiar Washington fight: the president and his team will focus on short-term economic gains, delaying deficit-reduction efforts, while Republican policymakers will demand the opposite.
As this new round of the debate gets underway in earnest, reader F.B. flagged an interesting exchange from a White House press briefing last week, with reporters pressing Jay Carney on the GOP's deficit concerns.
Q: And your opinion on the CBO report yesterday that unemployment would likely be above 9 percent by the election, and also that the deficit again will be over $1 trillion this year, making President Obama the only President to have three years of trillion-plus deficits. How does the President defend that?
CARNEY: Well, made possible in part by the trillion-dollar deficit he inherited from his predecessor, but the --
Q: But he's been in office three years.
CARNEY: Oh, no question, and he came into office with the worst recession since the Great Depression, a catastrophic decline in economic growth and employment, and took measures to reverse that catastrophic situation, and measures that have been successful. I think -- I don't have the graph now, but I saw an interesting graph lately about what policies contributed to the deficit that we have now.
Mr. Carney, you're in luck. I know of just such a graph.
Center on Budget and Policy Priorities
Last summer, the Center on Budget and Policy Priorities put together this image, showing the drivers of the national debt over the course of two decades, based largely on CBO estimates.
In case it's not obvious, that orange section shows the extent to which Bush tax cuts are responsible for the deficit and the debt.
It's likely GOP officials will be unimpressed with the White House budget plan, in large part because it kicks the problem of budget shortfalls down the road a bit. But until these same Republicans are prepared to deal with the policies driving the debt, it will be hard to take their cries seriously.
A GOP House member said last year it's "insane" to hold Bush-era policies responsible for current and future debts. But that's the opposite of the truth -- policies adopted during the Bush era carry lasting consequences and left a mess that will take a very long time to clean up.
Republicans may find these details inconvenient, but that doesn't make them false.
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Let's assume that both Democrats and Republicans consider the CBO a credible source. They probably don't depending on who's in the White House, but let's say they do. Then consider the components of this chart. Certainly the Bush tax cuts represent a decrease in revenues rather than spending. I suspect that the Economic Downturn also represents lower tax revenues. So how can Republicans truly believe that debt reduction can and should only be achieved through spending cuts alone?
By "Economic Downturn" I assume you mean the "Boehner-McConnell Recession".
It's not so much about believing, as it is having the kind of followers who are/were (?) enthusiastic about replacing Obama with people like Trump, Palin, Bachmann, Cain, Perry, Romney, Santorum, Giuliani, etc. Don't forget, they consider Newt an intellectual.
When the majority of people in this country will most likely die owing more than they have and yet there are still those who join the wealthy in the fight against estate taxes what do you expect?Common sense?
What they try to argue is that revenue always is around 25% of GDP and so any spending above that should automatically be cut back to match the revenue sources. They automatically assume that tax cuts raise revenue so they assume you cannot cut from the deficit by raising taxes. Therefore the only logical conclusion would be to cut spending.
Our increase in spending was based on the increase in revenue due to a tech stock bubble in the 90's, internet stock bubble in the early 00's and real estate bubble in the mid 00's. Now that all those bubbles have burst with revenue falling off the cliff, our spending has not matched the drop in revenue. In fact our spending has gone up dramatically. I will argue that the increases in tax revenues during those bubbles were not based on a real productivity gain of the economy, but on speculation. Our spending should have been based on the rate of increase during the pre-bubble days and let the surpluses build up. But alas our elected politicians of both parties can not resist spending the money which comes in. Its what they were elected to do - spend money to favor their constituents so that they can get reelected.
Its as if my income doubled for the last 10 years because I was was winning at the casino at night and my wife was spending every dime of my 2X income. However once my winning strategy stopped working and I started losing money, my wife continue spending money at my 2X income level and said don't worry about my decline in income because we can run up our credit cards or home equity line until she reassuringly tells me that I will be able to get my income back to the 2X level. "We can't cut going out to dinner every night, fire our gardener, housekeeper or nanny because we need to continue paying them to keep our economy going". We can only keep spending above our income because the bank (Chinese, German investors) continues raising our credit card limit with an interest rate on the card of 1%. The banks keep lending to us because we have some crazy Greek neighbors who have spent wildly out of control, dancing, breaking dishes and guzzling ouzo every night. Or our Italian neighbors, who not as reckless in their spending as the Greeks, still have racked up a bunch of debt which the banks know that they can never repay. The bank will cut us some slack because we definitely live in the best house on a crumbling block. They figure that I will either get my income back up or will prevail on my wife and have her cut our spending to match my income. However the bank will not continue lending to me forever and once they write-off my Greek and Italian neighbors debt and if I don't pay down my debt, they will start raising my credit card rate from 1% and will eventually cut me off and go after me like they did my free spending european neighbors.
Debt avereages 18% of GDP. Under Obama, that has gone up to 24%.
Three reasons why war has nothing to do with it
•The cost of the current wars is peanuts compared to the costs of the other wars when looking at them as a percentage of GDP. The Iraq war is costing about 1% of GDP. WW1 was costing 3% of GDP and WW2 was costing 16% of GDP. Thus when comparing with the two world wars and comparing the debt in 1980 with the one in 1910 (periods without war and low debt), one would expect a debt below the 45%. However, the current US federal debt as percentage of GDP is around the 90% and growing.
•During the 1950s and 1970s, the US was fighting wars in Korea and Vietnam that were costing each about 2% of GDP. At the same time, the US was in the cold war and weapons race with the Soviet Union. But the debt decreased from about 120% in 1945 to below 40% of GDP in 1980.
•The financial crisis happened in 2008. Between 1980 and 2008, debt already increased from around 35% to above the 60%.
Increase federal revenues via a strong economy, and that will help a lot. Continue with Obama's socialist economy of low DGP and high unemployment and we are sunk.
...but, contessa, who is going to buy the products of increased (or innovative) production to help create a stronger economy? The consumption engine embodied in the middle and lower class is broke. The fact is that there is no evidence that trickle-down economics works, but there is plenty of very straight forward research indicating that enriching the lower classes yields economic returns at a better than 1:1 rate. THAT is a good investment.
It's always so disheartening to see so much hand-wringing about how the country is supposed to "pay" for job-creation programs, like creating jobs is somehow a secondary goal for our lawmakers and can only be stomached if something else is cut to pay for it. Putting Americans back to work should be priority number one for everyone in Washington, and paying for such a program really ought not to matter. Creating jobs pays for itself. Second, the easiest thing in the world to pay for creating jobs and pay off our debt would simply be to strip the wealthy of their government subsidies known as the "Bush tax cuts" and then to cut the bloated Pentagon budget and end the war in Afghanistan immediately. http://www.sunstateactivist.org
but I thought the GOP convinced us all that debt is good. Did they not get Greenspan to argue for a national debt saying that if the fed had money they would have to invest it and that would be wrong?
I am so confused. Maybe we should all charge it and watch the creditors try to collect. Maybe we could all charge "our share" of the national debt to our credit card and spend our income on trips to Vegas?
"But that's the opposite of the truth -- policies adopted during the Bush era carry lasting consequences and left a mess that will take a very long time to clean up."
First off, the GOP will have to admit reality: 1) tax cuts don't "pay for themselves", 2) tax cuts to the top 1% doesn't "create jobs", 3) they neither have a clue about economics or how the economy works, 4) they really don't want to be bothered with "the little people" (99%), and 5) they have NO IDEAS!!
Then in November 2012 they should all be fired!!
For those who want more than cliches, slogans, and sound bites, a detailed analysis is provided by the Center on Budget and Policy Priorities (whence this chart comes) at http://www.cbpp.org/cms/index.cfm?fa=view&id=3490.
Regardless of what "truth-provers" are available, intelligent conversation will still be drowned out by the Republo-Right's ever-louder 7th grade screams of, "LA-LA-LA I CAN'T HEAR YOU!!! I AM RUBBER AND YOU ARE GLUE!!"
It's a dialogue tactic that we just can't seem to overcome.
I get that all the time, in the form of ad hominem. On FB this week, some random friend of a long time friend called me a "left wing liberal brain dead a$$hole," because I defended Justice Ginsberg from an "OMG she hates the Constitution!" attack. Classy, huh?
The Bush tax cuts are going to become an election issue. Republicans are going to come out in favor of extending all of the cuts and we may see the House pass such a bill. This will put the Dems on the defensive for the elections because the Republicans will claim Obama is trying to raise their taxes. These cuts will be pushed after the party conventions and just before the elections unless the Dems head the Republican off before they get to make it an issue. This may become an acute problem if the Republicans see they are headed for losing control of the House. It is the last stand issue for the Republicans when nothing else works with the voters.
When will the GOP get it that cutting spending cuts jobs? The major sector of the economy that is losing jobs is the public sector. The GOP since Reagan have convinced a large number of people that government is the problem and taxes are bad. Because Reagan won with this message, all the current Republicans think that is the way for them to win.
When will they get it, that taxes are how we pay for all the things we all need and want but cannot pay for by ourselves, such as roads and bridges, public schools, etc. Many people will support cutting the budget until it comes to cutting the programs that they want. It just depends on whose ox is getting gored.
The major sector of the economy that is losing jobs is the public sector.
Thats the difference between the two parties. My preference is for reduced spending which allows for a reduction of taxes which is a drag on the economy, increased savings and increased investment by individuals. Increased savings leads to lower interest rates which makes equity investment more attractive. Private capital is what drives private company formation and jobs, not taxes for public service union jobs.
What on earth was he doing talking to the press about economic matters without having huge colorful versions of that graph and the "bikini" jobs graph on hand? Can they not foresee that the issues of jobs and deficits are going to come up when talking to the press??? By this point, both graphs should be tattooed on all Team Obama's foreheads.
Seriously. If Carney just recently saw that graph, then he is not doing his job. That graph has been around for years.
This report, JOINT COMMITTEE ON TAXATION, March 23, 2010, JCX-20-19, was written in expectation of seeing the Bush tax cuts expire. Also see JCX-20-20, which is the shorter version. These give a sense of how great the difference is in expected revenue and shows what specifically would have changed for the majority of Americans. The charts are the best part.
Why do I get the urge to go surfing when I see that chart?
Since 1980 we borrowed 14,000 Billion. The Tax Book was Christmas Tree filled with goodies for the Rich and Corporations. It is a shame that they take more in Exemptions than they pay in taxes.
That is why OECD ranks Us:
#2 as Least Taxed--We pay 30% of GDP in fed---state--local taxes
#2 as Least Taxed Corporations--In 2011 They paid 1.5% of GDP in taxes
# 4 on Inequality--10% own almost 80% of our Wealth and take almost 50% of our individual income..80% get the crumbs
Suggestions:
1.Fed Fund election--6 months-3 primary- 3 general-free equal tv time-one debate a week=12-adequate to evaluate candidates no $$ no pacs
2.Members of Congress and White House can accept nothing with a financial value.
Keep them on the job not on the road
3.Progressive Flat Tax(by group)--tax to pay our way not leave for kids to pay
4.Burn Tax Book--gets enough added revenue to have a surplus to attack the debt
Yes! Simple. Yes Effective.
only bug I find is how to choose candidates.
Everyone seems to be blaming Bush era tax cuts or Obama policies..... the real issue is that this gigantic mess started when CONGRESS gutted the finance and mortgage laws over a decade ago, and CONGRESS still keeps ignoring and debating solutions, among the other things CONGRESS keeps doing wrong. People, we need to stop re-electing ALL of these boneheads and vote out ALL incumbents. Term limits by the people will result in benefits FOR the people. Career politicians have destroyed America. Regardless of your party, every American needs to make the tough decision to vote out whoever their current representatives are and vote in NEW people. That is the ONLY solution to our problems...... What part of doing the same thing over and over again every election is not the definition of insanity ?
Vote all incumbents in Congress OUT of office ! !