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PART I: THE REALITY

From CBS News in March 2012, as part of an article where Mark Knoller breathlessly tells us how fast President Obama is adding more to the deficit than his predecessors, we get this graph showing where the deficit currently stands:

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But the total deficit and how fast it is rising under President Obama is only part of the discussion.  From Ezra Klein, in January 2012, we get the following two graphs showing the how both President George W. Bush and President Obama affect the deficit numbers:

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Looking at the two graphs, one can see that Bush added $5.1 trillion over 8 years and President Obama is only projected to add $983 billion over an 8 year period.  

Even the Wall Street Journal has confirmed that President Obama has actually lowered the growth of the spending rate:

After adjusting for inflation, spending under Obama is falling at a 1.4% annual pace — the first decline in real spending since the early 1970s, when Richard Nixon was retreating from the quagmire in Vietnam.
In case you're wondering, The Wall Street Journal piece also had this graph showing the rate of spending growth back to President Reagan:

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This might leave you scratching your head about the increase of the deficit.  Where is the increase coming from?  As can be seen in this chart from the Center on Budget and Policy Priorities, the largest part of the increase comes from revenue losses caused by the Bush tax cuts and the economic downturn:

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PART II: THE RHETORIC

If you watched the Republican convention you might have seen the debt clock prop they introduced as a major theme.  (link)   Or if you read the recent piece by Matt Taibbi, you might have learned that Mitt Romney is, rather hypocritically, emphasizing the debt as a way criticizing President Obama.  Here is a Romney quote:

"A prairie fire of debt is sweeping across Iowa and our nation," he declared. "Every day we fail to act, that fire gets closer to the homes and children we love."
Under President George W. Bush, Republicans in congress voted for tax cuts, two wars and a huge Medicare Prescription drug benefit, all unfunded.  Under this Democratic President, Republicans have suddenly found Jesus when it comes to deficit spending.  You can go here and click on the button that says "Burden of Debt' to hear Paul Ryan, who was one of the Republicans who voted for the tax cuts and the wars and the prescription drug benefit, opine on the subject.  Or you can watch Ryan rail against the borrow and spend approach here:

There are those who believe this is all political posturing:


First, conservatives believe that deficits make a good campaign issue. They need something to rile up people – something to fan their anger and resentment against government – and deficits fit the bill. Unfortunately, it seems to be working. Polls find increasing numbers of Americans are mentioning deficits and the national debt as one the most important problems facing our nation.

However, the main reason the Republicans have seized on this issue is that it is a good way to reduce government or at the very least prevent its expansion. Efforts to rein in the budget have long been a part of their “starving the beast” strategy that was described in another article.

Few are better than Senator Bernie Sanders at exposing the hypocrisy behind the sudden interest in the deficit:


PART III: REAL WORLD SOLUTIONS

Let's start by playing a little game of "Guess the speaker." Who is the person quoted below making the case for deficit spending that will lead to later revenue surpluses?

We’ve got to get the engine of economic growth growing again because we now know, because of recession, we don’t have the revenues that we wanted to, we don’t have the revenues we need, to fix Medicare, to fix Social Security, to fix these issues. We’ve got to get Americans back to work. Then the surpluses come back, then the jobs come back. That is the constructive answer we’re trying to accomplish here on, yes, a bipartisan basis.

Joe Biden? No.  Barack Obama?  No.  Harry Reid?  No.  Nancy Pelosi?  No.  Chuck Schumer?  No.  Some Blue Dog Democrat maybe, sneaking in the word bipartisan to make the bipartisan fetishists in the DC cocktail circuit happy?  No.  Give up?  OK, it's Paul Ryan.  Yes that Paul Ryan.

The 2002 Ryan makes a lot more sense than the current pseudo-deficit hawk version.  Besides not balancing the budget until 2050, Ryan's budget would shift lots of costs to states and localities, making the cuts to state and local services.  Here is a graph from CBPP (click on the provided link for more explanation of how this would impact state and local services) showing how much worse than sequestration the Ryan Budget would be :

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The real world solution to this is to ignore the lies of the lead Republicans when it comes to dealing with the deficit and elect a Democratic Congress that will not lead us over a cliff when it comes to Budget negotiations.  We face three scenarios.  According to the CBO, we can have the fiscal cliff Republican version:

[T]he US could slump into another recession in 2013 if the very things that Republicans are causing take place - the Bush tax cuts expire and the federal government is forced to slash spending.
There is a second version that involves getting Republicans to cooperate.  There is little or no chance of that happening.  Or we can have the better non-fiscal cliff version that involves having a Democratic Congress:
Actually, there is a third scenario that CBO has not calculated: if Obama is reelected and Democrats retake the House and remain in control of the Senate, we will see a commonsense approach to tax policy - restoring the historically low tax rates on income up to $250,000, a move to tax reform that eliminates tax incentives for companies that off-shore and out-source jobs and income, investment in infrastructure, clean energy and energy independence, investments in education and health care; sensible reforms to Medicare, Medicaid, greater efficiency in government spending. We will see rehiring of teachers and other vital public workers, a resurgence in the housing market and a drop in unemployment rate to around 6%.
If you really want to fix the deficit, elect a Democratic Congress!!!

2:17 PM PT: Thanks for the rescue!

Originally posted to mikepridmore on Wed Aug 29, 2012 at 09:30 AM PDT.

Also republished by In Support of Labor and Unions and Community Spotlight.

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Comment Preferences

  •  This is the second part of a series (9+ / 0-)

    on why we need a Democratic Congress.  The first is here.

    The ...Bushies... don't make policies to deal with problems. ...It's all about how can we spin what's happening out there to do what we want to do. Krugman

    by mikepridmore on Wed Aug 29, 2012 at 09:35:13 AM PDT

  •  MikePridemore... (6+ / 0-)

    Why aren't you running for office somewhere?

    I've read your posts for years now, and I think you have what what the nation and The People need in a duly elected representative to the US Congress.

    Also, are you any relation to Craig Pridemore, a politician from SW Washington State? I like Craig, and hope he wins his race for State Auditor, he's smart and progressive.

    that being said...

    A great diary on a serious issue.

    Then again, the Republicans ONLY goal, per Sen Mitch McConnell himself the week the President was inaugurated in 2009, was to "deny President Obama a second term".

    If he gets himself re-elected.... what the hell will they do? Continue to Obstruct everything? Then the US Electorate will have had 8 years of watching them act like a pack of rabid-four-year-olds chanting "I'm taking my ball and going home" day after week after year.

    Which will make 2016 a cakewalk for whomever the Democrats run, because who will vote for the rotten, little 4 year old who's been causing trouble for eight long years?

    Really, it's the first time I've thought about post-November 6, 2016 in a political sense.

    What the fuck is the GOP gameplan for a 2nd Obama term as US President?

    Has anyone read anything about this period of time and GOP plans re: US Senate and US House and obstructionism?

    "Taxes are what we pay for civilized society.''
    -- SCOTUS Justice O.W. Holmes Jr
    "I like paying taxes...with them, I buy Civilization"
    -- Angie in WA State

    by Angie in WA State on Wed Aug 29, 2012 at 01:12:54 PM PDT

  •  I can think of a lot of reasons for wanting (7+ / 0-)

    a Democratic congress.  Fixing the deficit is probably lowest priority reason.  We've seen in Europe how much good it does the economy to focus intensely on the deficit.  I'd rather increase the deficit right now and fix the economy.  I suppose that's what Bernie is saying in the clip, and if that's your position, that's ok with me.

    Still, I'm worried, very worried about the Grand Bargain compromise that Obama is planning for after the election.  If reports are correct that he's going for a Catfood Commission Pete Peterson type compromise that reduces important entitlements for whatever reasons of legacy he imagines, then I hope the Democrats in congress have the gumption to say no to a Democratic president.

    I'm not sure they do.

    •  This is in response to the (3+ / 0-)
      Recommended by:
      Judge Moonbox, Lujane, Calamity Jean

      rhetoric of the Republicans that we need to get rid of President Obama because of the deficit.  As I mentioned in the diary, this has been part of the convention already and it is one of the central issues addressed by Matt Taibbi's latest Rolling Stone expose on Romney.  I think Paul Ryan was at least partially right in 2002 that you spend to bring back jobs and that the deficit can be taken care of later, which is what you seem to agree with.

      As for the Grand Bargain, I don't know enough about what the President is planning to make an intelligent comment at this point.

      The ...Bushies... don't make policies to deal with problems. ...It's all about how can we spin what's happening out there to do what we want to do. Krugman

      by mikepridmore on Wed Aug 29, 2012 at 02:01:36 PM PDT

      [ Parent ]

      •  People who actually want to cut the debt... (4+ / 0-)

        want to increase taxes. After George Aitch Bush and Bill Clinton raised taxes in the 90s, we had a decade of continuous growth, ending with the surplus and unemployment at a post-Vietnam War low. Supply Siders haven't really bothered to explain how an overtaxed economy could have produced such results.

        After George W. Bush cut taxes, we had a shorter period of slower growth, and the deficit was constantly over $200 billion.

        When I hear journalists say that Ryan wants to balance the budget, I want to ask them: "Did you not get the news that Ryan wants to lower taxes at the top? Are you afraid that if the Republicans lose because you debunked their lies, you would have crossed an ethical boundary as a journalist?"

        Just how stupid does Mitt Romney think we are? -Paul Krugman

        by Judge Moonbox on Wed Aug 29, 2012 at 05:51:29 PM PDT

        [ Parent ]

        •  The last quote at the end (1+ / 0-)
          Recommended by:
          Lujane

          talks about raising taxes on corporations and those with income above $250,000.  There are those who don't think there is enough money at the top to balance the budget without raising taxes on the middle class.  But until we get back control of congress this is a moot discussion.  I eagerly look forward to a time when we can hash out numbers with a congress that is open to actually fixing the deficit.

          The ...Bushies... don't make policies to deal with problems. ...It's all about how can we spin what's happening out there to do what we want to do. Krugman

          by mikepridmore on Wed Aug 29, 2012 at 06:21:59 PM PDT

          [ Parent ]

  •  Where is the payroll tax cut ... (3+ / 0-)
    Recommended by:
    Jerry J, mikepridmore, Lujane

    in the chart of Obama's policies? Was that free, and if so, how do we make other tax cuts free?

    Congress shall make no law abridging the right of the people peaceably to assemble.

    by edg on Wed Aug 29, 2012 at 01:37:12 PM PDT

    •  In Ezra's explanation (2+ / 0-)
      Recommended by:
      coffejoe, Judge Moonbox

      of the graphs, which is here, he specifically mentions the payroll tax cuts as part of Obama's spending, though it isn't exactly clear where in the graph it is included.  So, no, the payroll tax cut was not considered free.  Here is the paragraph where he mentions it:

      In total, the policies Obama has signed into law can be expected to add almost a trillion dollars to deficits. But behind that total are policies that point in very different directions. The stimulus, for instance, cost more than $800 billion. So did the 2010 tax deal, which included more than $600 billion to extend the Bush tax cuts for two years, and hundreds of billions more in unemployment insurance and the payroll tax cut. Obama’s first budget increased domestic discretionary spending by quite a bit, but more recent legislation has cut it substantially. On the other hand, the Budget Control Act — the legislation that resolved August’s debt-ceiling standoff — saves more than $1 trillion. And the health-care reform law saves more than $100 billion.

      The ...Bushies... don't make policies to deal with problems. ...It's all about how can we spin what's happening out there to do what we want to do. Krugman

      by mikepridmore on Wed Aug 29, 2012 at 02:16:20 PM PDT

      [ Parent ]

    •  It's in the charts: (3+ / 0-)
      Recommended by:
      mikepridmore, coffejoe, Lujane

        Labeled on the side: as Extensions.

  •  Where is TARP in those graphs? (1+ / 0-)
    Recommended by:
    mikepridmore

    TARP was mostly paid back - with interest.  Where does it show that?

    Most graphs about deficits erroneously assign all of TARP to Bush, but never account for the payback or assign it to Obama, which is just plain wrong.

    (Hint: Take TARP out of the equation and Obama's growth balloons incredibly)

    Last - your numbers are missing something.

    When President Obama took office, the national debt stood at $10.6 Trillion.

    In the next few days, it will hit $16 Trillion.

    I'll leave it up to you to find the missing trillions.

    •  Did you read the piece at all? (2+ / 0-)

      Tarp is clearly on the graph in the piece.  Here is the graph again:

      Photobucket

      A major point of the piece, from its very first paragraph, is that you can't blame any president for all the spending that occurs during his term.  But you can blame him for the things he does.  Ezra Klein discussed in great detail, here, what both Bush and Obama specifically did that added to the deficit.  No one is giving Obama credit for TARP repayments that Bush should get credit for.  And there aren't missing trillions unaccounted for.  

      If you don't like that President Obama is better at managing money than you want him to be, you need to find some other way to express that disappointment.

      The ...Bushies... don't make policies to deal with problems. ...It's all about how can we spin what's happening out there to do what we want to do. Krugman

      by mikepridmore on Wed Aug 29, 2012 at 02:43:35 PM PDT

      [ Parent ]

      •  Ezra Klein plays with numbers... (1+ / 0-)
        Recommended by:
        splashoil

        That is one of the stupideist two graphs in history.

        He pretends that President Obama did not extend the Bush policies in Iraq and Afghanistan.

        So, he stops attributing monies going toward those enterprises.  Obama could have shut down those wars on day 1.  He didn't, so assign the costs since inauguration day to his policies.

        Next - the Bush tax cuts ended in 2010.  The tax cuts in place currently are Obama Tax Cuts, not Bush's.  He signed legislation putting them into place.  You cannot keep callng them Bush's tax cuts.  The Obama admin loves to keep calling them Bush's so he can skate free on the effects of his Obama Tax Cuts.  Sorry.. you cannot have it both ways.

        Next - You still cannot find the payroll tax?  Neither can I, though you take his explanation for granted that it must be in there somewhere!

        But here's the kicker:

        Obama’s first budget increased domestic discretionary spending by quite a bit, but more recent legislation has cut it substantially. On the other hand, the Budget Control Act — the legislation that resolved August’s debt-ceiling standoff — saves more than $1 trillion. And the health-care reform law saves more than $100 billion.
        The Budget Control Act saved $21 Billion in 2012 spending.  $21 Billion!  That is all you can attribute to Obama, because the other spending cuts have not been enacted.  Overall, that act cut 900 Billion over ten years.. 90 billion per year on average!  I would argue they will never take place in a second Obama term.

        ACA?  What a joke.  From 2014 on this will cost more than that $100 billion per year!

        •  My apologies. (1+ / 0-)
          Recommended by:
          Calamity Jean

          I did not realize you were illiterate.  You must be because if you were not, you would plainly see that the extension of the Bush tax cuts are counted against Obama.  

          The ...Bushies... don't make policies to deal with problems. ...It's all about how can we spin what's happening out there to do what we want to do. Krugman

          by mikepridmore on Wed Aug 29, 2012 at 04:36:59 PM PDT

          [ Parent ]

  •  Would Love To See A Strong National Congressional (1+ / 0-)
    Recommended by:
    mikepridmore

    Campaign as much as I want to see a strong national Obama campaign

  •  I like public debt (2+ / 0-)
    Recommended by:
    mikepridmore, Lujane

    It's a hell of a lot better than private debt.  

    And here's the thing about the federal deficit.  When the government spends more than it takes back in as taxes, it's creating money.  If people need the economy to produce more stuff of higher value, they need more money, else they'll have less money chasing more stuff, i.e., deflation, which is very very bad for stimulating the production of more stuff of higher value.

    Operations and laws governing the Treasury and the Federal Reserve Bank obscure this simple truth, but can't fundamentally change it.   So the Treasury has to borrow money to fund the "deficit"?  Well, that borrowing has an interest rate, and that interest rate is controlled by the Federal Reserve Bank.  If they're gonna keep their interest rate target, they've got to create, through funding open market bond purchases, enough money that will end up being roughly the same amount as the federal deficit, with other factors like private debt and the external sector deficit added in the mix, or the interest rate will change out of their control.  Interest is merely the rent one charges for the use of their money, after all, and that depends on how hard it is to rent money from someone else and how likely the lender feels that the overall value of their money will decrease in the time it's being used by someone else.

    This obfuscation regarding the creation and ultimate origin of money (after all, the Constitution say's it's Congress's job to control the creation of currency and set Federal spending), has a detrimental effect on the economy as a whole, because it has the effect of allowing the very wealthy to "claim" the newly created dollars before the government spends them.  This is not as detrimental as the inappropriate spending and taxing targets of the Federal budget to the overall economy, but does contribute to the widening wealth and income gap.  It allows the wealthy to charge rent on newly created money that they otherwise have no prior claim to.

    At this point, though the real problem is the inappropriate spending and taxing targets.  There's plenty of money out there, but a lot of it is dead.  There's this notion that raising taxes is always a drag on the economy, and that increasing spending is always a boost.  The truth is that it depends on the spending and the taxing.  

    Raising taxes on "dead wealth," that is, money that's only making money by charging others rent for its use, tends to improve the economy in terms of real production and value, because people will try to avoid that tax by charging each other less rent for the use of money, and instead take their share if the use of that money successfully creates value.   But in order for that to work there has to be higher taxes in those areas where money tends to pool and die.  Taxes don't pay for anything, they suck dead money out of the economy.

    Likewise, spending can depress growth all by itself, if you're spending on the people who already have a lot of dead money.  Since it's so easy for them to make money, they may as well charge higher rent for the use of their money, or even not make it available to rent at all.  Put it this way, if the government cut you a check for $50 a week for possessing a car, would you charge your buddy less than $50 a week to borrow that car if his borrowing it for the week means that you don't get your government check and he does?  But if the government didn't send you that check for possessing a car, how much more likely would you be to lend it to him for less than $50?  A simple example of spending resulting in less (economic) activity.

    In short, we need higher taxes not to reduce or eliminate the deficit, but to revitalize all the dead money that's out there   We need re-prioritized and probably higher spending so we're not automatically making so much of the new money dead money and to make sure we're buying things that improve the common welfare.  And once we've done all this, we'll still have a deficit, and that's a good thing.  The only time we won't need a deficit is when there's no more room for the economy to grow and we're exporting as much (value-wise) as we're importing.

    From such crooked wood as that which man is made of, nothing straight can be fashioned. -Immanuel Kant

    by Nellebracht on Wed Aug 29, 2012 at 03:23:44 PM PDT

  •  um (0+ / 0-)

    Wasn't Clinton's surplus during a time, wait wait, that's IT.  Both sides need to fucking start working together again like they did during the good old days.

  •  I question the entire premise of the diary (2+ / 0-)
    Recommended by:
    Calamity Jean, mikepridmore

    Other commenters have correctly pointed out how attacking a deficit during a depression is a disastrous choice on purely economic grounds.  On the political side, I would add that the fetish for austerity has the potential to destroy the Democratic Party coalition.  

    This is not a meme we should even be discussing.  I will not vote for any Democrat campaigning for austerity.  Period.

    Shirley Chisholm was right. Our Republic is in deep trouble.

    by Big River Bandido on Thu Aug 30, 2012 at 07:31:05 AM PDT

    •  I make no call for austerity. (1+ / 0-)
      Recommended by:
      Big River Bandido

      I am simply saying there is no hope of deficit reform unless we have a Democratic Congress.  I quoted Paul Ryan's 2002 call for deficit spending as an example of what I want.  Here is the money quote for why we need a Democratic congress:

      Actually, there is a third scenario that CBO has not calculated: if Obama is reelected and Democrats retake the House and remain in control of the Senate, we will see a commonsense approach to tax policy - restoring the historically low tax rates on income up to $250,000, a move to tax reform that eliminates tax incentives for companies that off-shore and out-source jobs and income, investment in infrastructure, clean energy and energy independence, investments in education and health care; sensible reforms to Medicare, Medicaid, greater efficiency in government spending. We will see rehiring of teachers and other vital public workers, a resurgence in the housing market and a drop in unemployment rate to around 6%.
      Where do you see austerity in that?  Please explain.

      The ...Bushies... don't make policies to deal with problems. ...It's all about how can we spin what's happening out there to do what we want to do. Krugman

      by mikepridmore on Thu Aug 30, 2012 at 09:03:16 AM PDT

      [ Parent ]

      •  "Deficit reform" is a DLC dog whistle (0+ / 0-)

        Some related phrases constantly regurgitated by the self-described "center-left" apologists for austerity:  

        entitlements
        entitlement reform
        pension reform
        government living within its means
        running government like a business

        Basically, when you hear the likes of Erskine Bowles et al spouting any language like this — hold onto your wallet, unless you're a billionaire.

        Shirley Chisholm was right. Our Republic is in deep trouble.

        by Big River Bandido on Thu Aug 30, 2012 at 11:40:02 AM PDT

        [ Parent ]

  •  Historically True (0+ / 0-)

    Deficits have been lower under Democratic rule than under Republican rule for a long time. In fact, the last time we had was a surplus, Clinton was in office, and before that, LBJ's last year in office. In both cases, the economy was soaring.

    This is because government spending is productive. That is why raising taxes to spend more on public goods doesn't hurt the economy.

  •  "If you really want to fix the deficit elect a.... (0+ / 0-)

    democratic Congress, and while you're at it elect a REAL Democratic President not a tool for the 1%! Jill Stein  2012

  •  Just Do Nothing (0+ / 0-)

    If we want to fix the deficit, we can just do nothing.  Deficit reduction is currently law, and will go into effect in January, if we don't let the Republicans screw it up.

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