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(Too high) Spending is not the problem. Instead, (Too low) Spending (&Austerity) is!
Spending is not the problem! At least not in the sense that Republicans are claiming. The real problem is that demand (spending) is too low, and we actually need higher government spending/stimulus to address the cyclical problems that are causing the private sector to be skittish about new investments in jobs and capital.

I have a ritual on Sundays: Like a nasty highway crash, I can't help but look at the opinions of politicians, both Republicans and Democrats, being presented for the nation to see on the talk show circuit.

So when I saw Rand Paul's pro-austerity stump speech yesterday on Candy Crowley's State of the Union show on CNN, I cringed as my eyes and ears were peeled to his comments that "the sequester is merely a pittance." This is an extension of the promotion by Republicans of the meme that "Spending Is the Problem!"

If he thinks the sequester is merely a pittance, that must mean Rand Paul really wants hardcore Paul Ryan style austerity. To support this, he repeated a talking point that he has pumped out there for years now, insisting that the national debt is costing a million jobs a year.

This is based on the flawed idea that the conservative think-tank AEI has been supporting in its press releases. It cites a Reinhart Rogoff study of dozens of economies historically, which suggests that, in general from their sample, growth slows after national debt exceeds a certain level. This is merely an empirical observation of a number of economies that have very different underlying fundamentals and composition. than that of the United States. Beyond that, at issue is the causality vs. correlation. The slow growth in the US came because of a major bubble bursting, not from piling on of debt. In fact, debt has shot up due to spending to help address the fall in GDP, and has helped enormously in that area. The negative effect on growth was already there before we crossed the magic 90% threshold cited in Reinhart & Rogoff, so the suggestion by the AEI that this is a causal relationship that lives on and affects us today is downright wrong.

That slow growth translates to lost jobs is not what is being disputed. The growth/employment correlation is a fairly strong empirical relationship. This point is uncontroversial, but the R&R study is where the details get dirty.  To take an empirical observation of non-monetary sovereigns and make untrue causal links for the American debt situation to high unemployment is dishonest.

There's lots of criticism of the Reinhart/Rogoff study, which has caused the two authors initially to soften and then later even change entirely their claims from there being a causal relationship to there being a mere correlation, which tends to break down actually for systems that have fiat sovereign monetary systems. Paul Krugman has been instrumental in pointing out the shortfalls of their initially strong claims.

But these revelations don't change the tone of a right-wing think-tank like AEI. They will continue to misinterpret studies to push their anti-government agenda despite retractions/clarifications from authors of the studies.

No surprise there, Rand Paul is citing bad science to support bad policy. We know that the debt isn't what is causing the current slow growth. Instead, the culprit is clearly the financial crisis leading to destruction of aggregate demand that was caused by irresponsible bank behavior in an environment of deregulation supported by Reagan, Clinton, and W. Bush (and something Obama has not been addressing swiftly enough).

Yale economist Robert Shiller, hardly what one would call a left-winger, has been an oft-ignored voice of reason in the current debate, speaking out against austerity. His point remains: the problem is the drop in aggregate demand from these events that persists still today, and austerity (spending cuts) will only make it worse.

Click below, and I'll go into an analysis of when exactly spending would be a problem, and why spending is not the problem right now, in the sense that Republicans are suggesting (that it's too high, when it's actually too low!). Rather, I will explain why we need higher government spending (stimulus), not cuts in spending (austerity), to fix the underlying imbalances of the economy, and thus why Republicans are dead-wrong when they say spending is the problem.

I've written in the past about the fact that bond vigilantes respond to inflation-risk, not default-risk, in our modern monetary system. I've also written about how national debt can't be paid off, and that it is merely a part of the monetary mechanics of the banking system.

We know that we can handle higher debt loads, and that Japan is a fine example of how extended austerity only leads to stagnation, higher debt, and lower rates in the end. So even though stimulus spending in the US would need to be funded by debt issuance and perhaps even deficit expansion (if there's no new revenues introduced by taxing low-MPC wealthier economic actors), but that isn't problematic, since higher nominal debt doesn't axiomatically lead to inflation or other problems, especially in the absence of any growth.

There's also some fear over rates on debt increasing, in Greek fashion. Nevermind that the Fed controls rates, so this would only happen if we stimulate, which will increase growth, and increase inflation (leading the Fed to increase rates to help stave off inflation), then the rates on our Treasuries will go up. This will only affect new financing. It's not like if you have credit card debt and the rate goes up, that you now have to pay that rate on all your past debt. Treasuries are constructed differently, all the debt that has been issued in the past is not affected by new market price action of yields. When rates jump, it changes the price at which new Treasuries are financed, not the interest we pay on old debt accumulated.

This is a point that progressive economist Dean Baker has highlighted as well. Due to the inverse relationship of bond prices and rates, the US could actually use that kind of opportunity to buy back cheaper debt from the market, reducing nominal debt load.

Additionally, Treasury has been taking advantage of current low rates to lock financing on the longer end, as Nate Silver points out. Not only are we positioned to handle a change in rates, but the Federal Reserve has also published its policy to openly send signals to the market that even if growth picks up, inflation increases, and Treasury rates go up, that policymakers are prepared to deal with this risk.

So if spending isn't a problem, and debt load isn't a problem even if rates do go up (which would only occur with inflation, which won't happen without growth), then when is spending a problem? The short answer is: when inflation becomes a credible risk. When does inflation become a risk? When the supply of money out into the economy is too high, chasing too few real resources.

To visualize this, let's look at a few graphs that show data points that are well-anchored to the two main real resources: labor and capital.

To start, here's generalized inflation:

This is the mainline, continuously compounded. The reason I like to use this is that it really puts things into a historical perspective. It illustrates that in the present day, the inflation figures show we're closer to deflation, rather than run-away inflation. In other words, it shows we have a higher risk of falling into a Japanese-style deflationary trap (and with our much more favorable demographics, this is completely unnecessary) rather than Weimar-style hyperinflation.

It is established then that we are not currently seeing any risk of inflation from the data itself, the Consumer Price Index. This is also seen even in the aggressive alternative private measures of inflation. And so there's nothing for inflation/deficit-hawks to point to to justify their concern. It's purely hypothetical on their part. One may even suggest that there are ulterior motives for such fear-mongering.

With that aside, to judge the risk of potential inflation from higher spending introduced to the economy, let's focus on the resource constraints of labor and capital. We have to look at how much of the capacity is employed for both, because if there's excess capacity, then money thrown into that won't chase too few resources, but will actually employ those which are not in use.

First, labor:

U-6 Unemployment Measurement for the United States

U-6 Unemployment Measure for the United States

This is the most "conservative" measure or unemployment, which shows marginally-attached or dropped-off-the-rolls unemployed individuals, which the Fed essentially ignores for policy purposes (how convenient).

As we can see, in the context of better economic times recent, this current rate of labor unemployment is more than double what it would be in normal, healthy times. To suggest that there are too few labor resources available is a very hard story to tell, especially in light of the wage stagnation relative to productivity.

If wages aren't budging in real terms, and there's a slew of unemployed laborers in the economy, it's quite clear that there's no supply constraint of the real resource of labor. The supply is actually excessive in this market, so inflation wouldn't come from this real resource squeeze.

Let's move on to capital:

Capacity utilization in all industries of American economy

Capacity utilization in all industries of American economy

If we switch this graph around, you can interpret it as capital unemployment being over 20%, if it helps to understand it from a different perspective.

Historically, a level closer to 85% of employment is healthier, and around 90% is a nice level of full employment of capital that isn't too "heated" to lead to inflation of goods. However, the cost of capital (represented by interest rates in the economy) is at historic lows: we have a zero interest rate policy, and still that is not enough to stimulate the demand and higher returns to capital, promoting more capital employment.

The area of exception is during the housing bubble in the 2000's, where people made a living from selling houses and associated industries, so the capital unemployment in other industries was easy to ignore, since everyone had a real wealth effect from higher home equity increases thanks to the inflated real estate market.

But in the 2010's there's no bubble to mask this unemployment of capital in the real economy. There's nothing to make up the shortfall, which is why people have had to turn to SNAP and other forms of assistance to support their non-discretionary consumption. Instead, there's plenty of slack in capital markets, so inflation in the economy is more of a bogey man than a credible risk to be found in the current data.

In the aggregate of the US economy then, we can see that labor and capital are not showing any signs of a constraint in supply. It's hard to imagine then that more demand/money chasing this supply would lead to run-away inflation. It stands to reason that an influx of money and demand would actually lead to more production, higher utilization of capital and labor, and more growth in the economy.

If inflation isn't a problem, and debt isn't a problem, then why is spending a problem according to Republicans?

As I've outlined in another previous diary entry, policies of austerity have already been shown empirically to fail miserably in the UK, Eurozone, and Japan. Austerity achieves lower government deficits, which push the private sector into borrowing more (saving less) in order to make up for the trade deficit in the United States. Our dollar's status as reserve currency necessitates a Current Account deficit, which makes austerity extra stupid for our country, as the private sector has to go running to the banksters to borrow. It's no surprise then that the characters behind the "Fix The Debt" and related pro-austerity movements are bankers, financiers, and individuals in industries historically known to have ulterior motives for public policy advocacy.

Thus, if we know austerity is a failed policy, and we know that debt isn't a problem for monetary sovereigns like the US, UK, and Japan, then why are the Teahadists like Rand Paul and Paul Ryan pushing pipe dreams of balanced budgets (a topic I've addressed in a previous diary)?

The answer must be either that they don't understand the economy and actually think that nominal debt levels are hurting the US' growth right now (as evidenced in Paul's appearance on Crowley's show).

Another case in point is Paul Ryan's appearance on Meet The Press, where he confusingly says:

"We’re not preaching austerity. We’re preaching growth and opportunity. What we are saying is if you get our fiscal shift fixed, you preempt austerity."
Re-read that in case it doesn't register. Yes, he's saying that to pre-empt austerity you need to...engage in austerity. Over at EconoSpeak, the point is made better than I could:
But Ryan is calling for more government spending cuts so we can avoid austerity? Does this alleged GOP economic guru even know what the word austerity means?
If it isn't raw stupidity and misunderstanding, then more nefariously, the GOP must be promoting austerity now as a way to hurt the economy so that Obama and the Democrats can't campaign on a robust economy to win in 2014 and 2016. Austerity would kill growth and jobs, and Republicans could just blame Obama for this and increase their electability in the coming elections.

That would mean that the Republicans are either stupid for not understanding the economy, or they are evil for supporting failed policies as a way to hurt the country and the Democratic Party that is in power today.

But, alas, I will conclude this entry with a few glimmers of hope from both sides of the aisle.

Bobby Jindal, on the Republican side, has spoken out against Austerity, and saying that the Republicans should "stop being the stupid party:"

"We must not become the party of austerity.  We must become the party of growth.”
Whether this is an Orwellian newspeak strategy, of pushing austerity, but not actually saying they're pushing austerity, is another story.

On the Democratic side, we've got Bill Clinton speaking out against austerity at a retreat for House Democrats in Virginia:

"The debt problem can’t be solved right now by conventional austerity measures, and that’s why Paul Krugman is right when he keeps talking about all these -- everybody that’s tried austerity in a time of no growth has wound up cutting revenues even more than they cut spending because you just get into the downward spiral and drag the country back into recession."
And we've got the House Democratic Leader Pelosi echoing this sentiment, sort of at least, yesterday on Meet The Press:
“It is almost a false argument to say that we have a spending problem. We have a budget deficit problem,”
She's hinting more at revenues, which I'm all for, at least in the name of reducing inequality. But her comment still smacks of this idea that the national debt accumulation is a problem, which it isn't, per se.

Unfortunately, it doesn't look like the large stimulus plan I'd like to have passed is politically feasible this year (I will post a diary entry later that will outline specifically my reasoning and implementation of a stimulus plan to help reach fuller employment). However, Pelosi's admission on Sunday's Meet The Press helped balance out the rage I felt at Rand Paul's appearance on State of the Union. And for that, I'm grateful. Hopefully public sentiment will continue to sway in this direction.

There are indeed green shoots in the debate over austerity. For a while there it has looked like there was a bi-partisan consensus that the debt was a problem and austerity was necessary. So I'm glad to see that the Very Serious People are coming around on this (at least on the left). It's just a shame that we had to undergo a destructive human experiment on the European people to learn what most Econ 101 students could have told policymakers: cuts in spending in a time of stagnation will only further reduce growth, which will hurt jobs and the aggregate economy.

Originally posted to AusteritySucks on Sun Feb 10, 2013 at 11:37 PM PST.

Also republished by Money and Public Purpose.

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Comment Preferences

  •  It's not austerity for growth's sake (1+ / 0-)
    Recommended by:

    they want. The prism you need to understand them is their ideological opposition to government itself, which in good Hayekian fashion they equate with tyranny.

    They want austerity in order to cripple government, not to resolve a debt crisis. Remember, they created the crisis!

    When the union's inspiration /Through the workers' blood shall run /There can be no power greater /Anywhere beneath the sun /Solidarity Forever!

    by litho on Mon Feb 11, 2013 at 03:06:24 AM PST

    •  Good point (2+ / 0-)
      Recommended by:
      litho, MrJersey

      But are they consciously planning a "starve the beast" tactic, or are they truly that blind to the consequences of their ideas?

      We know the Stupid Party puts ideology before facts and reality, but the real question is do they REALLY and TRULY just not give a single sh- about the American people? Is their precious anti-government ideology seriously that important to them?

      •  I'm going to give them the benefit (1+ / 0-)
        Recommended by:

        of the doubt and accept they truly believe, with Hayek (and Ayn Rand), that the welfare state leads inexorably to a totalitarian state.  In that sense, then, their stupidity is intellectual shallowness, an inability to question why Hayek's predictions have failed to bear fruit in the real world, and an inability to follow through to their natural conclusions the outcomes of their own policy recommendations.

        I don't think they consciously wish to harm people.  I think trapped in the binary tyranny-freedom they believe they're opting for freedom.  They can't see what they really do is condemn the vast majority to a lifetime of misery.

        When the union's inspiration /Through the workers' blood shall run /There can be no power greater /Anywhere beneath the sun /Solidarity Forever!

        by litho on Mon Feb 11, 2013 at 04:07:50 AM PST

        [ Parent ]

        •  Pete Peterson was Nixon's Sec Commerce, (2+ / 0-)
          Recommended by:
          aguadito, katiec

          and he is big-time investment banker. I find it inconceivable that he doesn't have a grasp on monetary reality, yet he more than anyone is behind the push toward austerity. He sees nothing in it but profit. So while the Pauls and the Thadists of the world may be true believers, their backers are motivated by greed alone. IMO

        •  No, they've (2+ / 0-)
          Recommended by:
          aguadito, bluezen

          been trying to hurt people. Their aim is to destroy democracy and create plutocracy. Inequality here has been growing since the 1970s; but they keep pushing policies that they know will create more. It's the "let 'em eat cake" syndrome!

  •  That spending chart is extremely misleading. (1+ / 0-)
    Recommended by:

    It attributes spending that was passed AFTER President Obama  got elected -- the stimulus spending passed in spring of 2009, for example, to President Bush.  Then, it talks about the percent of increase AFTER taking into account the stimulus spending.  That's very misleading.  Although the stimulus spending happened during FY 2009 (and the Budget for FY 2009 was passed during the Bush administration) it is clearly misleading to attribute spending that was pushed for by President Obama, and passed and signed after he was elected, to President Bush.  Essentially, that chart is saying, AFTER President Obama's stimulus spending in the spring of 2009, his increase over and above a FY that included his own stimulus package was the lowest since Eisenhower.  

    FY 2009 record high spending levels are attributable to both things enacted under President Bush AND to things enacted under President Obama.  Charts like that, which attributed it all to President Bush, are extremely misleading, and, in my view, discredit people who use them to make a point.

    It's amazing that people here continuing to push that meme even after many outlets have pointed out how misleading it is.  FactCheck estimates that charts like that atribute some $203 billion in FY 2009 that President Obama got passed to President Bush.

    A much more honest way of looking at spending is to look at government spending as a percent of GDP.  The White House data on that is here.  2009 Outlays were 25% of GDP, the highest level since WWII.  2010 and 2011 stayed at historically high levels at 24% of GDP.  Those estimates that go down over the next years by the White House are based on the sequester staying in effect.

    •  Strange comment (0+ / 0-)

      Your FactCheck link actually shows just how accurate the story the chart I posted is depicting.

      The chart is merely showing that Obama hasn't GROWN spending much at all, he's essentially just maintained it.

      That's the same point your link to FactCheck is making.

      It's not "extremely misleading", it's not even a little misleading, to demonstrate that Obama inherited a dogsh- economy from Bush, and that the hike in spending is automatically-triggered cyclical spending for the safety net.

      Hey, by that token, we can say, none of that spending is Obama's fault, so it's not fair to attribute any of it to him, since it was Bush's bubble and Bush's crash and Obama has had to clean up after him.

      In reality, the chart is accurate. You can also look at the deficits as percentage of gdp as well, for example check this out:

      You can see that Obama hasn't exploded the deficit or spending at all in that case. It's the same story the initial chart i posted is telling: Obama is NOT a drunken spender.

      So I'm not sure what point you're trying to make. Obama came into the second coming of the Great Depression and he's done his best to control spending (maybe too much?) that occurred before him under the previous congress and president.

      Deficits don't matter, jobs do.

      by aguadito on Mon Feb 11, 2013 at 06:08:34 AM PST

      [ Parent ]

      •  Here's the part you missed from Politifact (0+ / 0-)

        (you apparently didn't read the whole article):

        We think reasonable people can disagree on which president should be responsible for TARP spending, but to give the critics their say, we’ll include it in our alternative calculation. So, combining the fiscal 2009 costs for programs that are either clearly or arguably Obama’s -- the stimulus, the CHIP expansion, the incremental increase in appropriations over Bush’s level and TARP -- produces a shift from Bush to Obama of between $307 billion and $456 billion, based on the most reasonable estimates we’ve seen critics offer.
        It says that charts shift as much as $307 billion to $456 billion of spending that was either clearly or arguably Obama's spending to Bush.  

        Here's the Washington Post summary of the analysis used for that chart:

        So, in sum, the conclusions of “independent fact checkers” are unanimous, even though we reach a similar destination through different routes: The data used in the MarketWatch analysis is flawed in a number of ways — the starting point is wrong, the ending point is misleading and it is not inflation adjusted.
        After that, people who rely on the Marketwatch analysis have no credibility.

        I repeat: that chart is extremely misleading.  And as the WaPo says, the "independent fact checkers" are unanimous in supporting that conclusion.

        •  Here's the part you missed (1+ / 0-)
          Recommended by:

          The whole article you posted was making the point that Obama isn't responsible for the humongous spending! It was "fact-checking" the claims that Obama is responsible for the highest levels of spending per GDP!

          From your FactCheck link:

          Since fiscal 2009, however, it cannot be denied that spending has increased only modestly. Total federal outlays actually went down 1.7 percent in fiscal 2010, for example, then rose a little more than 4 percent in the fiscal year that ended Sept. 30. Spending was projected by CBO to rise less than 1 percent in fiscal 2012. In fact, CBO reported on May 7 in its most recent monthly budget report that spending for the first seven months of the current fiscal year was 3.4 percent below the same period a year ago. That was mostly due to differences in timing of certain payments, but even adjusting for those, CBO figured spending is 0.8 percent lower so far this year.
          (Emphasis my own.)

          And in the own introduction in case you missed it:

          The truth is that the nearly 18 percent spike in spending in fiscal 2009 — for which the president is sometimes blamed entirely — was mostly due to appropriations and policies that were already in place when Obama took office.
          So thanks for the link. It actually details just how much Bush was responsible for the mess and not Obama!


          Deficits don't matter, jobs do.

          by aguadito on Mon Feb 11, 2013 at 06:24:33 AM PST

          [ Parent ]

          •  Please read your own link (0+ / 0-)

            That says that FY 2010 did not go up much over FY 2010.  

            FY 2010 started in October 2009.  FY 2009 started in October 2008.  That means that FY 2009 overlapped the Presidents.  

            The President was inaugurated in spring of 2009, and AFTER he came into office, he passed the stimulus, the CHIP increase, etc. -- some $300 billion to $400 billion in additional spending.  Your chart attributes that to FY 2009, and then attributes ALL of FY 2009 -- even the part passed by Obama -- to Bush, because the original FY 2009 budget -- the part without President Obama's additions -- was passed under Bush.  It essentially says,

            whatever increase in spending President Obama passed from January 20, 2009 to October 2009, we are going to count as a "Bush" increase in spending
            .  That's the misleading part, as the WaPo says.    

            What that link says, is that if you attribute ALL of FY 2009 -- even the part passed by Obama after he came into office --  to Bush and to Bush alone, your chart is correct.  But as the WaPo link says, all the independent fact checkers agree that it's misleading to attribute all of  the spending increase for FY 2009 -- like the spending increases passed after January 20, 2009 -- to Bush.  

    •  Why? (3+ / 0-)
      Recommended by:
      aguadito, katiec, jellyyork
      A much more honest way of looking at spending is to look at government spending as a percent of GDP.  
      The whole point of automatic stabilizers is for spending to gdp ratio to rise in a recession. You're pointing to a machine doing what it's supposed to do as a problem. That doesn't make sense. If spending were held to a specific percent of GDP, every economic decline would resonate into a depression. The essence of government is to provide a negative feedback loop. What you are asserting is that to disregard that function is a more "honest" way of looking at it. Not in a reality I understand. Could you illuminate?
      •  I completely agree that government spending (1+ / 0-)
        Recommended by:

        as a percent of GDP goes up in a recession.  Nobody is disputing that.  That has to happen.  But that spending as a percent of GDP continues at record highs even after the recession ended in June 2009.  

        The reason I say % of GDP is more accurate is that measuring in actual dollars is misleading as well, because the "value" of the U.S. dollar fluctuates.  When people talk in terms of targeted revenue and targeted spending, they often use % of GDP to measure both, just as the White House does.

        What is going to be much more telling is when the President submits his budget to Congress (he's already missed the February 4 deadline).  The CBO is going to score it as a percent of GDP over the next 10 years.  

      •  See other comment (0+ / 0-)

        Even when you compare deficits as percentage of GDP, the picture is the same: Obama inherited a mess, and has done his best to hold it together since:

        BTW good to see you :P

        Deficits don't matter, jobs do.

        by aguadito on Mon Feb 11, 2013 at 06:25:58 AM PST

        [ Parent ]

    •  Here's another view (0+ / 0-)

      Was gonig to use this in an entry in the future, but I'd like you to see it now to help drive home the point:

      Hopefully you can see now how Obama inherited a complete pile of crap from Bush, and that the level of spending is not his fault at all.

      And again, the chart i've used in the entry tells the same story: Obama's not growing spending at insane levels, if anything he's maintaining.

      Deficits don't matter, jobs do.

      by aguadito on Mon Feb 11, 2013 at 06:13:31 AM PST

      [ Parent ]

      •  That proves my point. (1+ / 0-)
        Recommended by:

        It shows President Obama with highest deficit, in terms of % of GDP, since Kennedy.  By far.  Look at the numbers -- only President Obama gets to  -10% -- that's a deficit of 10% of GDP, according to that chart.  (Caveat -- I'm just summarizing what the chart says on its face, I have no idea whether it's accurate).

        It is much more credible to say that the President concluded those high spending levels were necessary because of the economic situation.  It is NOT credible -- as that WaPo link shows -- to argue that his spending increase "is the lowest since Eisenhower."  

        •  You're confused (0+ / 0-)

          Obama didn't "decide" to have that spending hike. It was, as Old Surgeon said, automatic stabilizers.

          He inherited it. You're the one trying to mince words to make Obama the bad guy responsible for the stuff.

          Read your own link and the quotes I made in the other comment.

          Deficits don't matter, jobs do.

          by aguadito on Mon Feb 11, 2013 at 06:30:04 AM PST

          [ Parent ]

          •  That's where the dispute is (1+ / 0-)
            Recommended by:

            Read the WaPo link.  

            Re:  the stimulus package, the CHIP increase, and the other increases passed by President Obama AFTER he took office -- the WaPo link summarizes the independent fact checkers and concludes that they are "unanimous" in saying it's misleading to attribute that to Bush.  

            Now, you can certainly argue that the spending by President Obama in 2009 was necessary, given the Bush economy.  

            But every independent fact checker says that it is misleading and flawed to say that was Bush's spending -- and that's what your chart does.  Your chart says the stimulus, the CHIP expansion, etc. was Bush's spending -- not that it was Obama's spending made necessary by Bush, but that it was Bush's spending.  That's misleading.

            •  It's misleading but the point stands (0+ / 0-)

              That he inherited huge deficits and has just essentially maintained the levels of spending.

              I'll replace the graph with one that doesn't have that minor inconsistency in calculations. But the point stands, Obama inherited the mess from Bush.

              It's extremely misleading for you to say that chart is extremely misleading when you're qibbling over a couple hundred billion bucks, which doesn't change the overall picture. And at least a couple hundred billion can be attributed to the financial crisis which Obama had nothing to do with, so that wipes away his additional bills (which were largely already in the pipeline, mind you).

              Deficits don't matter, jobs do.

              by aguadito on Mon Feb 11, 2013 at 06:43:18 AM PST

              [ Parent ]

              •  Every independent fact checker disagrees (1+ / 0-)
                Recommended by:

                with you and agrees with me. In addition to the links I already provided, see here.  WaPo gave the analysis underlying your chart "three Pinnochios."

                •  I just (0+ / 0-)

                  conceded that there is a $200 billion discrepency (as the Annenberg FactCheck link points out). And it is very minor in the big picture.

                  Also, that does not change a damn thing about the greater point, as I've shown in the other sources provided.

                  Look at the chart from FactCheck alone. It shows that the small component that Obama added in 2009 still doesn't change the fact that the explosion happened under Bush, and he added a minor part in FY2009.

                  Given that MINOR slightly misleading issue of $200 billion which may be more accurately attributed to Obama, I've swapped out the old MarketWatch chart and replaced it with one from the White House which presents the point in a different light: the point being that government spending is not exploding and hasn't been exploding under Obama, and that he inherited it from Bush.

                  See the other charts and the excerpts and the main points of the FactCheck link you cited: Obama was not responsible for the explosion, Bush was. And he has since been controlling spending (and I actually think, as you can see from my various entries, that he should just be spending more, but he hasn't).

                  But you need not look further than your own link to see this exact point: that Obama inherited this, he didn't create it, and he's only been trying to contain it. Demonizing Obama and blaming him for this is desperate.

                  Deficits don't matter, jobs do.

                  by aguadito on Mon Feb 11, 2013 at 06:55:48 AM PST

                  [ Parent ]

                  •  aguadito - the budget balooned in the last (0+ / 0-)

                    year of GWB's Presidency in large part due to the recession, but Senator Obama said he would cut the budget deficit in half in his first term. What actually happened was four years of Trillion dollar deficits.

                    "let's talk about that"

                    by VClib on Mon Feb 11, 2013 at 07:28:54 AM PST

                    [ Parent ]

                    •  Obama was naïve (0+ / 0-)

                      To make that kind of prediction. Don't get me wrong, I disagree with a lot of what Obama has done. He should be spending a lot more to fix the economy, and he still pushes pseudo-austerity in his speeches. And it was dumb for him to say he would cut the deficit like that, and he was wrong to say that, but a lot of people were wrong in just how deep and persistent this downturn has been.

                      And yes, you're right, Bush's spike in the deficit was due to the recession....

                      ...The recession that was 8 years in the making, under Bush.

                      He had two entire terms to do something about the obvious housing bubble and bankster shenanigans that caused the crisis. And yes, it was obvious. Look at Bill McBride, Roubinni, Shiller (of the Case-Shiller index).

                      There was plenty of warning, but deregulation took precedence over protecting us from the bubble bursting. Still Bush's responsibility.

                      This is why you won't hear Bush's name spoken by any Republicans on the campaign trail. He's universally viewed as having been a lackluster leader.

                      Deficits don't matter, jobs do.

                      by aguadito on Mon Feb 11, 2013 at 07:36:01 AM PST

                      [ Parent ]

  •  The Republicans seem to have slept through the (2+ / 0-)
    Recommended by:
    aguadito, Calgacus

    entire year of Economics 1.01 & 1.02.  I remember something in those courses about a guy named John Maynard Keynes, someone who makes much more sense than the Laffer Curve.

    The Republican "bidness" types just have no exposure to macro economics so all of their thinking is "micro" in the extreme.  They are just not big thinkers.  

    And it feels like I'm livin'in the wasteland of the free ~ Iris DeMent, 1996

    by MrJersey on Mon Feb 11, 2013 at 06:21:34 AM PST

  •  Check this out: .... (1+ / 0-)
    Recommended by:

    A Breakthrough Speech on Monetary Policy:  Reuters, Kaletsky

    Would send a link if I could, but there's a link on Mike Norman Economics, you have to scroll down a little to find it.

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