General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsKrugman: Democrats should stop obsessing about deficits.
http://krugman.blogs.nytimes.com/2012/12/29/on-the-economics-and-politics-of-deficits/Evan Soltas of Wonkblog and Joe Weisenthal of Business Insider both make the same point, in more detail, that I tried to make in my series on ONE TRILLION DOLLARS: the current budget deficit is overwhelmingly the result of the depressed economy, and its not clear that we have a structural budget problem at all, let alone the fundamental mismatch between what we want and what were willing to pay for that people like to claim exists.
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So, the whole deficit panic is fundamentally misplaced. And its especially galling if you look at what many of the same people now opining about the evils of deficits said back when we had a surplus. Remember, George W. Bush campaigned on the basis that the surplus of the late Clinton years meant that we needed to cut taxes and Alan Greenspan provided crucial support, telling Congress that the biggest danger we faced was that we might pay off our debt too fast. Now Greenspan is helping groups like Fix the Debt.
And as Duncan Black points out, the Bush experience tells us something important about fiscal policy: namely, that when Democrats get obsessed with deficit reduction, all they do is provide a pot of money that Republicans will squander on more tax breaks for the wealthy as soon as they get a chance. Suppose Romney had won; do you have even a bit of doubt that all the supposed deficit hawks of the GOP would suddenly have discovered that unfunded tax cuts and military spending are perfectly fine?
dkf
(37,305 posts)Print print print our debts away. Yay!!!!!!!
PETRUS
(3,678 posts)pnwmom
(108,977 posts)but in the short run we should worry much more about stimulating the economy to achieve the growth that will take care of the non-structural deficit.
dkf
(37,305 posts)Wow just wow.
I really don't know why we spent all those years hating the Bush cuts then. The world sure seems topsy turvy.
pnwmom
(108,977 posts)the spending curve way down.
dkf
(37,305 posts)For Medicare. Beyond that not much.
Amidst all the cries of Barack Obama being the most prolific big government spender the nation has ever suffered, Marketwatch is reporting that our president has actually been tighter with a buck than any United States president since Dwight D. Eisenhower.
Who knew?
So, how have the Republicans managed to persuade Americans to buy into the whole Obama as big spender narrative?
It might have something to do with the first year of the Obama presidency where the federal budget increased a whopping 17.9% going from $2.98 trillion to $3.52 trillion. Ill bet you think that this is the result of the Obama sponsored stimulus plan that is so frequently vilified by the conservatives but you would be wrong.
The first year of any incoming president term is saddledfor better or for worsewith the budget set by the president whom immediately precedes the new occupant of the White House. Indeed, not only was the 2009 budget the property of George W. Bushand passed by the 2008 Congressit was in effect four months before Barack Obama took the oath of office.
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http://articles.marketwatch.com/2012-05-22/commentary/31802270_1_spending-federal-budget-drunken-sailor
WASHINGTON (MarketWatch) Of all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree.
As would-be president Mitt Romney tells it: I will lead us out of this debt and spending inferno.
Almost everyone believes that Obama has presided over a massive increase in federal spending, an inferno of spending that threatens our jobs, our businesses and our childrens future. Even Democrats seem to think its true.
But it didnt happen. Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.
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dkf
(37,305 posts)pnwmom
(108,977 posts)fraction of the GNP.
By the way, Krugman isn't just some NYTimes columnist, nor is he just some Princeton University professor. He's a Princeton professor who won the Nobel Prize in economics. Even if his arguments seem wrong to you, on the surface, maybe you should at least give them serious consideration. If you go the NYTimes site and search for his columns on the deficit there, you could find many more columns written about this with more statistics to back up his arguments.
From the link at the OP:
"Its hard to look at that chart and not conclude that the slump is the principal cause of the deficit. Soltas suggests, based on a more careful statistical analysis, that the structural budget deficit, including interest, is 2 percent of GDP or less. He also makes an interesting observation: the deficit has become more cyclically sensitive over time thanks to rising inequality. How so? More revenue comes from the wealthy even though their tax rates have fallen and their income is more volatile than that of ordinary workers.
"So, the whole deficit panic is fundamentally misplaced. And its especially galling if you look at what many of the same people now opining about the evils of deficits said back when we had a surplus. Remember, George W. Bush campaigned on the basis that the surplus of the late Clinton years meant that we needed to cut taxes and Alan Greenspan provided crucial support, telling Congress that the biggest danger we faced was that we might pay off our debt too fast. Now Greenspan is helping groups like Fix the Debt.
"And as Duncan Black points out, the Bush experience tells us something important about fiscal policy: namely, that when Democrats get obsessed with deficit reduction, all they do is provide a pot of money that Republicans will squander on more tax breaks for the wealthy as soon as they get a chance. Suppose Romney had won; do you have even a bit of doubt that all the supposed deficit hawks of the GOP would suddenly have discovered that unfunded tax cuts and military spending are perfectly fine?"
Egalitarian Thug
(12,448 posts)create false crisis and terrify the dim bulbs into begging for "The Cure*". Just let them keep their drug of choice and their TV and they'll let anything slide.
*Whatever theft the owners decide on at any given moment
alcibiades_mystery
(36,437 posts)useful for some of our suddenly all deficit-hawking progressive friends.
Cheney said deficits didn't matter in an up economy! But we have progressive Keynesians pulling out the sack cloth in a down economy? Krugman is right on here: we don't have a structural budget problem. We have a consumer demand problem, which is why raising middle class taxes and cutting every program to the bone behind deficit fanaticism is as silly economically as it is regressive politically. Oh, rest assured, the various "charts" are on their way in reply. One thousand billion per annum, they declare! Meh.
Egalitarian Thug
(12,448 posts)amandabeech
(9,893 posts)They all act like the recession is over because their jobs are safe or because the economy reaches some technical milestone.
The real problem is not enough jobs that pay decently.
Krugman's the only prominent media personality who has been talking about jobs and the lousy economy.