This post is heavily based on an article by D. Fahrenthold and R. Helderman (see Sacramento Bee, July 29, 2011)
Here I go again, ad nauseam about the federal budget deficit crisis. Please read this, and learn FACTS:
1. The total federal deficit is now at $14. 3 trillion.
2. The overwhelming fault for this deficit lies with George W. Bush and the Republican Party.
3. Before President Reagan, until 1981, the federal government had racked up a deficit of $1 trillion.
4. From 1981 to 1989, the Reagan administration added $1.9 trillion to the deficit, mostly due to tax cuts and increased military spending.
5. From 1989 to 1993, President Bush Senior added $1.5 trillion to the deficit, mostly due to the Gulf War and the recession.
6. From 1993 to 2001, President Clinton added $1.4 trillion to the deficit, despite 2 years of federal surplus.
7. From 2001 to 2008, President George W. Bush added $6.1 trillion to the deficit, to pay for two wars and tax cuts for the rich. How on earth does a government decide to go to war and at the same time reduce taxes? Has this lunacy ever happened before in history?
8. From 2008 to 2011, President Obama added 2.4 trillion to the deficit, to pay for the stimulus, and due to the recession, two continued wars, and extension of the Bush tax cuts for the rich.
Therefore:
9. Over the past 30 years, Republicans have been at the helm for 20 years, and they are responsible for $10 trillion of the total deficit, i.e. 70% of it.
10 . Democrats have been in the White House for 10 years, and they have contributed $4.3 trillion of the deficit, i.e. 30%.
It is despicable for demagogues like Charles Krauthammer on Fox News to keep saying that “blaming Obama’s predecessors for the budget crisis is a cheap shot.” That is PRECISELY where the blame lies! Obama has only been in charge for 2.5 years, and his contribution to the deficit is 17%. It would be a lot less if the “Party of No” had not obstructed every one of his efforts to reduce the deficit.
Message to the Tea Party and to the Republican Party: You must understand once and for all that the deficit crisis was created by YOUR President, by YOUR party, i.e. by YOU. The only time in the past 30 years that the government enjoyed a surplus was under Clinton. This was due to a TAX INCREASE (and a peace dividend). The tax increase, far from slowing down the economy, was in fact accompanied by a dynamite economy.
The ONLY solution:Raise taxes. How? For starters, repeal the Bush tax cuts for the rich.
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29 comments:
Clear and utterly persuasive, Tom. It seems so obvious, but the media are cluttered with noise that obstructs the simple facts. Most voters don't know what they're voting for, and most legislators are too afraid of them to act responsibly, even when they know better. Phooey. Ann
Excellent! Really enjoyed reading this.
Excellent, Tom.
Thanks for your supportive comments. Maybe we can make a difference
Hi Tom,
You're exactly on the wavelength of Paul Krugman, the Nobel prize columnist of the NYT. No bad company.
Kind regards,
Ha!
Flattery like this I can take!
But more seriously: I DO often feel that we write some pretty good things on this blog sometimes, and yet it is hard to be recognized, due to the sheer volume of verbiage all around us.
Anyway, thanks.
I recommend your readers take a look at http://home.adelphi.edu/sbloch/deficits.html for a different perspective. A glance at the stats over the past 30 years will show that the deficits get out of hand when Democrats control both the House and Senate. When the Republicans control both houses, the deficits are less than the preceding or succeeding Democrat congresses. For example, when the Democrats ran both houses from 1987-1994, the deficits were typically in the $200-$400B range. When the Republicans controlled both houses from 1995 to 2001, deficits were below $200B. During the Bush 43 administration, when the Republicans controlled both houses from 2002-2007, deficits were in the $500-$600B range. When the Democrats got control in 2007, deficits have zoomed 2-3 fold in the past four years to the $1-1.5T range. Tom contends that Republican presidents are the problem, while the stats support an alternate hypothesis that Democrat controlled congresses are the problem.
Professor Kando,
Don’t you know the difference between a fact and a conclusion?
Point #2 is not a fact, it’s a concluding opinion -- perhaps a legitimate conclusion to draw after seeing facts 3-10, but it is nonetheless an opinion. And as one of your respondents notes, there are facts that could lead to a different conclusion, i.e., that the problem is when democrats control both houses of Congress.
I was a democrat most of my life but now consider myself an independent – partly because I’ve had it with each party trying to fix fault, rather than fixing problems….
Thank you, anonymous and Sheila. I am always happy to see that I am not just preaching to the choir.
Anonymous: I may get back to you after I do some more research.
For now, I'll say this: There is no doubt that both the "welfare State" guys and the "Free Market" guys contribute to deficit spending. The difference is, one side does it buy wanting to spend more on public services, while the other side does it by trying to "starve the beast," to quote Ronald Reagan. Clearly, you and I are on opposite sides, on this issue.
Sheila: If I put my point #2 at the end of the list, would that satisfy you? I suppose a conclusion typically comes at the end of a statement. But you are picky. There is also a literary format in which one (1) first states one's "position" (conclusion) and then explains the reasons (facts) supporting it.
For example, a prosecutor might start his statement to the jury saying something like, "defendent is guilty. We shall prove this by showing that, etc..." and then he presents the evidence.
Also, I DO offer a solution in my last paragraph, and I go beyond fixing fault.
As I write this, I hear that they have just come to an agreement in Washington. Perhaps it’s time to celebrate? Or maybe I’ll celebrate after I find out the details of the agreement...
I am sorry that you are no longer a Democrat. oh well, I was a Republican at one time, just go figure...
Good article, Tom. However, the word "deficit" in this context is generally used when we're referring to a negative amount or a shortage in the federal (annual)budget, where the word "debt" is generally understood to refer to the total amount of money the federal government owes (to China, etc. etc.) I think the distinction is important to eliminate confusion!
In reading your post I am reminded of rabid sports fans sitting in a bar and arguing about team statistics in order to prove whose team is really best. This rear-view-mirror approach to assigning best and worst, right and wrong, and for predicting the future, is endemic to our society and is the reason our political system is grinding to an ignominious halt. New ways of thinking are needed!
The data points cannot be assigned. When viewed in a larger time frame, deficit, debts, tax rates, GDP and employment numbers tend to smooth out over a moving range that reflects larger economic and social trends rather than the policies of individual administrations.
For example, if we plot these numbers over that past 100 years, we can see trends and milestones---the economic transformations and social dislocations of the industrial revolution, the polarization of wealth and rise of speculation in the 20's, the crash of speculative markets and rise of social activism in the Great Depression, WWII and America's rise to prominence amid the ashes of Europe. The rise of the middle-class, and then the rise profits increasing at an increasing rate and the concomitant polarization of wealth and power that led the dismantling of social programs, unions, progressive taxation and the deregulation of market players.
The point here is that the parties in power are subject to these larger trends and these conditions will on the whole, determine the numbers, so all attempts to assign blame or give credit on the basis of short-term data points, are specious.
The question that really matters is to try to determine the aims of the various parties and the level of commitment to those aims.
In America today there are two parties. Beginning with WWII and its aftermath, these two parties gravitated toward a center in which aims were shared--to keep a good thing going for everyone. As the post-WWII boom, augmented by the Cold War boom, abated, the economic realities, both external and self-made began to shift.
Today, the Republican party aims to completely unfetter free-market forces and enable every-man-for-himself. The Democratic party accepts this basic idea but seeks to mitigate its excesses. These two parties are close enough in aiming that the numbers will remain roughly the same whichever is in power. The catastrophic outcomes we are witnessing today cannot be attributed to one party or the other because both parties subscribe to a similar set of aims.
Most revealing in this are numerous recent speeches by Hillary Clinton. From a foreign policy standpoint she consistently says America's aim is to promote Democracy AND our economic philosophy and practice! That second part of the aim is very telling.
American economic thinking was conditioned by its post-WWII conditions--unfettered free enterprise. European thinking, until recently, was conditioned by post-WWII conditions in a very different way--managed markets and social responsibility.
Today, America is no longer competitive in her own game. This is not only because she has failed competitively but also because the game itself is being changed with the introduction of new players. The rules of the new game have yet to emerge and chaos and unpredictability dominate the future-scape.
So the aim of both parties to grow profits and, by way of profits, advance our national interests, is quickly playing itself out on the now-global stage.
We will need to rethink our aims as a nation if we want to change the numerical trends that currently occupy so much of people's attention. Arguing yesterday's statistics will produce greater stalemate while changing nothing of substance. The decline will continue.
Right On!!
Thanks for all the comments.
Rudy:
Okay: The total federal DEBT is $14.3 trillion, and the other amounts I mention are all additions to the DEBT.
You are right: The DEFICIT is the annual shortfall. Obama’s critics have (correctly) pointed out that his annual SHORTFALLS have exceeded those of any of his predecessors. So politically it serves Republicans to talk about annual DEFICITS, and it serves Democrats like me to focus on the total accumulation of DEBT, by which measure Obama is NOT the worst culprit.
* * * * *
Marc: Of course, of course. All very true. In a long-term historical, philosophical and idealistic sense everything you say is irrefutable. I hope that the change of consciousness which you describe will come. It must.
All my life I have vacillated between two views:
(1) The two major parties are Tweedledee and Tweedledum - the whole C. Wright Mills- William Domhoff Military-Industrial Complex/Power Elite perspective. They are all in cahoots, etc.
This was certainly my position when I marched against the Vietnam War, which was largely a war of and by the Democratic Party. To deny that we are largely in the grip of systemic forces is to deny the very essence of Sociology.
But:
(2) We also have to choose for the lesser of two evils. Everything in life is relative, including evil. That’s why I sent money to Hillary Clinton’s campaign 3 years ago, and I will send money to Obama’s campaign next year.
I also know what more progressive third parties have done. For example, Ralph Nader robbed the Presidency from Al Gore and gave it to George W. Bush. So while it’s not very subtle and it’s not very intellectual, I nevertheless choose sides. I am partisan.
Yes, and many of my friends constantly chastise me for calling foul on a lot of the nonsense that passes for responsible and learned debate.
Make no mistake about it, I am very partisan and I do try to optimize my choices between lesser evils and greater goods. But this does not mean that I must abet the kind of dialog that produces situations from which there are no exits. Compromises notwithstanding, my aim is constant.
The "facts" of history--the data points--can only be understood in the context of the aims of those who are telling the story. When aims differ, the "facts" and their meanings differ.
The disputes between Israelis and Palestinians, liberals and conservatives, atheists and Christians, Serbs and Croats, cannot be reconciled based on facts. The only way to reconcile these warring parties is for them to adopt in some degree, shared aims by which to move forward in constancy of purpose. If shared aims, to some greater or lesser degree, cannot be achieved, the parties are stuck and no amount of recollection will help.
I think Obama has some understanding of this pragmatic methodology but he has consistently underestimated the degree to which American political and economic players have become divided in their aims. He has assumed that shared aims were given. As our discussion of the Civil War made clear, there comes a point at which aims at cross purposes produce intractable differences in practice. Catastrophe ensues.
Middleman Obama's failure has been one of leadership. Rather than stridently leading the nation in building shared aims and then forging compromises in the service of those shared aims, he has ceded the question of aims to the warring parties and then tried to forge compromises of their disparate aims. So long as aims are not shared, the method of compromise is useless. The warring goes on.
By arguing the data points--the historical facts--we actually make catastrophe more likely. It is only when conditions on the ground--the Great Depression, WWII, hurricanes and floods, terrible injustices--drive people to collaborative action in shared purpose (aims) that the facts of the past can be shaped into coherent history.
Arguing the facts of the past and assigning blame does nothing more than further entrench dogmatic belief. The conversation must be changed if we want to make things better.
BTW...
I do not actually think that catastrophic events are the only way for shared aims to develop. Events such as those tend to make the aiming happen, but I believe that skilled leadership can tap into this conditions-on-the-ground process proactively by aimfully interpreting "facts" in a manner that is compelling to followers.
Also, I note a contradiction in my two comments. In my first I argue that there is a similarity of aims that keeps the same things happening over and over again in the American economy. In my second comment I say that the aims of conservatives are irreconcilably different in a Civil War sense.
I think that the "centerist" or moderate stances of right and left were dominant up until about 1980. The Civil War sense is something that has been emerging since. Concomitants of these sharpening divisions have been conditions on the ground, including polarization of wealth, unemployment, market volatility, etc. The whole things is of course, a process in motion.
Can the economic conditions that produced an American center before 1980 be restored to where they were? Of course not. The game has changed.
One more possibility is that when the rift between two sides is so great, when inequality is so unbearable, change can be forced upon a system by the ultimate equalizer: REVOLUTION!!
Anonymous...
Don't you know, we are in the midst of a revolution right now!
At home the insurgent Tea Party is in the vanguard, titling at the vulnerable symbolic lynchpin of 20th Century civilization, the U.S. dollar. The EU is teetering on the brink and old fascistic tendencies are resurgent. The Japanese technological miracle, the second--now third-- largest economy in the world, is crumbling under the weight of innovation--nuclear power run amok on a tiny island. Fundamentalist Muslim factions are making their bid for power amidst the chaos of the Arab Spring.
I do not think that these revolutionary events are merely cyclical trials and tribulations endemic to the human project, if only because this time those trials and tribulations are being played out on a massively global scale with massively impactful tools and toys.
The construction of civilizations--the human project--always consists of building symbolic houses of cards on inherently unstable ground. Sooner or later our flimsy projects must collapse under their own weight. The timing and consequences of any given collapse depends on how big and tall our house of cards has become.
The change in consciousness that Tom refers to above...
"I hope that the change of consciousness which you describe will come. It must."
...is for humans to come to terms with the fact that their projects are indeed, houses of cards.
If you know that you are building a house of cards, and take this to heart, you can do much better. And when your house of cards starts to tremble and shake you at least have a chance to deal with that instability in a manner that mitigates the most catastrophic consequences.
This idea--a methodology really--is not as farfetched at it sounds. Our tribal ancestors, long ago, understood full well that their puny projects were houses of cards and apropos of their understanding, favored low-rise over high-rise construction and treaded more lightly upon the ground beneath their feet.
My practical experience with this rather "conservative" method for moving forward, comes from sailing with others across turbulent oceans in small boats. If you have ever done this, you will know what I mean.
Revolutions really scare me.
What can I say?
I cannot do justice to Marc’s fertile and indefatigable mind. Just a few random thoughts:
1. Regarding debating past facts: Santayana’s famous statement: those who cannot remember the past are condemned to repeat it. So maybe rehashing those past deficit figures, and who is to blame for them, has some use.
(But I fervently hope that we don’t get into this again!)
2. I sense ambivalence in Marc, about the reconciliability of differences - or not. Slavery in the 19th century, economic policy now, etc. That’s me! I am ambivalence personified!
3. Pragmatism! Ha, that’s me too. If there is any ideology to which I have subscribed consistently throughout my life, it is the thought of William James et. al.
4. The symbolic construction of social reality and its fragility, and therefore the need for caution (skepticism towards revolutions?) are also very much part of my world view.
Thanks, you guys, for a record number of comments.
God (?)bless you, Tom. We, the blog "members" should get together
and pay for a full page in a deserving, rational newspaper of your choice to publish this obvious piece of reasoning, brilliantly composed.
The best to you, Csaba
Tom: The Bee states facts as they want. The summation of you comment is that over 30 years the Repubs.have bee "in control" therefore causing the deficits. The president was Repub. for 20 years but hardley "in control."The Bee skips over the fact that since 1945 only 10 times (20)years have the Pres.,Senat,& House been the same party. 1981-2009 each party controlled all three only two times fo total 6 years. All others were split. This is easily verified by history so the Bee selects what it wants for the Demcratic position. For about two years Obama had all three bodies but did not present a budget at all. Of course that was the minority party fault. Now about 80 new House members,Tea party, control the government. If a leader does not lead it can be led by a rabble.
to latest anonymous:
Sure, we all select the facts which suit us. This is a complicated (and tedious) topic. Maybe true science is the only area where - ideally - facts can speak for themselves.
Be that as it may, just regarding your last point: It is indeed remarkable that minorities (I speak of Republican extremists now), are able to dictate their agenda everywhere - in California, in Minnesota, in Washington. We now seem to have near consensus in this country that the government, the public sector and taxes are the root of all evil.
But maybe this is not so mysterious. Remember what one of our readers wrote a few months ago, quoting the Italian sociologist Gaetano Mosca and Karl Marx: The ruling ideas of each age have ever been the ideas of its ruling class. So much for democracy, schmemocracy.
This whole debt-ceiling affair was like watching a fist fight between a street-smart hoodlum and an average Joe. The hoodlum doesn't care if he gets hurt or even dies. The average Joe will be more careful and is thus at a disadvantage. Now that the hoodlum has won it remains to be seen where, exactly, the cuts are going to be made.
Why does the US have a debt ceiling to begin with? And why wasn't it challenged in the past? Is it not raised so we can pay for the two wars that the hoodlums have started? Is it not for money that we spent on corporate tax loopholes?
This bill will create cuts in every imaginable government funded program that makes our lives more humane and livable. Our roads, our parks and our schools are going to suffer. Old people are going to suffer, and so will you and I.
If you ask me, Obama should have invoked the 14th Amendment, which would have allowed him to unilaterally raise the debt-ceiling. It might have made America look like a dictatorship, but I would rather be ruled by a benevolent dictator than be blackmailed by a bunch of ruthless criminals.
Let me add a few words on the right/left contrast from a European persective. A recent Dutch TV program included some interesting remarks by former Duch politicians on the contrast in terms of 'realism'. The right accepts the society as it is, while the left wants to change it, to make it 'better', more just. So the right accepts social inequality, while the left wants at least to soften some of its effects. So there you have the well-known effect, protecting the rich vs the poor. The right tends to be realistic to the point of cynicism, while the left is idealistic, maybe sentimental or a bit hypocritic. The right hates idealists for their idealism which suggests moral superiority, while the left thinks rightists are egoists. So the right spends of defensive (?) wars, the left on social security and third world development. How to find a common ground?
Paul's concepts are excellent. Just that lately, the Right has grained strength (on both sides of the Atlantic), and I am unhappy about that.
P.A. to my previous comment
There are sentiments involved:
- on the right: fear
- on the left: hope
They can both be manipulated and they are widely.
- on the right: protect & defend what you have or hope to acquire, even if this requires war
- on the left: be patient, wait for future benefits, etc.
[Note: the perverse version is to promise paradise in the afterlife, cf. major religions]
Tom, Your figures are correct, the deficit is a major problem, and the Bush/Cheney regime is primarily responsible for this downgrade.
However, your assignment of blame on the Tea Party is scapegoating. This problem was in the works before the Tea Party was formed or existed. The Tea Party is a reaction to politics as usual on the part of both Republicans and Democrats.
Our government is trying to defy economic principles using the force of law. Our representatives are either living in la la land, or so beholden to party interests that they could care less whether they destroy the economy.
The Democrats think you can raise taxes and somehow the wealthy won't leave the country. Of 60 AAA rated companies 40 years ago, only 4 are left in the United States. Taxing income and corporate production won't eliminate the deficit because income will drop and corporate production will move.
The Republicans who think you can control the world by conquest of the world's resources and forcing everyone to use the dollar are also misguided. The world will not accept such conquest and the environmental and image fallout has been catastrophic. Such republicans (neocons), wanted to reduce taxes without reducing spending. That triggered our current official downgrade.
The Tea Party is saying that we need to get our fiscal house in order, just as Standard and Poors is saying this. The reason the Tea Party looks intransigent is that it refuses to defy economic law with a compromise. For example, if the government has stepped 4 feet off the cliff, a compromise of 2 feet off the cliff doesn't cut the mustard. You still collapse.
It is time for Americans to realize that unlimited credit, unlimited debt, unlimited borrowing, and unlimited taxation defy economic laws.
So yes, your figures are correct. However, as long as you blame the Tea Party for a problem brewing over the last 50 years, you are still part of the problem.
My, my, this one post continues to generate response! How gratifying.
I like the fact that we are getting both “sides,” Paul sympathizing with the Left, Gordon more critical.
Gordon raises 2 issues:
1) General economic theory and
2) The Tea Party.
1) regarding the first issue, it’s clear that Gordon and I subscribe to different perspectives: He supports the Austrian school and its descendants - Ludwig Von Mises, Joseph Schumpeter, Milton Friedman, Alan Greenspan. Years ago I wrote papers on Schumpeter’s “Capitalism, Socialism and Democracy.” I understand his arguments for “creative destruction” and all that.
But I am a Keynesian, like Robert Heilbronner and Thomas Friedman. As Keynes said, “in the long run, we are all dead.” What matters most now is unemployment and a sagging economy, as was the case during the thirties. We need stimulus more than debt reduction AT THIS TIME, as President Roosevelt understood better that President Obama.
I find it funny that today, Alan Greenspan of all people was still being consulted on national TV for his expertise - he who practically single-handedly engineered the 2008 financial debacle through excessive deregulation.
2) The Tea Party: What can I say? Some of its spokes people (or should I say sympathizers? There is no membership card, it’s an amorphous movement) say absurd things, but maybe one shouldn’t dismiss the whole movement because of that. Their instinct against excessive indebtedness is sound...
Tom, Regarding economics, I do not believe either the Austrian or Keynesian school have the answers to the current dilemma. They have both shown their limits. I am a partial supporter of Hayek but not Von Mises. Hayek believed the government has a role as a referee.
I think the big pharmaceuticals etc. use von Mises because he supports a form of economic anarchy, and in a situation of anarchy the biggest and strongest always win.
The Keynesians can only manipulate social policy when there is something to manipulate. They cannot create something out of nothing and they've already overplayed their hand.
Republicans generally tout von Mises and Democrats Keynes, but neither theory addresses our deficits or loss of jobs to overseas.
As for the Tea Party, I'll have to grant you that there are a lot of whacky people in it. But, if George Washington were alive, he'd likely support it: http://blog.ganderson.us/2011/08/20-unheeded-warnings-by-george-washington/
Thanks for your reply.
Let's hope SOME economists find the way out of the current mess, SOMEHOW
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