Thursday, October 21, 2010

The deficit in Republican thinking

Observations from watching too much politics on TV:

In a close race for Congress in a sprawling district that includes south suburban Chicago, young, handsome challenger Adam Kinzinger is but the latest to mouth a Republican talking point to explain why he backs renewing President Bush’s expiring tax cuts for the wealthy: The worst thing you can do is to raise taxes in the middle of a recession.

That boilerplate answer harkens back to the then radical philosophy of Depression-era economist John Maynard Keynes, a favorite of liberals. But Keynes did think there was one worse thing you could do: cut spending. Funny, Republicans skip over that detail. GOP rhetoric goes in the opposite direction: Reign in out-of-control spending now.

Keynes, by the way, believed government should reverse course in good economic times, by hiking taxes and paring expenditures. But Republicans subscribe to supply-side economic theory, which holds that you always cut taxes on the wealthy, whether the times are good or bad. One consequence is the ballooning of federal budget deficits during the last three Republican presidencies.

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It’s the top of the 9th, and the score is 10-2 in the visitors’ favor. Even though your hometown team’s starting pitcher George Bush played disastrously, he was inexplicably kept in the game. Finally, with the bases loaded and nobody out, the manager yanks him and brings in the long, lean Barack Obama The new pitcher forces the first batter to pop up; no base runner advances. The second player strikes out. The third batter, however, hits a homer, a grand slam, pushing the score to 14-2,which ends up as the final score.

Now, ridiculously, some fans are grousing that Obama lost the game. Of course, under the sensible rules of baseball, the loss falls squarely on Bush.

Politics lacks such clear-cut rules, however. Thus, Dana Loesch – a conservative, St. Louis-based blogger and talker – says on Real Time with Bill Maher that Obama tripled the federal budget deficit in 2009 from the year before.

The deficit was a record $1.4 trillion in 2009, up from $459 billion in 2008. But if that record was Obama's doing, how come the accountants saw it coming well before he took office. Eventually, on Jan. 7, 2009 – two weeks before the Inauguration – the Congressional Budget Office projected a deficit of over a trillion dollars for the year. The office put a price tag on George W. Bush’s policies, not Obama’s campaign promises, to come up with the figure. The big budget busters: the tax cuts and two wars, along with the recession. Keep in mind, too, that 2009 actually refers to the fiscal year that started on Oct. 1, 2008, more than three months before Bush left office. (See analysis by Center on Budget and Policy Priorities.)

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Does anyone buy the Republican talking point that the congressional stalemate over tax cuts is creating uncertainty among businesses and is thus retarding the recovery? OK, I can see the uncertainty part. The fragile state of the economy itself, though, is surely fueling more uncertainty. But slowing the recovery? That’s a joke, right? The steepness of the hole the nation fell into is what's making the climb out a slog.

Obama is taking steps to reduce Bush’s impact on future budgets and thereby reduce future deficits. One such step is to let Bush’s tax cuts for the wealthy expire. But Republicans (and some Democrats) won’t cooperate. Congress recessed without taking up the issue - lack of action that won't send the economy into a tizzy.

Further reading:

1 comment:

  1. Republican outrage over the growing deficit is nothing more than political posturing.

    Calculations by the nonpartisan Congressional Budget Office and other independent fiscal experts show that the $1.1 trillion cost over the next 10 years of the Medicare prescription drug program, which the Republican-controlled Congress adopted in 2003, by itself would add more to the deficit than the combined costs of the bailout, the stimulus and the health care law.

    The GOP's unanimous support for extending the Bush era tax cuts to those making over $250,000 a year will increase the deficit by $700 billion.