I continue to be amazed that people think that this president is honest, when there is such a huge ongoing gap between words and deeds. Who was foolish enough to believe that he would actually cut the federal budget? Of course, as was the case with many of his campaign promises, I assume that his supporters just assumed and hoped that he was lying.
10 thoughts on “How About That Net Spending Cut?”
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George W. Bush campaigned in 2000 on a promise to keep the budget balanced. By 2002 he’d turned the promise into a joke:
Obama has the two wars that Bush started and the deepest recession since the 30s. A net spending cut at this point would be fiscal malpractice.
A net spending cut at this point would be fiscal malpractice.
But exploding the deficit isn’t? A spending cut at this point would be fine, if combined with a real stimulating tax rate cut (eliminate corporate tax, put a moratorium on payroll tax, reduce marginal rates, etc.).
Exploding the deficit does not hurt the economy in the short run. It isn’t crowding out private investment, because private money is cowering in the corner anyway.
Cutting spending, on the other hand, means laying people off, buying less (resulting in suppliers laying people off), and is sure to make the recession deeper.
I agree that a moratorium on the payroll tax would be a good stimulus. Eliminating corporate taxes is an invitation to abuse (I could immediately incorporate and dodge most of my taxes). Cutting marginal rates doesn’t put money in the wallets of the people most likely to spend it.
Exploding the deficit does not hurt the economy in the short run.
So in other words, when Bush exploded the deficit after the 9/11 attacks; that’s bad. It doesn’t matter that the deficit then declined every year afterwards. But when Obama quadruples the deficit; that’s not a bad thing in the short run eventhough the deficit stays double Bush’s for the next 8 years.
Jim’s toking on some awesome stuff.
Leland: Bush did not hurt the economy in the short run when he ran up the deficit.
As for the longer term, Bush had no macroeconomic reason to be running deficits from 2003 on. Obama is dealing with a much bigger economic downturn.
Bush had no macroeconomic reason to be running deficits from 2003 on.
I’ll concede that the economy was getting back on track after 9/11. The markets did peak out at an all time high just as the Democratic Congress took over. After that, the deficit wasn’t managed as Congress passed continuing resolutions rather than budgets. The markets then started their nose dive.
> As for the longer term, Bush had no macroeconomic reason to be running deficits from 2003 on.
You can’t just jerk revenues up, which is why you can’t push expenses up arbitrarily. (If you do, you can’t ever break even because the time to catch up is greater than the length of the cycle.)
Deficits were going down under Bush. If he’d run smaller deficits before 2003, he’d have made it to a surplus.
However, folks who argued for the structural increases during the Bush years, are in no position to criticize. That includes Dems because their arguments were that Bush wasn’t adding enough new programs or making them big enough.
You can’t just jerk revenues up
Clinton did in 1993 (he got no GOP support; they claimed his tax hikes would bring on economic disaster).
I thought I had posted already. My view is that this stimulus spending will be an example of failure for the Keynesian approach to lifting recessions. First, I see it as too much cure and too late. Much of the spending doesn’t take place in a reasonable timeframe and the amounts are staggering. It also negates the prime benefit of a recession, namely, the culling of the weak. Businesses that are failing should be allowed to go out of business via bankruptcy court. For you, Jim, perhaps you should talk with jack lee. He seems to be on top of this particular matter and shares your general ideological bent.
The current approach of bailing out or buying out failing companies really centralizes power with Obama, the Democrat Party, and their supporters. The UAW got a great deal at the expense of the other asset holders in GM and Chrysler. As did the US government. Public funds shouldn’t be any more special than private funds. This sort of unpredictable, wealth transferring activity helps generate the “cowering in the corner” phenomena that Jim noticed. My view is that bankruptcy law is based on centuries of experience and problems. Obama shouldn’t be subverting that.
Sure it’s unfair that Obama gets saddled with perhaps the worst recession since the Great Depression, a terrible bailout, and two small though very expensive wars. But Obama has just added to the problem with more bailouts, generated considerable uncertainty which worsens the current recession and hinders any future recovery, and played favorites in an unprofessional and perhaps avaricious manner. Sure this could be yet another Keynesian recovery, but I don’t think so.
> > You can’t just jerk revenues up
> Clinton did in 1993 (he got no GOP support; they claimed his tax hikes would bring on economic disaster).
Actually, he didn’t. He increased rates but revenues did not increase proportionally.