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BigRedChief
06-10-2009, 10:42 AM
NYT: How the U.S. surplus became a deficit
Business cycle, Bush policies linked to most of federal government's deficits

ECONOMIC SCENE
By David Leonhardt
The New York Times
updated 4:50 a.m. CT, Wed., June 10, 2009
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There are two basic truths about the enormous deficits that the federal government will run in the coming years.

The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.

The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II. This debt will constrain the country’s choices for years and could end up doing serious economic damage if foreign lenders become unwilling to finance it.

Mr. Obama — responding to recent signs of skittishness among those lenders — met with 40 members of Congress at the White House on Tuesday and called for the re-enactment of pay-as-you-go rules (http://www.msnbc.msn.com/id/31188422/), requiring Congress to pay for any new programs it passes.

The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.
The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.

Wall Street bailout
About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.

Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.

About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.

If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.

How can that be? Some of his proposals, like a plan to put a price on carbon emissions, don’t cost the government any money. Others would be partly offset by proposed tax increases on the affluent and spending cuts. Congressional and White House aides agree that no large new programs, like an expansion of health insurance, are likely to pass unless they are paid for.
'He's not fixing it'
Alan Auerbach, an economist at the University of California, Berkeley, and an author of a widely cited study on the dangers of the current deficits, describes the situation like so: “Bush behaved incredibly irresponsibly for eight years. On the one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he’s not fixing it.”
“And,” he added, “not fixing it is, in a sense, making it worse.”

When challenged about the deficit, Mr. Obama and his advisers generally start talking about health care. “There is no way you can put the nation on a sound fiscal course without wringing inefficiencies out of health care,” Peter Orszag, the White House budget director, told me.
Outside economists agree. The Medicare budget really is the linchpin of deficit reduction. But there are two problems with leaving the discussion there.


First, even if a health overhaul does pass, it may not include the tough measures needed to bring down spending. Ultimately, the only way to do so is to take money from doctors, drug makers and insurers, and it isn’t clear whether Mr. Obama and Congress have the stomach for that fight. So far, they have focused on ideas like preventive care that would do little to cut costs.

Second, even serious health care reform won’t be enough. Obama advisers acknowledge as much. They say that changes to the system would probably have a big effect on health spending starting in five or 10 years. The national debt, however, will grow dangerously large much sooner.

Mr. Orszag says the president is committed to a deficit equal to no more than 3 percent of gross domestic product within five to 10 years. The Congressional Budget Office projects a deficit of at least 4 percent for most of the next decade. Even that may turn out to be optimistic, since the government usually ends up spending more than it says it will. So Mr. Obama isn’t on course to meet his target.

But Congressional Republicans aren’t, either. Judd Gregg recently held up a chart on the Senate floor showing that Mr. Obama would increase the deficit — but failed to mention that much of the increase stemmed from extending Bush policies. In fact, unlike Mr. Obama, Republicans favor extending all the Bush tax cuts, which will send the deficit higher.
Republican leaders in the House, meanwhile, announced a plan last week to cut spending by $75 billion a year. But they made specific suggestions adding up to meager $5 billion. The remaining $70 billion was left vague. “The G.O.P. is not serious about cutting down spending,” the conservative Cato Institute concluded.
What, then, will happen?

“Things will get worse gradually,” Mr. Auerbach predicts, “unless they get worse quickly.” Either a solution will be put off, or foreign lenders, spooked by the rising debt, will send interest rates higher and create a crisis.
The solution, though, is no mystery. It will involve some combination of tax increases and spending cuts. And it won’t be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.

That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade.

This story, "For U.S., a Sea of Perilous Red Ink, Years in the Making (http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.htm)," originally appeared in The New York Times.

Copyright © 2009 The New York Times
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KC Dan
06-10-2009, 10:54 AM
Every President has culpability to our wonderful debt (as he signs the bills)but the real responsibility lies in the Congress, they write the damn thing. Read the Constitution and Congress' Powers.

Section 7 - Revenue Bills, Legislative Process, Presidential Veto
All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur (http://www.usconstitution.net/glossary.html#CONCUR) with Amendments as on other Bills.

Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it.
If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law. But in all such Cases the Votes of both Houses shall be determined by Yeas and Nays, and the Names of the Persons voting for and against the Bill shall be entered on the Journal of each House respectively.
If any Bill shall not be returned by the President within ten Days (Sundays excepted) after it shall have been presented to him, the Same shall be a Law, in like Manner as if he had signed it, unless the Congress by their Adjournment (http://www.usconstitution.net/glossary.html#ADJOURN) prevent its Return, in which Case it shall not be a Law.

Every Order, Resolution, or Vote to which the Concurrence (http://www.usconstitution.net/glossary.html#CONCUR) of the Senate and House of Representatives may be necessary (except on a question of Adjournment (http://www.usconstitution.net/glossary.html#ADJOURN)) shall be presented to the President of the United States; and before the Same shall take Effect, shall be approved by him, or being disapproved by him, shall be repassed by two thirds of the Senate and House of Representatives, according to the Rules and Limitations prescribed in the Case of a Bill.

Section 8 - Powers of Congress
The Congress shall have Power To lay and collect Taxes, Duties, Imposts (http://www.usconstitution.net/glossary.html#IMPOST) and Excises (http://www.usconstitution.net/glossary.html#EXCISE), to pay the Debts and provide for the common Defence and general Welfare (http://www.usconstitution.net/glossary.html#WELFARE) of the United States; but all Duties, Imposts (http://www.usconstitution.net/glossary.html#IMPOST) and Excises (http://www.usconstitution.net/glossary.html#EXCISE) shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

To establish Post Offices and Post Roads (http://www.usconstitution.net/glossary.html#POSTROAD);

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

To constitute Tribunals inferior to the supreme Court;

To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;

To declare War, grant Letters of Marque (http://www.usconstitution.net/glossary.html#MARQUE) and Reprisal (http://www.usconstitution.net/glossary.html#REPRISAL), and make Rules concerning Captures on Land and Water;

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

To provide and maintain a Navy;

To make Rules for the Government and Regulation of the land and naval Forces;

To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;

To provide for organizing, arming, and disciplining the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;

To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings;

And To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

blaise
06-10-2009, 11:26 AM
The Buck Stops Back There.

Amnorix
06-10-2009, 11:28 AM
Every President has culpability to our wonderful debt (as he signs the bills)but the real responsibility lies in the Congress, they write the damn thing. Read the Constitution and Congress' Powers.


It's a joke to lay 100% of the blame on Congress.

Amnorix
06-10-2009, 11:30 AM
'He's not fixing it'
Alan Auerbach, an economist at the University of California, Berkeley, and an author of a widely cited study on the dangers of the current deficits, describes the situation like so: “Bush behaved incredibly irresponsibly for eight years. On the one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he’s not fixing it.”
“And,” he added, “not fixing it is, in a sense, making it worse.”



I think this is pretty fair. Bush [and Congress] were incredibly irresponsible for a very long time, and now Obama isn't doing much or anything to change the course.

And then when he does suggest anything, like PAYGO, fools on the right mock him for it. :spock: WTF is up with that...?

KC Dan
06-10-2009, 11:32 AM
It's a joke to lay 100% of the blame on Congress., if Congress never writes and approves the bill, then it would happen anyway? They are 100% to blame.

KC Dan
06-10-2009, 11:33 AM
And then when he does suggest anything, like PAYGO, fools on the right mock him for it. :spock: WTF is up with that...?
Becasue it is media fodder. You know it, I know it, everyone knows it. He is speaking out both sides of his mouth.

Chief Henry
06-10-2009, 11:55 AM
Only a "fool" would believe Obama on "Paygo".

Amnorix
06-10-2009, 12:12 PM
, if Congress never writes and approves the bill, then it would happen anyway? They are 100% to blame.

Right. The PResident is just that guy in the corner that signs what they send up. OH IF ONLY HE HAD SOME POWER.

You're right. I'm sorry. Congress is actually to blame for everything because all legislation comes from them. Thanks for bringing me up to speed.

Amnorix
06-10-2009, 12:13 PM
So you guys do or don't support PAYGO?

Or do you not support anything Obama does just on principle because he is the debbil?!

KC Dan
06-10-2009, 12:19 PM
So you guys do or don't support PAYGO?

Or do you not support anything Obama does just on principle because he is the debbil?!
I 100% support it but I think that BO does not as exemplified by his actions on authorizing new debt and his incredibly crazy 2010 budget request that cannot be met - (pay-go) - wise without substanital tax hikes and budget slashes. It's all talk. If he backs it up and slashes his 2010 budget, raises taxes then I am with him.

morphius
06-10-2009, 12:21 PM
The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012.

This could maybe have been true, had the internet fallacy popped, Enron scandle, and MCI Worldcom driven to bankruptcy because of fudging numbers. Each of those effected some very large market segments. Almost all tech companies took a beating, lots of money dried up for phone companies rushing to try to keep up with BS numbers from MCI, and probably similar issues with energy companies with the Enron scandle. And all of these worked to drive out the day traders, which took more money away from companies. As most of those issues started during the Clinton administration it seems dishonest to label that just as "Business Cycle".

SBK
06-10-2009, 12:36 PM
Deficits are not caused by business cycles or economies, they are caused by over spending.
Posted via Mobile Device

banyon
06-10-2009, 12:52 PM
Deficits are not caused by business cycles or economies, they are caused by over spending.
Posted via Mobile Device

I agree with this sentiment and that the title of the article is ridiculous.

HonestChieffan
06-10-2009, 12:57 PM
Deficits are not caused by business cycles or economies, they are caused by over spending.
Posted via Mobile Device

And under collecting. So lets screw down business, reduce their cash flow and income and try to make up for it with more taxes so they make less and income goes down and they lay folks off so we need to spend more....wait...where does this end?

Hold on we need to have a cabinet meeting

Calcountry
06-10-2009, 01:16 PM
I think this is pretty fair. Bush [and Congress] were incredibly irresponsible for a very long time, and now Obama isn't doing much or anything to change the course.

And then when he does suggest anything, like PAYGO, fools on the right mock him for it. :spock: WTF is up with that...?We are waiting for the day, when like Swarzenkennedy, the federal government is compelled to CONFRONT it's profligate spending as a premise to balancing the budget. NOT, how to raise taxes or revenue.

Bush failed, his failure led to Obama, which so far is like Bush to the 4rth power as far as spending is concerned.

He hasn't even discussed taxes YET.

Bwana
06-10-2009, 01:22 PM
LMAO

BigRedChief
06-10-2009, 01:23 PM
Deficits are not caused by business cycles or economies, they are caused by over spending.
Posted via Mobile Device
And decrease in revenue.

Calcountry
06-10-2009, 01:58 PM
And under collecting. So lets screw down business, reduce their cash flow and income and try to make up for it with more taxes so they make less and income goes down and they lay folks off so we need to spend more....wait...where does this end?

Hold on we need to have a cabinet meetingIt ends with a super majority on government handouts and the rich living in Antigua or the Caymans.

Calcountry
06-10-2009, 02:02 PM
Deficits are not caused by business cycles or economies, they are caused by over spending.
Posted via Mobile DeviceDeficits are mainly caused by the spirit of entitlement to which nearly all of Americans and newly arrived immigrants have these days.

Far cry from the immigrants of yesteryear, who forsook their language, and even their names in order to assimilate in this country and pursue the American dream.

Whatever happened to thankfulness?

The sad truth is, we aren't owed anything. We are all just one terrorist nuke, massive Katrina type catastrophe away from anarchy.

Do you feel entitled today?

HonestChieffan
06-10-2009, 02:24 PM
So you guys do or don't support PAYGO?

Or do you not support anything Obama does just on principle because he is the debbil?!

NO. Its pretty damn simple. Paygo for Obo is covered by raising taxes at will to make it Paygo.

Im for NoGo for any more of this turds insane spending on bullshit we do not need and cannot afford.

Just say No.

SBK
06-10-2009, 03:06 PM
And decrease in revenue.

No. If you bring less in you spend less then you have no deficit.

The problem is not what comes in, it's what goes out. ALWAYS.
Posted via Mobile Device

Calcountry
06-10-2009, 05:16 PM
No. If you bring less in you spend less then you have no deficit.

The problem is not what comes in, it's what goes out. ALWAYS.
Posted via Mobile DeviceWhat would Obama know about this?

Mr. Kotter
06-10-2009, 05:27 PM
Gosh, the NYT blames it all (or most of it anyway) on Bush?! :spock:

I'm shocked. :rolleyes:

Chief Faithful
06-11-2009, 08:52 AM
And decrease in revenue.

So when the economy downturns the natural solution is to double spending on pet projects so the deficit can quadruple the previous record deficit.

Of course we could solve the deficit problem by increasing the tax on the economy. Then ignore the resulting further downturn in the economy culminating in further decreases tax revenue forcing more people to accept government handouts causing greater deficits. But that is ok because we have a sort of God in the White House so the same lessons of history do not apply to him.

RaiderH8r
06-11-2009, 09:52 AM
So you guys do or don't support PAYGO?

Or do you not support anything Obama does just on principle because he is the debbil?!

PAYGO is a simplistic solution to a complex problem. It certainly sounds good on its face and, as a general rule, is effective. However there are times in the budget process where it is untenable and creates a significant snarl of difficulty, particularly related to tax rates should a proposal arise to cut them. But that only matters, I guess, if you are to believe the Laffer Curve.

When Obama said "We're out of money." Somebody should have told him to put down the f'ing credit card. Same goes for Congress and their spending habits...both sides. Ultimately its not exclusive fault of Congress, the President, or Washington, responsibility rests with a citizenry with a f'ed up sense of entitlement and continues to Monday morning QB as the future of their grandchildren is spent away by whoring power hungry mongrels fighting over every last table scrap out of the US Treasury. F'ing robber barons.