Deficit hypocrisy

August 26, 2009

There’s something scary about big numbers. It’s one reason we in the media often like to put the biggest number we can find into a headline.

So it was no surprise that most media outlets went gaga over the Obama administration’s projection that the nation’s debt will grow by $9 trillion over the next decade. And sure enough, critics of the administration’s efforts to reform healthcare were quick to seize on that scary number as another reason to advocate doing nothing.

But without wading into the muck of the current debate over healthcare reform, it’s worth taking stock of just how much hypocrisy there is when it comes to the subject of government spending and those big bad deficits.

Let’s start with the Republicans. They talk a good game about reining in federal spending, but they bear as much responsibility as the Democrats for the nation’s $11 trillion in total debt.

It’s sometimes hard to remember that when President Clinton left office in January 2001, the federal budget actually was in surplus. Yet by the time President Bush left town, the federal government was running a nearly a $1 trillion deficit thanks to spending on the wars on Iraq and Afghanistan, the bank bailout and increased spending on prescription drug coverage for Medicare beneficiaries.

But the Republican deficit hawks didn’t really start squawking about government spending until President Obama took office and proposed a $700 billion stimulus package for the ailing economy.

In reality, no political party can claim title to being prudent fiscal managers. All that talk about reducing the deficit often is just a wedge issue that gets used by politicians — both Republican and Democratic — to score points and torpedo legislative proposals they oppose.

So while I’m no proponent of profligate government spending, the current budget deficit shouldn’t be used as excuse to squelch a potentially worthy government program that could benefit generations of Americans.

A proposal like health care reform should be judged on its own merits and not shelved simply because government spending is currently out-of-whack largely because of a need to stave off the worst economic crisis since the Great Depression.

In considering something like health care, there’s a need to take a long-term view-not the just impact on the federal budgets for the next few years.

And don’t be fooled by conventional media wisdom that the average American is concerned about the deficit. Sure, in an abstract polling question most Americans will say big federal deficits are bad. But the truth is most Americans don’t mind government spending when it provides a useful service or puts money in their pockets. If that wasn’t true, the cash-for-clunkers program wouldn’t have run out of money so soon.

The current financial crisis is in large part due to the fact that we’re a society that loves to live beyond its means. It’s the American way to buy more home than is necessary and run-up the credit card bill to pay for a family vacation.

Credit became way too easy during the run-up to the financial crisis, but credit isn’t going away. It’s simply taken a breather. That’s because everyone in the federal government and on Wall Street is rooting — almost urging — for Americans to start spending again.

For good or ill, credit and spending is the lifeblood of a consumer economy. Yet sadly, the only real solution policymakers have for ending the economic crisis is to encourage people to starting living off their plastic cards again.

And that’s why deficit spending by the federal government is probably here to stay for a long time. The government is only doing its part to help.

27 comments

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Let’s see… $1 trillion in 8 years bought us 9/11 recovery, Iraq, Agahnistan, Katrina recovery and prescription drug benefits and TARP 1. The additional $8 trillion in 7 months bought us what again? Cars?

Posted by dante | Report as abusive

“Let’s start with the Republicans. They talk a good game about reining in federal spending, but they bear as much responsibility as the Democrats for the nation’s $11 trillion in total debt.”

Actually, although it looks like Obama will change this, so far, no Democratic president has ever increased the gross federal debt. Increased debt is 100% republican doing. That’s just a verifiable fact…

Posted by Jeff | Report as abusive

It is not entirely correct to blame Bush Administration for the 1-trillion when he left office. The Democratics started us down the spending road when they took over Congress in 2006. They controlled basically all the spending that took place. Take a close look at 2006-2008 for those numbers and subtract from the first 6 years of Bush.

Posted by Jim Balmer | Report as abusive

“But the truth is most Americans don’t mind government spending when it… puts money in their pockets.” With this logic, lets double the deficit to $18 trillion and then give it all away to special interest groups. At least they will be happy.

Posted by SteveNYC9 | Report as abusive

@Dante – I think you need to work on your math. In Bush’s final year the defecit was $1trillion. In every year of his Presidency there was a defecit, starting with $100bil in 2001 and ending with $1.03trillion in 2008. The total defecit growth under President Bush sums to approximately $4.3 trillion.

So, $9trillion defecit growth in a decade assumes nothing more than President Bush’s final year defecit being the standard. The current administation has not created $8trillion in debt in a single year, as you imply.

Posted by @Dante | Report as abusive

Dante is not very good with either arithmetic or reading comprehension. Bush left with a $1 trillion ANNUAL deficit, which should be compared to a $0.9 trillion average ANNUAL deficit forecast over the next ten years.

Posted by imback | Report as abusive

“In considering something like health care, there’s a need to take a long-term view-not the just impact on the federal budgets for the next few years.”

So if a lake front vacation home is going to benefit my family for generations, I would be justified borrowing the $$ with the expectation that my decendants will pay it back.

This is the logic that got us into this mess and the illogic that will keep us here.

Posted by akcoyote | Report as abusive

A good article… except.
Except that once again we see the tired, tired shield of “both parties do it” employed to fend off frothing right wingers who would doubtless hang Mr Goldstein in effigy or compare him to Hitler or something if he had the temerity to not hedge his bets. If only he’d just state the facts of recent history:
It’s always been right wingers who make the most noise by far about deficits and spending in general, decrying any investment that we might make as a country in our own well-being or future. Yet given control of all branches of government, they drove the deficits to all-time highs: just as they did the previous two times they controlled the White House.
Conversely, the last time Dems had any real power, an overhaul of government systems paired with prudent investment in the future nursed a collapsed economy with horrendous deficits back to vibrancy and surplus.
The article does bring up the last point, but fails to note any significance in the record.
It seems that the historical roles are becoming clear: when we’re a bit giddy with success and prosperity as a nation, we vote in the Republicans and their snake-oil pitch that everybody will be magically better off without any order or annoying rules. When faced with the consequences that must inevitably follow any binge, though, they call in the adults to clean up after the party, putting things right for the frat boys to clumsily destroy… yet again.

Posted by Nathan | Report as abusive

Face it: We need to REDUCE gov’t spending, NOT increase it, to reach solvency. Either that or increase tax revenue. The internet bubble is what saved President Clinton by producing windfall tax revenue. As neither party is about to reduce gov’t spending, the ONLY way out is to PUSH THE GREEN BUBBLE – solar, etc.
Capped coal will skyrocket the cost of electricity and usher in the GREEN AGE. So let’s do it.
OIL IS HISTORY, just like the ‘buggy whip.’
The real issue is the conversion to CLEAN ENERGY.
Once we have the revenues, we can create a Federal ‘Medi-Cal’ program for the poor – like Ca. did.
But without revenues, we go NOWHERE.

Posted by john q public | Report as abusive

OK all you wingnuts:
How expensive was/is the war in Iraq. $677 billion and growing daily. Per taxpayer: $5,078. This was a wing-nut war of choice, and a colossal disaster.

If you compare this to current government stimulus spending, there is something wrong, since current government stimulus (eg. Cash for CLunkers – $3,500-4000 per car) is preventing us from being in another Great Depression.

HELLO!!!

Posted by EF | Report as abusive

Republicans wanted “star wars” and corporate welfare without paying for it. Democrats want health care and social programs without a means to pay for it. Increased taxation is the only realistic means for the federal government to lower the deficit without cutting the wants of Republicans and Democrats.

Posted by Doug | Report as abusive

We need neew spending to be revenue neutral. period. Lets pay for it or not get it. President Obama says the same thing for Health care. The stimulas package was an exception not the rule. Avoiding a second great depression seemed like a good time to break the rule.

Actually, the final “Bush” deficit was $455-85 billion, $160 billion of which came from the idiotic tax rebate check scheme, and coinsided with the beginning of the recession, and resultant decrease in government revenues without cutting spending.

The only significant spending attributable to the Bush administration in the 2009 budget is the first $350 billion of tarp money, everything else is on the Obama Administration, and of course the Democratic supermajority in Congress.

Presidents by the way, don’t create deficits or surpluses. The Congress, specifically the House has the constitutional responsibility for originating all spending, and the overall ecomony generates the revenue.

The “Clinton surpluses”, were a result of an unsustainable economic bubble(as we learned when the crash began in June of 2000), and some control of spending caused by the first Republican Congress in decades shutting down the federal government to rein in spending. Once the bubble surfaced they all returned to their piggish ways.

We have a spending problem, not a revenue problem. The Government is a drug addict, and they are addicted to our money, that is the problem, no matter who is in office.

By the way Jeff, every president since the great depression has increased the national debt(including your hero Clinton), Democrat and Republican, how do you think that Kennedy and Johnson paid for Vietnam and the great society programs.

By the way, Jeff and others, get your facts straight, the final “Bush Deficit”(fiscal year 2008) was $455-85 billion, $160 billion of which came from the idiotic tax rebate scheme. Fiscal 2007 which was the last budget of the last Republican Congress came in $165 billion. Additionally, every administration since the great depression has increased the national debt, how do you think that Kennedy and Johnson “paid” for Vietnam and the great society programs.

Posted by Robert | Report as abusive

Most of our deficit woes lie at the feet of George Bush. The fact that he masked spending by not including military expenditures for the wars in Iraq and Afghanistan in order to disguise their effect on the deficit, and Obama is putting all expenditures on the books as they should be, is another stark difference. Deficits are okay with Republican as long as we’re killing people and not trying to heal them.

Posted by LincolnX | Report as abusive

Pretty simple if you really want to look it over. Hardly matters who or what got us here, it is about what will fix things.
So… Health care reform wasn’t such a big deal when it was 3% of GDP, but at 20% GDP this elephant is going to eat us all alive. Government is the tool we have to remedy this and a failure to deal effectively sells us out cold. Don’t expect a cure for cancer or the common cold soon without reform. (spending/taxing not optional)

Someone recently blogged about the other thing government needs to take care of… Wall Street and so on. Again Simple fix. The suggestion was that a minute tax on trades would put an end to the volatile practice of program trading. .01% on each trade eliminates these razor thin margins and the one arm bandit associations one can make about them. Trade for growth and stability.
Compensation packages: All compensation weather cash stocks or bonous is treated as wages. All wages subject to a 90% tax rate at say $1 million per year. You wanna make more you have to own and risk it. Leave it in the corporation? OK as long as you can account that it is reinvested rather than sitting still.
Social Security… Eliminate the tax cap on earnings. Should have been done a long time ago… By the way this one could likely cover healthcare reform as well as shore up one of the most important social programs we have. Waking up ill in America should not be anyones financial ruin, and retiring from a lifetime of service to the economy should not be a frighteningly unstable experience either. Some guarantees to the average Joe are owed in a country where individuals amass billions on the backs of the masses. I don’t complain without offering solutions. Simple is better.

Posted by DanO | Report as abusive

DanO-
Love all your suggestions, including the basic premise that simple is better.

Posted by Nathan | Report as abusive

@Jeff ‘Actually, although it looks like Obama will change this, so far, no Democratic president has ever increased the gross federal debt. Increased debt is 100% republican doing. That’s just a verifiable fact…”

Jeff, I think you need to get your “verifiable” facts straight. Per treasurydirect.gov the debt of the US federal government has increased under every single president. Even the Dumbocrats. Heck the debt even increased during the Clinton “surplus” years! Stop with the holier than though routine.

Over the last 50+ years:
President Debt increase
Eisenhower -17B
Kennedy -7B
Johnson -42B
Nixon -104B
Ford -165B
Carter -226B
Reagan -2.1T
Bush -1.0T
Clinton -1.3T
Bush* -3.2T

*Final numbers for fiscal year 08/09 not reported.

Proof:
1950-1999
http://www.treasurydirect.gov/govt/repor ts/pd/histdebt/histdebt_histo4.htm
2000-2008
http://www.treasurydirect.gov/govt/repor ts/pd/histdebt/histdebt_histo5.htm

Posted by Truthers are Birthers | Report as abusive

Actually NO *President* has EVER increased the National Debt. You wag that Lie real well, sonny. So do some of the Syncophants that Point Out that it is under Republican Presidents that Debt increased the most.

Interesting Statistic, but not relevant. More relevant: Almost always, after being in office for 2 years, the Party that controls the White House loses seats in congress to the other major party. That trend generally continues throughout their administration as an overall trennline, even for a two term president.

What that means is that when Bush had Democrats controling the purse strings for the end of his term, it was *not* an aberation. The same can be said for Clinton, and others as well. So the *spending* of Bush is actually the *spending* of the Congress he was working with. Ergo, Democrats ran up the bill under *their* watch. So whose debt is it? Again, tell me clearly JUST WHO VOTED TO SPEND ALL THAT MONEY???

Posted by Mel | Report as abusive

I believe the great majority of politicians are responsible for our debt from the federal level to the state level down to the towns through all their greed, corruption and fraud weather they be Republicans or Democrats. Maybe if these self-serving donkeys actually did what they were supposed to we wouldn’t have these problems. Maybe if they did their job by way of the constitution as they are supposed to we wouldn’t have to worry much which party got in. Got forbid they be fair and honest.

Posted by June | Report as abusive

What happened to “Pay as you go”? North Carolina’s constitution requires a balanced budget, why can’t the USA? Plus, stop with the ugly comments on both sides. Work together or get out of the discussion!

Posted by Robert Gardner | Report as abusive

ok, you people need to do some fact checking and its quite simple. Got to the US treasury website here:

http://www.treasurydirect.gov/NP/BPDLogi n?application=np

then enter in jan 20th,2001 (bush’s first day) then enter Jan 20th 2009 (bush’s last day) and you will see that during his tenure the debt increased 4.9 trillion….and then add in the cost of the Iraq war at that time (roughly 660 billion) and then add 1/2 half of the tarp payments (350 billion)that were not added until obama was in office. Then try doing the same historical check for the last 7 months of president obama and see how much hes spent. And don’t forget that the iraq war and the tarp bailouts have all been added recenty not before bush’s last day.

Posted by Harry K Kalas | Report as abusive

Go June & John Q Public ! The world has been at war and in depression since the coming of the industrial age. As Warren Beatty said in ‘Reds’: ‘War is about profits’. The US will recover its money on that account. It will however have to beg, steal, print or borrow. Only the latter option is left open. From where ? and how will the debt be serviced ?

Posted by Hour glass | Report as abusive

That’s right. If running a $1 trillion deficit is okay then why not a cumulative $9 trillion one? Heck, why not $18 trillion for good measure? Why not a cash for clunkers program every year? If a $11 trillion debt makes Americans feel good, why not ramp it up to $20 trillion, plus $45 trillion in unfunded future liabilities, just before all the Baby Boomers start heading into retirement and start consuming more healthcare? I mean why not? You can always blame it on Bush. Or blame it on Reagan. Or blame it on the Chinese for saving too much!

Posted by MrBill, Eurasia | Report as abusive

that is very funny, clearly the US will have to sell off assets and/or borrow from China, haha, imagine the Lincolns being exchanged for Junkboats.

Posted by Hour glass | Report as abusive

The same old routine. This won’t ever get fixed just like so many other causes. No need to get exicted about things one has no control over. That’s what I tell myself…

Posted by Down Time | Report as abusive

This story is too much about good democrats vs. bad republicans and not enough about the catastrophe of our national debt. Mr. Goldstein advocates just going the heck ahead and borrowing more for a national health program, which is want a lot of folks on the left would like to see. What’s another trillion?

People don’t understand that there are already signs that our national credit is maxed out. Treasury auctions have started to show weakness, driving up yields (i.e., our nation’s cost of borrowing) because no buyer sees a reasonable plan to contain the debt. A lot of this debt is owned by foreign countries, esp. China. Unless it is brought under control, we risk losing control of our own financial sovereignty and with it, our ability to control our own economy. I find that people on the left often lack the most elementary understanding of economics, one of whose most basic rules is that there is no free lunch. You might as well jump out of an airplane and declare that the law of gravity “shouldn’t be used as excuse to squelch a potentially worthy government program.”

As an aside, Mr. Goldstein has confused the annual budget surplus under President Clinton with the national debt, which certainly was not paid off at that time.

Posted by Tom | Report as abusive

…so the more the US borrows from China, the more China gets control over US cash flow and assets to maturity ? (not to be confused with local debt, GDP’s and Reserve Currencies). The ironies, Commies taking over the World. Cheers, have a good one !

Posted by Hour glass | Report as abusive