James Pethokoukis

Politics and policy from inside Washington

NYTimes: In just five months, Obama almost as much to blame for deficits as Bush

June 10, 2009

Instead of running $800 billion budget surpluses — as was predicted back in the 1990s — America is running trillion dollar deficits. How did that $2 trillion swing happen? The blame breakdown, according to the NYTImes: recession, 37 percent, Bush policies (particularly tax cuts and the prescription drug benefit), 33 percent; Obama continuing Bush policies (Iraq, tax cuts) 20 percent, the Obama stimulus bill, 7 percent; and the rest of the Obama “investment agenda, 3 percent.

Me: ┬áSo 30 percent is Obama’s fault? He’s only been in office for less than five months and he’s almost as much to blame as Bush who was in office for eight years. Personally, I think not fixing a problem means you get 100 percent of the blame. Buck stops in the Oval Office and all that. The NYTImes makes the common flawed assuption that without the Bush tax cuts, the economy would have performed just as well as it did (and generated the same revenue) from November 2001 through December 2007 when the deficit collapsed.

Comments

The big global lesson of the 80′s is that socialism doesn’t work. Remember the fall of the USSR? How soon we forget! When I see government taking over banks and other industries and actually apointing a “pay czar” to determine how much people should be paid in corporate America it really scares me! When will it trickle down to the rest of us? Can you imagine the government informing you what your salary will be next year and how much they think you should be paid. How about government running the auto industry? You think they lost money before! Noone is better at loosing money than the US Government! Ross Perot was a wise man and realized that govt should be run like a business using simple concepts such as you dont spend more than you bring in. Remember the pie charts we all loved? Obama scares me. Just like Bush had a free hand to invade and start wars after the emotional response of 9/11, Obama has been given a free hand to enact socialistic economic practices and reform after the fallout of the reccession. Unfortunately instead of destroying another country Obama is destroying ours.

Posted by Jonathan Daugherty | Report as abusive
 

There is not much room for Obama to tinker with deficits this year, as any pull-back from government spending or raising taxes would definitely invite public outcry when people on main street are looking for economic recovery. For long time our budget deficits and trade deficits have been made up by auctioning treasuries to foreign powers. Why upset this system when it is working fine ? Given the autonomy of Fed’s greenback machine operating 24-7, Obama needs to buy time to fix these numbers left over from his predecessors.

Posted by Gary Hall | Report as abusive
 

Both sides of the aisle seem to be in agreement that some form of stimulus was and is needed to revive such a large economy in this severe of a downturn. However, as we have witnessed across America — foreclosures, high household debt, declining income, virtually zero household savings — can create serious national economic problems.

This is where most of the bi-partisan debates arise. The gov’t is now acting in the same manner as many Americans did for the past 20 years — Skyrocketing debt, declining income, increasing spending (ie zero savings/deficit pay downs). If these same practices put our nations households in such a predicament, why should the gov’t follow these doomed to fail practices?

Stimulus is good — http://en.wikipedia.org/wiki/Keynesian_e conomics — but the paradigm shift that many in the Obama camp are calling for could prove to be disastrous. Without a fully functional capitalist free market system, the effects of the stimulus will be rendered useless without the appropriate mechanisms to take advantage of the upside that the US, and the global community for that matter, are desperately searching for. Green shoots are one thing; the kind of wealth and prosperity that was created in the 80′s is much different.

Let’s not give up on the American Dream just yet–if we do–China will gladly make it their own national ethos.

Posted by JMichael | Report as abusive
 

Larry Lindsay said recently that he was a Keynsian — but a Keynesian with a “sharp pencil”. The current “Stimulus” is mis-directed into areas that will have a negligable impact toward economic recovery and is laden with political paybacks. It is un-targetted, has a backwards “time release” (more money going in later rather than sooner), and short changes what should be an easy winner –infrastructure spending.

They got the first part right – agreeing to deploy the funds, but exponentially more important is the where, when & how to spend that precious resource — tax dollars. What do they think – it grows on trees ;-)

The NYT is falling all over itself to make a case that Obama’s budget & policies are not fully & completely responsible for the coming explosive growth in deficits. That’s a neat bit of contortionist rhetoric.

Posted by Siobhan Sack | Report as abusive
 

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