Pointing Fingers
Where should we point the fingers for our current fiscal/economic mess? Keith Hennessey has a post that I tend to agree with. Hennessey looks at the opening statements from President Obama on his new budget,
The fact is, 10 years ago, we had a budget surplus of more than $200 billion, with projected surpluses stretching out toward the horizon. Yet over the course of the past 10 years, the previous administration and previous Congresses created an expensive new drug program, passed massive tax cuts for the wealthy, and funded two wars without paying for any of it —- all of which was compounded by recession and by rising health care costs. As a result, when I first walked through the door, the deficit stood at $1.3 trillion, with projected deficits of $8 trillion over the next decade.
Hennessey has a fairly long list of responses to this, but I want to try and keep this post somewhat short. Obama lists a number of reasons why the current problems we face aren’t his fault,
Medicare Drug Program
Tax Cuts
Iraq and Afghanistan
Recession (2 of them actually)
Now, how many of these are “Bush’s fault”? I’d say the first 3 can be partly blamed on Bush. But let us consider what Team Obama is going to do:
Medicare Drug Program—Keep it
Tax Cuts—Keep Most of them
Iraq and Afghanistan—Continue Bush’s policies.
Huh. Not all that much change if you ask me. What was Candidate Obama’s campaign slogan again?
And to be fair, if the Democrats were in charge during the Medicare Drug Program we’d have an even larger program than we do now. And regarding Iraq and Aghanistan, I’ve seen the claim that Obama’s first term could be considered Bush’s third term. So, even though Obama, ostensibly, could take different policy positions on several of things he claims are responsible for our current plight…he doesn’t.
Do you think that Obama would have gone into Iraq?
Look at the debt Obama is running up. Add up the first 6 years of debt (not just deficit) and you equal one year of Obama. And next year will be a third larger if Obama has his way. Of course, then Obama would start freezing the budget (or at least 17% of it) and can generate enough savings to be lost in the rounding error (less than 1%). Bush was not what we would want or should expect from a republican president. But Obama is working at doing harm at an order of magnitude higher rate.
Probably not. My point is not, what would Obama have done in 2001-2003. My point is that if these are bad policies that have gotten us in this hole…then Goddammit stop them. But no. We’ll stay the coure.
One of my gripes about government is failure is never ever admitted. “Well, that didn’t work, we’ll try something else.” Instead it was, we didn’t spend enough, make it intrusive enough, take away enough liberties. We need to ratchet up yet again, then it will work.
You know the old saying, “Insanity is doing the same thing over and over again expecting different results.” By that definition government is insane.
But, there is a pony in there somewhere. And its purple, with golden hooves and its magic will make everything right.
This is hardly a fair post and generally you do much better than this (your earlier post today for example.) There is certainly room for discussion, but I don’t see how anyone can reasonably equate Obama and Bush regarding budgets.
Regarding your examples, I will grant that the first recession and Afghanistan were hardly Bush’s fault, but all the rest were directly the fault of the last administration, unless you want to expand that to “Bush and Congressional Republicans.”
An argument could be made that the budget mess was caused by unforeseen elements and things that didn’t work out as planned, but they are still attributable to the last administration.
As for Obama’s response, The Medicare Drug Program is at least payed for and somewhat fixed by the Health-care Reform that is pending (which you can hardly blame Obama if it doesn’t pass.)We can hardly walk away from Iraq and Afghanistan and say “not our problem” at this point. With the tax cuts you need define what you mean by “most”. I don’t know the numbers off the top of my head and I suspect you do, but if you’re talking people affected or specific taxes, sure, maybe most will be kept but by dollar value “most” of the tax cuts will be allowed to expire.
I don’t necessarily agree with everything in this administrations financial plan, but so far they have been heads and tails above the last one in a much more difficult economic, and political, climate.
That’s confused. The bad policies got us into that war. He’s not continuing those policies. And to say he’s not trying to get us out, is just false. One guy sets a building on fire, leaves it to another guy to put the fire out. There is a difference.
If you look at what Al Gore campaigned on you’ll see:
New Prescription Drug Benefit? Check.
New Tax Cuts? Check.
Increased Defense Spending? Check.
Now, with a Republican Congress, Gore might have been frustrated on the prescriptions drugs on the one hand, on the other, he probably would have eneded up passing some additional tax cuts to gain Republican support for other measures, particularly as the economy softened.
Gore enjoys plausible deniability on Iraq, though his speeches at the time seemed more focused on obtaining an international coalition comparable to the First Gulf War than a belief that Saddam didn’t have WMD. On Afghanistan, I see no difference.
In other words, tax cuts and government benefits are popular regardless of the administration and the concerns in the Middle East after 9/11 would have existed under either administration.
I’ll point my finger at a government run amok. It doesn’t matter who the players are the system is geared for excess and waste.
Right, by largely continuing Bush policies.
So your saying you actually think its a good idea to-
Walk out on two wars
Increase Taxes
Increase medical costs to individuals
All in the mist of the worst economic crisis in 80 years.
Leaving aside the fact that these are all politically impossible, they are a terrible idea to boot. While it’s true they are too costly I can’t imagine a worse time to remove them from the public sphere.
When a President walks into office, he doesn’t walk into a perfect world. They all inherit issues. Bush inherited a recession, a broken intelligence system, and many foreign issues. All presidents inherit problems. It is how they deal with it that counts.
IMO Obama has done an awful job so far. He blames everyone else but himself even when it is clearly his doing. He also ignores his short Senate record like voting for TARP. Like most Dems he blames Bush for spending too much but ignored the fact that they voted to spend even more than Bush wanted or that they often actually did get spending increased by threatening a filibuster and having control of congress after 2006.
Okay, let us start at the beginning. Not all was Bush’s fault, but a majority was and you add up all the problems of the roaring 20’s which was ignored and what follows is a depression.
When Bush came into office, we had a yearly surplus. The talk from Gingrich is that we would have surplus for years to come. There was a recession and I don’t think it was no different than past recessions-meaning it was not that bad. To get out of a recession, two years of tax cuts would have been sufficient along with the fed accommodating. However, with 9/11, 4 years of tax cuts would should have been enough. Now Bush had 8 years of tax cuts and we saw deficits and debt and we “stayed the course.” That was the policy. It was trickle down with nothing else done. It was ideology and that was all. And now we know what republicans sit on. It is always failed ideology.
Now, the trickle down theory does not reach the bottom 20% to 30% of the population. That is those without education, it is small towns with factories that closed, it is a less mobile workforce. It is globalization that has taken our jobs. Funny, that we need to create jobs in which we have given away jobs. Add to that Bush added Medicare part D, and the war in Iraq. Now, we call this “guns and butter.” LBJ did this and you had some 20 years of inflation/stagflation. That inflation/stagflation created higher interest rates and higher unemployment until Volcker got rid of it. In the case of Bush it was deficits and debt. All during this time we sent our jobs overseas. So globalization was ignored and still is ignored today. We cannot compete with over 2 billion cheap laborers in the world. We are losing the middle class. Now, I have just told you, but not one politician will tell you that. So during the Bush years all of our problems were ignored. After all according the the republicans is that all you have to have is the constitution and tax cuts.
So during these 8 years all I saw was our jobs go overseas, our money go to Iraq, and the neglect of our country. And all we saw was militarism, laissez-faire as far as fixing any problems, neoconism, and relgionism. In short, it was total ignorance and arrogance as we saw the problems pile up.
Also both parties and the fed targeted the housing industry while ignoring our problems and globalization.
We also saw the banking industry taking too much risk.
When Clinton and Gringrich left office, we had problems, but they were still manageable. Now we are in a hole and it will be very difficult to get out of. We cannot just pull out of Iraq and Afghanistan. And that was totally screwed up in the beginning costing us a trillion dollars and the lost of lives. The tax cuts was for the here and now. The tax cuts did not save our jobs, the tax cuts did not prevent a recession, and the tax cuts did not create prosperity.
I don’t like the fact people saying that Obama is continuing Bush’s policies with war. He cannot leave it, if we could, we would. We are stuck there. When Bush left office he left a mess. Both foreign policy and domestic policy was and is a mess.
To get out of this may take some 20 years. It will require investing in our country, in our people, and in the future. None of this was done. This is a heavy price to pay for such ignorance and failed ideology.
Obama has inherited deficits and debt, a banking crisis, a housing crisis, an auto crisis, loss jobs and globalization, two wars, and a near depression. During the Bush years we heard that “deficits don’t matter.” That “free trade is good.” And that “America, has no problems.” [Bush at the olympics]
What we see is that our country cannot function without jobs. Republicans say they support small business, but in my town you can’t have that if we lost the factories. Again, they have no idea what they are talking about in Washington. I don’t know whether to laugh or cry. The democrats spend on social programs and the republicans are stuck in failed ideology.
I think that you also have to look at how those rosy forecasts were developed. Clinton stripped the military down as much as he could, was riding the wave of dot come/stock market tax revenues and the rebound out of the Bush 1 mini recession. These positives were forecast out at maximum while expenses were forecast out at minimum and viola you have surpluses as far as the eye can see. So in essence the rosiest of rosy scenarios was accepted as truth and any problems were disregard until a republican took the white house and started to rebuild the military, fight a war on terrorists and their enablers and handle the fallout of the dot com/stock market falling apart and taking its revenue stream with it.
The fact that our ruling class continues to make grand promises without figuring out how to pay for them is wrong, but we keep sending these idiots to Washington based on their obscene promises that they make. So in reality it is our fault for sending morons to Washington, which is something we have to correct. mpw
How many years in a row did Bush spend a trillion dollars? If you pay any attention, you will notice Obama spent more in a year than Bush did in the previous 4 years. 784 billion dollars for a stimulous plan that saved 600,000 jobs. Saved? 10% unemployment and which of the Obama policies you think will work to reverse that? Attack the banks? If you want to live under government control, move or prepare to fight.
Now here is a graph and you need to look at it over 20 year periods. We saw what the “guns and butter” economics did in the 70’s and when that was fixed by Paul Volcker in the early 80’s we enjoyed over 20 years of lower inflation, lower interest rates, and lower unemployment. Bush does his own “guns and butter” and we can expect to see unemployment to stay high for a long time (10 to 20 years). The reason is that the fed has had interest rates too low for too long so they cannot stimulate. We had 8 years of tax cuts for the here and now and we did not invest in our country, in our people, and in the future. That we have globalization that is taking our jobs. We have two wars to contend with. Our economic growth will be slow and will not create the jobs we need. And the products we buy will be made in other countries, which means we cannot buy American products to produce American jobs.
 http://4.bp.blogspot.com/_3bGnkNeoPxk/SZiQ1JIJUqI/AAAAAAAACag/qP1TeKCqlIQ/s1600/research.stlouisfed.org.png
Tad,
If they are bad and making the situation problematic then yes! If stopping them is bad, then don’t point fingers and play the blame game. You can’t have it both ways.
Gerry W.,
First comment, TL;DR.
Second comment–Regarding guns and butter and the late 60’s/70’s you don’t know what you are talking about. Try misguided policy regarding inflation and unemployment. Nothing about guns or butter.
1) Medicare Part D. The problem lies in not paying for it. Bush got Republican support by not raising taxes to pay for this new program. Dems have been willing to pay for their programs. Both the House and Senate HCR bills have included means to pay for themselves. New taxes? Yup. However, contra Bush policies, you do not get something for nothing.
2)Tax cuts. We are facing a recession AND debt. You have equivocated yourself on the correct approach to taxes in this environment. As you probably know, most of the increase in deficits comes from decreased revenue. However, increasing taxes in a recession is not generally done in a Keynesian or Neo-Keynesian approach to recessions. I dont know the answer here.
3)Iraq and Afganistan- I agreed with Afghanistan. Most people did. It was very poorly handled, but to be fair, Afghanistan has been tough for everyone. Iraq was a mistake. Bush gets full credit there. Could Obama pull out faster? Maybe, but logistics is hell. We also made agreements with the Iraqis before Obama came into office. We could renege on those, but that would be immoral at the least. Would it be worth the cost in lives from a chaotic withdrawal to save money? What we do not see is the Obama administration trying to extend our stay there as I think McCain would have. Look at how they handled the recent election near crisis (read Lynch).
4)Recessions- Give number one to the Dems. Bush approached it with handing out cash and cutting taxes, ie, running up the debt. Same as we usually do (see Reagan). Credit for the second goes largely to Republicans, but Clinton gets some credit also for some of the policy changes. still, it was Bush putting in place industry people like Dugan who were not only captured, but helped write and lobby for the changes that enabled it all.
I thought Hennessey made a few good points, but he seemed to miss the influence of decreased revenues on this issue. Also, GDP still has not returned to where we were before the crash IIRC.
Steve
http://www.washingtonpost.com/wp-dyn/content/article/2005/09/21/AR2005092102504.html
Guns and Butter.
LBJ wanted to expand the Vietnam war and he wanted his “Great Society” programs. LBJ could not raise taxes as Kennedy just had the tax cuts. LBJ turned to the fed and had money printed. This takes some 3 years to filter through the economy depending on the velocity of money, etc. Nixon saw the inflation and used “wage and price controls” as a way of fixing it and failed. Inflation, interest rates, and unemployment continued to go up. Ford used “WIN buttons” and failed. Inflation, interest rates, and unemployment went up further. Carter did not know what to do, but he did get Paul Volcker in during his last year in office. And under Reagan, Volcker raised interest rates to 21.5% on the prime. This killed the inflation. The blame goes all the way back to LBj who started this inflation. Namely in economics “Guns and Butter”.
We enjoyed over 20 years of a non-inflationary economy. Now Bush had his Guns and Butter, and we will pay a heavy price for that. It was deficits and debt, total ignorance of our economy and the loss of jobs. It is that we are in two wars. And it is tax cuts and failed ideology and no investment into our future. We are where we are. The results will be slow job growth, possible inflation/stagflation, low dollar, and or high interest rates.
It’s ridiculous to equate Mr. Obama’s wrapping up of the Iraq war with Mr. Bush’s starting of same.
Just as it is ridiculous to pretend that the cost of both wars is anything but a function of how they were carried out.
Obama’s policies are not the same as Bush’s. Bush’s policy was to conduct war on the cheap — a very expensive proposition as it turns out. On the cheap meant losing the opportunity to take Bin Laden. It meant allowing Iraq to dissolve into a low-grade civil war. It meant diverting scarce resources from Afghanistan to Iraq thus imperiling our position in Afghanistan — another expensive decision.
Competent prosecution of both wars might have saved hundreds of billions of dollars.
Obama is winding down in Iraq. That is a continuation of Bush’s final version of his Iraq policy. Obama is escalating in Afghanistan but in theory at least on a temporary basis in order to stabilize a fraught situation.
Every president faces problems on taking office. Very few face a possible depression, a banking system meltdown, a housing collapse — with the deficit already exploded — one barely-stable war and a second war on the brink of disaster.
” Attack the banks?”
This from Simon Johnson.
“While the US financial system has a long tradition of functioning well with a relatively large number of banks and other intermediaries, in recent years it has become transformed — through years of regulatory and antitrust neglect — into a highly concentrated system for key products. The big four have 1/2 of the market for mortgages and 2/3 of the market for credit cards. Five banks have over 95% of the market for over-the-counter derivatives. Three U.S. banks have over 40% of the global market for stock underwriting. This degree of market power is dangerous in many ways.”
I think the banks attacked first. They are winning.
Steve
Really? You didn’t read the post by James where Obama’s foreign policy has been described as Bush’s third term?
Twenty problems according to Market Watch.
I think it is fair to talk about Bush when the GOP still supports his policies.
Bush cut taxes at the same time he expanded Medicare and launched a war. Have you heard any elected GOP member not give tax cuts as their main economic program? They have also called Obama’s attempt to restrain Medicare spending growth as death panels. They continue to support an aggressive foreign policy and defend starting the Iraq war.
As long as the GOP supports tax cuts more then balanced budgets, does nothing to restrain Medicare spending and supports an aggressive interventionist foreign policy they are following Bush’s ideas so discussing how his ideas worked is still relevant.
Under Bush payroll employment average 0.2% per year,
if it had been the more normal 2.0% per year much of the deficit would not exist.
the point is Bush promised strong economic growth from his policies and delivered the weakest economic expansion in history and the second most severe recession on record.
that is basically why the budget deficit is so large today–remember in the final year of the bush administration the budget deficit exceeded some 10% of GDP before Obama took office. So Obama has barely increased the deficit over what bush did.
We are now seeing the consequence of the Republican starve the beast strategy. Deficit do not hurt government but they do massive damage to the private economy. the republican strategy has been to cut off their nose to spite their face.
Steve:
Republicans are hard at work trying to whitewash Mr. Bush’s defense incompetence.
A ten year war tends to cost more than a two year war. We defeated the axis and won our civil war in less time than it took Mr. Bush to figure out that Don Rumsfeld was an imbecile. Costly, that, whatever you think of the rationale for the wars themselves.
I think the most useful tools in this kind of discussion are graphics:
Image borrowed from this good article by James Kwak, with which some of you may disagree.
darn, the graphic showed in the preview. direct link:
http://baselinescenario.files.wordpress.com/2010/02/12-16-09bud-f11.jpg
I guess if someone writes something on a blog it suddenly becomes a fact…
Obama=Bush-so why aren’t you happy- to be blunt-you are hack- On the wars-Obama simply cannot simply walk away-if Bush had not gone to Iraq- and deal with Afghanistan correctly we would not be at war now (save 300 bill/year). Pills for Pops-even Kennedy oppose it because there was any cost containment (federal bargaining)= the program is being revamped in the health care bill- the one that creates a 100 bill surplus over 10 years. Expiration of tax cuts for those over 250k year will have a measurable effect= also a change in capital gains rates. On the recession: i would argue that US policies the last eight years contributed to it. Now- are all policy options enough? Probably not, but the economy must be stabilized before we pursue the proper options. Mind you, the economy was stabilized 2001-and the Republican Party wrecked it. In other words- you have zilch credibility.
Larger? Perhaps. But I doubt we would have the straight up multi-billion dollar giveaway to the pharmaceutical industry that Bush saddled us with.