Economy Slows To A Crawl In First Quarter G.D.P. Estimate

Economic growth slowed significantly in the first three months of 2015, but it's not clear what that means going forward.

Economy Heartbeat

After fairly strong growth through the majority of 2015, the first release of the Gross Domestic Product numbers for the first quarter of the year showed the economy slowing to a crawl, but it’s still far too early to tell if it’s something we need to worry about going forward:

Confirming months of data that suggested a slowdown, the government said Wednesday that the American economy barely grew in the first quarter of 2015.

At 0.2 percent, the pace of growth was the slowest in a year, when a winter wipeout in the first quarter of 2014 prompted the economy to contract at a 2.1 percent rate.

Economists had expected a weak showing before the report. The consensus view called for a 1 percent growth rate in January, February and March, well below the 2.2 percent rate in the final three months of 2014.

“The U.S. economy stumbled badly in the first quarter,” said Scott Anderson, senior vice president and chief economist at Bank of the West in San Francisco. “Modest growth in the fourth quarter of 2014 turned into virtually no growth in the first quarter of 2015.”

The anemic showing was led by two areas that were especially weak: net exports and business investment.

Hurt by the stronger dollar and the lingering effects of a labor dispute that slowed activity at West Coast ports, net exports fell 7.2 percent in the first quarter, which shaved nearly a full point off the overall growth figure.

Plunging investment by businesses also weighed on the American economy, a trend some experts attribute to big cuts in spending in the energy sector, as falling oil prices prompt drillers and oil production companies to pull back on new projects.

One part of the economy that had been expected to help, the public sector, actually hurt overall growth last quarter, with state and local government expenditures falling at the steepest rate since the first quarter of 2012.

That the economy expanded at all last quarter was because of spending by consumers, although they spent at a significantly slower rate than in the second half of last year.

Consumer spending, which makes up roughly two-thirds of gross domestic product, rose 1.9 percent. That was well below the 4.4 percent gain in the fourth quarter of 2014, and was a sign that shoppers remained cautious, despite the big drop in energy prices.

The Wall Street Journal’s take on the report is rather pessimistic:

WASHINGTON—The U.S. economy slowed to a crawl at the start of the year as businesses slashed investment, exports tumbled and consumers showed signs of caution, marking a return to the uneven growth that has been a hallmark of the nearly six-year economic expansion.

Gross domestic product, the broadest measure of goods and services produced across the economy, expanded at a 0.2% seasonally adjusted annual rate in the first quarter, the Commerce Department said Wednesday. The economy advanced at a 2.2% pace in the fourth quarter and 5% in the third.

Economists surveyed by The Wall Street Journal had expected growth of 1% in the first three months of this year, though many were braced for a surprise to the downside.

The first-quarter figures repeat a common pattern in recent years: one or two strong readings followed by a sharp slowdown. First-quarter GDP growth had averaged 0.6% since 2010 and 2.9% for all other quarters. That has worked out to moderate overall expansion but no growth breakout.

“This is another quarterly number which confirms the long-term slow-growth thesis, but there are good odds we get a bit of a bounce later in the year from stabilized business spending and the housing markets, which are setting up quite promising,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, said in a note to clients.

The latest reading on the economy arrives in the middle of a two-day Federal Reserve meeting where policy makers will weigh the latest data against plans to start raising short-term interest rates. No action is expected from the Fed on Wednesday, but investors will look for clues on the timing for the first rate increase since 2006 in a policy statement due at 2 p.m. Eastern time.

Last year, economists pinned much of the blame for a bad first quarter—GDP shrank 2.1%—on unusually harsh weather. This year, multiple factors appear to be at work, including another bout of blizzards, disruptions at West Coast ports, the stronger dollar’s effect on exports and the impact of cheaper oil.

Better weather, a return to normal at port terminals and steadying investment could boost growth later this year.

“We expect the economy will rebound in [the second quarter] and beyond, similar to last year,” said Michelle Girard, economist at RBS Securities.

But not all the factors behind the slowdown appear temporary. A stronger dollar and cheaper oil could persist, keeping exports and energy-sector investment at bay.

As well, rising inventories kept the U.S. economy out of recession, contributing 0.74 percentage point to GDP in the first quarter. A second-quarter repeat is unlikely.

Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said producers probably will allow inventory positions to run off rather than building them up even more. “This tells us that current-quarter growth is likely to run around 2.5%, not the 4% snapback we had previously been anticipating,” he said.

U.S. households will have to pick up spending to help the economy grow. Wednesday’s report showed consumer spending, which accounts for more than two-thirds of economic output, decelerated to a 1.9% pace in the first quarter, down from 4.4% growth in the fourth quarter.

Rather than using savings from cheaper gasoline to buy more goods and services, Americans have been setting money aside for a rainy day. The personal saving rate at 5.5% in the first quarter was the highest since 2012. The figure was 4.6% in the fourth quarter.

Another key driver of the economy, business spending, also has faltered of late. Nonresidential fixed investment—which reflects spending on software, research and development, equipment and structures—retreated at a 3.4% rate, compared with a 4.7% rise in the fourth quarter.

Energy companies in particular are feeling the effects of cheaper oil. Business investment in structures fell 23.1%, led by a 48.7% contraction for mining sector spending on shafts and wells, Commerce said.

A stronger dollar, meanwhile, has made domestically produced goods more expensive overseas and foreign products cheaper inside the U.S. Combined with disruptions at West Coast ports, trade was constrained. In the first quarter, exports fell at a 7.2% rate, compared with 4.5% growth in the fourth quarter. Imports rose 1.8%, compared with 10.4% in the fourth quarter.

The general consensus among economists is that there will be a bounce back from this apparent downturn, but that it’s unlikely to be as strong as the growth we saw in 2014 after a first quarter in which the economy actually shrank due in large part to an unusually harsh and severe winter. Weather played a role in these figures as well, of course, but it doesn’t seems as if the responsibility for the slower growth can be solely attributed to the weather this time. For one thing, the winter of 2015, while severe in isolated instances, was not nearly as severe as what the Midwest, Plains, and Northeast faced during the winter of 2014. For another, as noted above, there are also a number of other factors that clearly seem to be having an impact on slower economic growth. Some of these, such as a stronger dollar and lower energy prices, admittedly have a good side to them but they also tend to drag down economic growth. This is especially true in the energy sector, which has seen layoffs and well shutdowns in Texas and North Dakota as the price of oil has dived on world markets. The slowdown was also predictable to some extent based on other economic statistics that have been released over the past several months, including the monthly jobs reports, all of which indicated that the economy was slowing down during the first three months of the year.

Now that we’re fully into the 2016 Presidential campaign, of course, economic statistics such as GDP growth and the jobs report will likely be getting more attention than they normally would. If it’s true that the economy is slowing down, for example, then that will likely have an impact on the President’s approval ratings and, by extension, public opinion about the Democratic Party. Additionally, you can expect Republicans to cherry pick economic data such as this to support their argument that the recovery that we’ve seen in the economy under President Obama has been weak at best, an assertion that is at least somewhat supported both by the fact that GDP growth since the Great Recession has been slower than it has been after previous economic downturns and by the fact that there are still millions of people who are either unemployed or underemployed, and millions more that have left the labor force altogether.

As Philip Bump notes, though, it’s far too early to tell how big an impact these numbers will have on the race going forward. For one thing, today’s release is only a first estimate that will be updated twice more over the next two months. While it’s not likely that these revisions will report back a number that is significantly different from what was reported today, it’s at least possible that the picture will look a bit rosier than it does today. Secondly, there’s no reason to expect that the economy will remain this sluggish for the rest of 2015. We bounced back from last year’s first quarter meltdown, and there will likely be a similar, if smaller, bounce this time. Six months from now, we could be looking at much different picture economically. Finally, the connection between poll numbers and economic figures isn’t a very straightforward one. Voters tend to vote based more on how they feel personally rather than what the GDP growth, unemployment, or stock exchange numbers might say. What that means, of course, is that even if the economic news is “good” the incumbent party can still find itself in trouble if voters perceive that their own economic position is insecure. One indication of that, arguably, can be found in the fact that consumers seem to be saving rather than spending at the moment.

Notwithstanding all of that, these numbers are going to become important going forward because they are going to shape the messages we see from the candidates, and of course those messages themselves can play a strong role in enhancing or diminishing the economic security of the voting public.

FILED UNDER: Campaign 2016, Economics and Business, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Hal_10000 says:

    Well clearly this (good/bad) economic news can be (credited/blamed) on (Obama/Republicans) for their (economic leadership/austerity).

    Or (blamed on Obamacare/credited to tax cuts.)

  2. Jack says:

    Clearly the Obama policies are doing everything they are designed to accomplish. What we really need is to end Republican obstructionism so growth can achieve 0 percent. That my friends, is the obvious progressive goal. Right? Right?

  3. al-Ameda says:

    @Jack:

    Clearly the Obama policies are doing everything they are designed to accomplish. What we really need is to end Republican obstructionism so growth can achieve 0 percent. That my friends, is the obvious progressive goal. Right? Right?

    Yes, the economy crashed on Bush’s watch, and yes, it has taken 5 years of slow steady growth in GDP, employment, and the housing markets to recover from the 2008 financial catastrophe.

  4. Jack says:

    I blame “Climate Change”. It’s all powerful.

  5. Jack says:

    @al-Ameda: Recovery??? Recovery??? Look to the Reagan Presidency for a recovery. This is similar to a Hoover “recovery”.

    If this is what you call a recovery, I’d like a lot less, please.

  6. Tillman says:

    @Jack: I’m certain the winter, which wasn’t harsh in the Midwest compared to last year but which did effectively shut down the city of Boston and played havoc with Southern city schedules for at least a week’s total time, had nothing to do with it. Kids here got something like two full weeks’ off from school.

    @Jack: Yeah, that savings and loan crisis, that’s the picture of a good economy. 🙂

  7. michael reynolds says:

    @Jack:

    The Reagan recovery was fueled by massive government borrowing and spending and by running up the deficit. Shall we go back to that? Because I thought you guys wanted lower deficits and less borrowing and spending.

  8. superdestroyer says:

    @al-Ameda:

    One could argue that the last five years of gridlock in Washington, DC have been good for the economy. No new major tax laws. No new regulatory schemes. No new entitlement programs. Also, ACA was stage in so slow that its impact on the economy was moderated.

  9. superdestroyer says:

    @michael reynolds:

    In case you have not noticed, the national debt will double during the Obama Administration. Even during the Obama Administration’s best year on the deficit will equal some of the worst of the GW Bush Administration.

    Also, Paul Krugman and other left-of-center economist have been pushing for even bigger deficits.

  10. Jack says:

    @michael reynolds: So, Obama has not borrowed massive amounts of money for his recovery? Has the debt not gone from 9T to 18 T in 6 years?

  11. Pinky says:

    @superdestroyer: Good catch. I just sort of glazed over that comment.

  12. Jack says:

    @superdestroyer:

    …No new entitlement programs….

    I heard somewhere that we have spent $22T on entitlements. Three times more than was spent on all of our wars in US history. That number was around $5T in the 90s. We don’t need new entitlements…they simply add more recipients.

  13. Pinky says:

    Pet peeve – the economy didn’t “slow to a crawl”, economic growth did. The 2015-1q economy is 100.2% the size of the 2014-4q economy, adjusted for seasonality.

  14. michael reynolds says:

    @Jack:

    Yes, the difference being that Mr. Obama was coping with the economic meltdown gifted to him by Mr. Bush. And now Mr. Obama’s deficit is dropping. And if your point is that Mr. Obama behaved much as Mr. Reagan did, okay. I’m fine with that.

  15. michael reynolds says:

    @Jack:

    Entitlement programs means Social Security and Medicare, right? Why don’t your Republican pals come right out and say they want to do away with SS and Medicare? Why don’t you?

  16. Jack says:

    @michael reynolds:

    Why don’t your Republican pals come right out and say they want to do away with SS and Medicare? Why don’t you?

    I have opined in the past that I, and my generation, will likely have to forego SS because there will be no money there when I retire. It’s a Ponzi scheme by definition…a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

    Why doesn’t the government up and admit it now?

  17. Jack says:

    @michael reynolds:

    And now Mr. Obama’s deficit is dropping

    Unless and until we get back to $9T, the deficit is not dropping, but growing at a slower rate. There is a difference. Don’t try to use silly liberal word games with me.

  18. David M says:

    @Jack:

    Unless and until we get back to $9T, the deficit is not dropping, but growing at a slower rate. There is a difference. Don’t try to use silly liberal word games with me.

    So it’s official, Jack does not understand the difference between the deficit and debt.

  19. grumpy realist says:

    @michael reynolds: Jack’s idea of a well-run country is Greece, obviously…..

    I also noticed today a typical whiny article from the WSJ complaining about low interest rates because all those poor retired people living off income from bonds are upset they can’t find 4% munis anymore. Talk about trying to get your hands on free money while sitting around on your ass watching sports….

    The stupid, it burns.

  20. Rafer Janders says:

    @Jack:

    Unless and until we get back to $9T, the deficit is not dropping, but growing at a slower rate. There is a difference. Don’t try to use silly liberal word games with me.

    Silly liberal word games? You know the deficiti is not the debt, right? That they’re two different things? Here’s an easy way to think of it:

    Example one: you owe a debt of $100 and have an income of $50 available to pay that debt. Your deficit is $50.

    Example two: you owe a debt ot $100 and have an income of $100 available to pay that debt. Your deficit is $0.

    Same debt, different deficits. One of these things is not like the other.

  21. David M says:

    @Jack:

    I have opined in the past that I, and my generation, will likely have to forego SS because there will be no money there when I retire.

    It’s not that there won’t be any money when you retire. If it happens, it will be a direct result of fools like yourself listening to and voting for the frauds responsible for ending it.

  22. Jack says:

    @David M: Deficit=annual, debt=overall.

    I know the difference. The fact of the matter is, this misstep does not negate my argument.

    Typical liberal. Will you complain about a spelling mistake next to try and shut down speech with which you do not agree?

  23. Rafer Janders says:

    @Jack:

    Unless and until we get back to $9T, the deficit is not dropping, but growing at a slower rate.

    Ahem….

    The U.S. budget deficit is now the smallest it’s been since President Barack Obama took office.

    The federal government ran a deficit of $486 billion in 2014 – the smallest deficit recorded since 2008, according to preliminary projections from the Congressional Budget Office released Wednesday. Last year the deficit was $680 billion, or $195 billion more than the current projection. The deficit is the size of about 2.8 percent of the economy, a size slightly below the average over the past four decades.

    The deficit has shrunk as a percent of gross domestic product for five years now and has steadily diminished since reaching its largest of $1.4 trillion in 2009, on the heels of the financial crisis. The improvement flies in the face of Republican arguments that entitlement spending under Obama has been unrestrained and unsustainable.

    http://www.usnews.com/news/blogs/data-mine/2014/10/08/deficit-hits-new-low-under-obama

  24. Jack says:

    @David M:

    If it happens,

    The question is not if it happens. It will happen. SS is unsustainable. Period.

  25. Rafer Janders says:

    @Jack:

    I know the difference.

    No, you plainly don’t.

    The fact of the matter is, this misstep does not negate my argument.

    Yes, it actually does.

  26. David M says:

    @Jack:

    The question is not if it happens. It will happen. SS is unsustainable. Period.

    And your evidence for this claim is….

  27. Rafer Janders says:

    @Jack:

    Will you complain about a spelling mistake next to try and shut down speech with which you do not agree?

    If it’s an argument about spelling, yes, I will complain about a spelling mistake. Similarly, in an argument about math, I will complain when it’s obvious that you don’t understand the basic concepts of addition and subtraction and percentage change.

  28. Jack says:

    @Rafer Janders: Is the Debt still growing, have the numbers on the debt clock reversed? no? Then it is still growing. Growing an astonishing $9T under president stompy feet.

    Until it does get back to $9T, it is growing at a slower rate, not dropping.

    What you are suggesting is that every president should overspend by $2T in their first year and less every year after that so they too can claim to be reducing the deficit “on my watch”.

  29. Rafer Janders says:

    @David M:

    And your evidence for this claim is….

    Rush.

  30. Jack says:
  31. PJ says:

    @Jack:

    So, Obama has not borrowed massive amounts of money for his recovery?

    You should look up the amount borrowed for the Iraq War and the amount borrowed for the Bush tax cuts (that Obama didn’t let lapse…). Also don’t forget that a lot of the borrowed money for the recovery was passed when Bush was President and not Obama. For instance, does TARP ring a bell?

    But as David M has pointed out, you really don’t have a clue, do you?

  32. David M says:

    @Jack:

    What you are suggesting is that every president should overspend by $2T in their first year and less every year after that so they too can claim to be reducing the deficit “on my watch”.

    Technically the FY2009 budget is attributable to Bush, so the president elect would need to have the outgoing president agree to overspend by $2T. And if that did happen, then yes, they could claim to be reducing the deficit. However, this is a meaningless distraction from the completely accurate point that the deficit has been dropping while Obama has been in office.

  33. Jack says:

    @David M:

    However, this is a meaningless distraction from the completely accurate point that the deficit has been dropping while Obama has been in office.

    However, this is a meaningless distraction from the completely accurate point that the debt has been GROWING while Obama has been in office.

  34. David M says:

    @Jack:

    The trustees report does not say SS is unsustainable. Anyone who understands the issue knows there is a minor projected shortfall that is easy to fix. Keeping the GOP from using the opportunity to destroy the program will be more difficult, but fixing it is easy.

  35. David M says:

    @Jack:

    However, this is a meaningless distraction from the completely accurate point that the debt has been GROWING while Obama has been in office.

    Of course it has, the Democrats are actually sane and responsible and weren’t cheerleading for a global depression.

    …which is what would have happened if the national debt were lower now than in 2009 when Obama took office.

  36. Jack says:

    @David M: Did you somehow miss the first sentence? Let me put it here for you.

    Neither Medicare nor Social Security can sustain projected long-run program costs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers.

    Neither…nor, can sustain…meaning unsustainable…it’s right there in the sentence.

    Under current projections, the annual cost of Social Security benefits expressed as a share of workers’ taxable earnings will grow rapidly from 11.3 percent in 2007, the last pre-recession year, to roughly 17.1 percent in 2037, and will then decline slightly before slowly increasing after 2050.

    Yeah, like the people are going to agree to increase deductions nearly 6% to cover entitlements.

  37. David M says:

    @Jack:

    You are claiming it is unsustainable because it requires minor legislative changes? Weren’t you also the one complaining about silly word games earlier? That would seem to apply here.

    …and as I showed earlier there are plenty of options other than increasing the deductions 6%.

  38. Ben Wolf says:

    @Jack: Social Security is neither a Ponzi scheme nor a financial fraud. Twenty-two trillion dollars in government liabilities is twenty-two trillion dollars in private assets.

  39. Jack says:

    @David M:

    …which is what would have happened if the national debt were lower now than in 2009 when Obama took office.

    Link? Proof? Nothing??

    Speculation on your part at best.

    Economists however, believe not having a huge debt actually increases jobs because taxes do not have to be as high. Thus increasing payments to the government even more…thus reducing debt more while at the same time, reducing the burden on taxpayers to service the debt.

    This is simple economics.

    Of course your way has legislators looking at a “one time” tax on all 401ks and IRAs (Yeah, one time) in order to bring in enough money to pay for all the “entitlements” that democrats have showered upon the people.

  40. Rafer Janders says:

    @Jack:

    Is the Debt still growing, have the numbers on the debt clock reversed? no? Then it is still growing.

    The debt is growing. The deficit is falling.

    A growing debt, in and of itself, is not a problem if you have the added income to pay that debt. You can’t look at debt independent of income.

  41. Nikki says:

    @Jack: Did you miss this?

    under currently scheduled financing

    I do believe that David M. mentioned the possibility of a legislative fix…

  42. David M says:

    @Jack:

    Nothing you wrote there makes any sense at all. It’s like you have no memory of the actual events during the 2008-2009 recession.

  43. Jack says:

    @David M: Raising taxes 6 percent on the working people of America is a minor legislative change?

    Silly Rabbit, Trix are for kids.

  44. Jack says:

    @Rafer Janders:

    A growing debt, in and of itself, is not a problem if you have the added income to pay that debt.

    The American taxpayer is NOT an ATM machine!

  45. grumpy realist says:

    @Jack: So how do you expect to fix the matter? Get rid of Social Security and Medicare? Fat chance. You try anything along those lines and all those Fox Geezers down in Florida and Arizona will set up an incredible stink. Say “oh, we’re only going to do it now, but we won’t pay out in the future”? You’ll get a big fat howl from everyone else.

    We could also take a good whack at the military, but the Earth will spin the other way on its axis before Republicans will decide that’s a path to go down.

    So—what do you plan to do?

  46. David M says:

    @Jack:

    You’re the only one fixated on the 6% number, trying to scare people into falling for the lie that SS is not sustainable. You may not want to acknowledge there are other options for SS, but that doesn’t mean they don’t exist.

  47. Ben Wolf says:

    @Jack:

    Economists however, believe not having a huge debt actually increases jobs because taxes do not have to be as high.

    This is not economics it is theological dogma. There is not a shred of empirical evidence to support the notion taxes rise to pay back national debt a la ricardian equivalence. It has never happened because it isn’t a necessity for a country with its own currency.

  48. Rafer Janders says:

    @Jack:

    The American taxpayer is NOT an ATM machine!

    I know, it’s not like the US government can just print its own mone…oh.

  49. Ben Wolf says:

    @Jack: The American taxpayer receives dollars from government, they do not create dollars. Not unless they’ve got an illegal press in the basement.

  50. Jack says:

    @David M:

    You’re the only one fixated on the 6% number

    You mean the one that the Social Security Trustees actually suggested?

  51. David M says:

    @Jack:

    It is not the only option. Stop being a jackass and pretending it is.

  52. Jack says:

    @grumpy realist: I already said I was prepared to be told I would have to forego my SS.

  53. Rafer Janders says:

    @Jack:

    Is the Debt still growing, have the numbers on the debt clock reversed? no? Then it is still growing.

    Person A has a debt that increased from $0 to $1mm! That’s huge! he owes so much money! However, during that same time period, his income increased from $0 to $2mm, so he’s actually well in the money.

    Person A has a debt that decreased from $2mm to $1mm. His debt fell, that’s great! However, during that same period his income also decreased from $2mm to $0, so he’s $1mm out of the money.

    Who’s better off — the person whose debt increased, or the person whose debt fell?

  54. Ben Wolf says:

    @Jack:

    Yeah, like the people are going to agree to increase deductions nearly 6% to cover entitlements.

    Social Security taxes were never intended to “cover” Social Security payments. You can go back and look at the correspondence between Roosevelt and his economic team to discover those taxes were levied as an anti-inflationary measure and a way of motivating Americans to protect the program from conservatives.

    We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program –FDR

  55. Jack says:

    @Ben Wolf:

    We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program –FDR

    And yet, SCOTUS has ruled you have no right to that money. In the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time.

  56. Tillman says:

    @Jack:

    Link? Proof? Nothing??

    C’mon dude, no one makes this the first thing they say in a post without providing links in the text right beneath that sort of criticism. Otherwise it’s some vague hypocritical notification to everyone reading your current debate with David M that neither of you have used links this entire time, putting the whole facade of this forum in jeopardy. 😀

    We’re not even getting to whether the links reference credible academic consensus in an intelligent and nuanced way that explain current thinking on an historical event of significance clearly and concisely. Just the lack of any links, even to the 98% of trash analysis that exists on the Internet, partisan and non-.

  57. David M says:

    @Jack:

    And yet, SCOTUS has ruled you have no right to that money. In the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time.

    Then it would seem the appropriate response is to stop voting for people who wish to end the program, not team up with them.

  58. David M says:

    @Tillman:

    It was probably easy to overlook among all the comments, but I did link to some options for SS. And Jack did link to the SS Trustees report, but that link is somewhat less useful given that it doesn’t support his claims.

  59. Tillman says:

    @superdestroyer: Yeah, it’s too bad Obama made the nonpartisan, correct move to list the so-called credit card expenditures of such boondoggles of the past as “Iraq” and “disaster response” in the budget, putting him in the hole from the beginning.

    But I’m sure this handicap of his hasn’t changed the statistical picture too much.

  60. Tillman says:

    @David M: Ah. Excuse me, short-term memory.

    Strike out all the parts of that after the first sentence, it works out.

  61. PJ says:

    @Jack:

    I already said I was prepared to be told I would have to forego my SS.

    I’m prepared to be told that aliens are invading Nevada.
    Doesn’t mean that it will happen.
    But I have now finished with the preparations for the possibility that I might actually be told that.

    One should always Be Prepared!

  62. al-Ameda says:

    @Jack:

    @al-Ameda: Recovery??? Recovery??? Look to the Reagan Presidency for a recovery. This is similar to a Hoover “recovery”.

    If this is what you call a recovery, I’d like a lot less, please.

    And yet, SCOTUS has ruled you have no right to that money. In the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time.

    Try comparing apples to apples.

    #1 — The Reagan Recession of 1982 was far less in magnitude than the Great Recession of 2008. The financial collapse of 2008 caused the loss of nearly 25% of the aggregate wealth of
    America’s households and businesses – nearly $21 Trillion. Nothing remotely like that happened in 1982. at the peak (depth) of the Great Recession we were losing jobs at a rate of 700,000 per month.

    I realize that it galls you to see the economy improve – nearly 60 consecutive months of steady economic growth, and a decline in the UE rate from 10% to 5.6%, but improvement has occurred, and you need to get over it.

    #2 — Yes, I still expect Obama to unilaterally repeal the Second Amendment and deny Social Security benefits to his political opposition.

  63. Ben Wolf says:

    @Jack:

    In the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time.

    If one is deported for membership in the Communist Party.

  64. Rafer Janders says:

    @Ben Wolf:

    If one is deported for membership in the Communist Party.

    Wait, what? They can….they can deport you for that?

    You know, apropos of nothing, I realize I just forgot something…uh, yeah, I gotta go back for it….

    *sound of running feet*

    *sound of slamming door*

    *sound of car door opening, closing*

    *sound of squealing tires*

  65. anjin-san says:

    @ Jack

    Have you suffered a blow to the head recently?

  66. rachel says:

    @anjin-san: That could explain it, or perhaps he’s just innumerate.

  67. SC_Birdflyte says:

    @Jack: At least in the case of SS, all the proceeds from the 1983 tax hike have gone to fund budget deficits, which have in turn been fed by tax cuts for the wealthy. At least I can give W credit for honesty, in admitting he wanted to do away with SS. That’s more than Reagan ever did.

  68. superdestroyer says:

    @Tillman:

    Considering that withdrawl from Iraq and the draw down in Afghanistan, one would think that there would be almost no reason for any budget deficit. However, whether something was on the budget or off-budget, it still counts against the national debt. And the Obama Adminstration in 8 years is probably going to add more than $8 trillion to the national debt.

    The best thing for the debt is the current very low interest rates. If interest rates ever go back up, the financial condition of the U.S. will be much worse.

  69. Tillman says:

    @superdestroyer: No, see, the thing was those adventures of Bush were prosecuted outside of the budget on borrowed money, making them more expensive in the long run. The hole Mr. Bush dug for Mr. Obama was plenty deep. Factor in a massive financial crisis that necessitates Keynesian deficit spending to correct, and you end up where we are now. Comparing Obama’s moves to Bush’s, who didn’t have his crisis hit until the last few months of his presidency and who spent on the national credit card at least, as cited in that article, what amounts to $2.7 trillion over a decade on a ground war and occupation falsely sold and promoted to the American people that fell apart within the first few months of victory…you see why the contrast doesn’t hold, yes?

    I’ll admit I’m biased against Bush, but even simple contrasts on the even playing field don’t go in his favor.

  70. jukeboxgrad says:

    Jack:

    Has the debt not gone from 9T to 18 T in 6 years? … Unless and until we get back to $9T, the deficit is not dropping … Until it does get back to $9T, it is growing at a slower rate, not dropping.

    Your “$9T” that you repeat like a mantra is wrong. On the last day of Bush’s last fiscal year the debt was $11.9T. Conservatives love phony numbers.

    Also, your comparison is wrong because it ignores inflation and it ignores the change in the size of the economy. When adjusted for inflation and the size of the economy, Obama’s borrowing is comparable to what Reagan and GWB each borrowed. IOKIYAR.

    Obama inherited the worst financial collapse in 80 years, the biggest deficit ever, and historically low tax rates. That’s the cause of his borrowing. It’s not because Obama has increased spending. Republicans are like people who pee in your house and then complain that the place stinks.

    superdestroyer:

    The best thing for the debt is the current very low interest rates. If interest rates ever go back up, the financial condition of the U.S. will be much worse.

    Debt hysteria reflects ignorance. If we wanted to completely eliminate the deficit and the debt we could, just by raising taxes on the top 1%. 100% of the current deficit would be eliminated if the top 1% resumed paying the effective tax rate they used to pay in the period 1942-1981. Link.

    The Reagan tax cuts for the rich are what’s unsustainable, and that problem will eventually be addressed.

  71. Pinky says:

    @Tillman:

    No, see, the thing was those adventures of Bush were prosecuted outside of the budget on borrowed money, making them more expensive in the long run.

    It looks like you’re conflating two issues here. There’s the question of whether or not something’s on the current budget, and the question of how it’s paid for. The final spending numbers, like those on the OMB site, include all spending on and off the budget. Their comparisons between the budgets of different presidents are all ex post (except for the estimates and projections, of course). As for the financing, and spending greater than revenues is paid for by borrowing. It’s not obvious why we should complain about wars costing more in the long run, but not social spending or any other type of spending.

  72. Neo says:

    @michael reynolds: This time it seems that $7.5 trillion of deficits just weren’t enough.

    … and complaining that 0.2% GDP growth was because of a “bad winter” during what their Global Warming friends at the EPA, using their “secret science”, are calling “the hottest year since records started” doesn’t really work too well.

  73. jukeboxgrad says:

    $7.5 trillion of deficits

    Another fictional number. Conservatives have so many.

  74. jukeboxgrad says:

    superdestroyer:

    the national debt will double during the Obama Administration

    False.

    Even during the Obama Administration’s best year on the deficit will equal some of the worst of the GW Bush Administration.

    Also false. Conservatives live in a world of fiction.

  75. Rafer Janders says:

    @Pinky:

    It’s not obvious why we should complain about wars costing more in the long run, but not social spending or any other type of spending.

    Well, one reason is that the wars are useless and don’t produce any economic multiplier, while social spending is actually spending on Americans which they then plow right back into the economy.

    You build a tank, it just sits there. You build a bulldozer, it’s going to be used in constructing schools and homes and highways.

  76. Pinky says:

    @Rafer Janders: You’re mistaken about how the multiplier effect works. A person spends $100, then the recipient spends $90, then that recipient spends $81, et cetera. That’s a different concept than return on investment.

  77. Pinky says:

    @Pinky: And return on investment for military, or any government spending, is very difficult to calculate. The results will usually depend on your assumptions.

  78. Ben Wolf says:

    @Pinky: There’s a considerable body of literature indicating military spending has a lower associated multiplier, which is consistent with the inherent problems of military Keynesianism. Financial flows are being directed toward the top of society and a disproportionate quantity is saved due to lower marginal propensity to consume. Those with higher incomes don’t spend much so the multiplier falls.

  79. David M says:

    @Ben Wolf:

    I don’t know about that, if they blow up a bunch of stuff and then rebuild it…seems to be a good multiplier to me.

    /snark

  80. superdestroyer says:

    Jukebox

    What was the national debt on January 20, 2008 and what will it be on January 20, 2016?

  81. jukeboxgrad says:

    What was the national debt on January 20, 2008

    Obama became president on 1/20/09. His first fiscal year started on 10/1/09, when the debt was $11.9T. Most of the spending for FY09 was signed into law by Bush. Now you can apologize for your false claims.

    what will it be on January 20, 2016?

    Another incorrect and stupid date.

  82. al-Ameda says:

    @Neo:

    … and complaining that 0.2% GDP growth was because of a “bad winter” during what their Global Warming friends at the EPA, using their “secret science”, are calling “the hottest year since records started” doesn’t really work too well.

    “secret science”? Is that the new Area 51 talking point?

  83. Ben Wolf says:

    @David M: I see what you did, you tricky minx.