“They Never Really Cared In The First Place”: Why Republicans Don’t Want To Acknowledge The Falling Deficit
An important budget memo was issued this week celebrating just how far the deficit had fallen over the last five years. But in one of the incongruities that define the political moment, the memo was issued by a Democrat, Senator Patty Murray of Washington, chairwoman of the Budget Committee, not a Republican.
The steep decline of the deficit is not something Republicans really want to talk about, even though their austerity policies were largely responsible for it. If the public really understood how much the deficit has fallen, it would undermine the party’s excuse for opposing every single spending program, exposing the “cost to future generations” as a hyped-up hoax. In fact, it would lead to exactly the conclusion that Ms. Murray reached in her memo to Senate Democrats: that the country can now afford to spend money to boost employment, stay competitive with the rest of the globe in education and research, and finally deal with the long-deferred repairs to public works.
In 2009, the deficit was more than $1.4 trillion, which was nearly 10 percent of the nation’s gross domestic product. This year, the deficit will be a little more than a third that size: $520 billion, or 3 percent of G.D.P. The Treasury Department said on Thursday that the deficit fell more sharply in the last fiscal year than in any year since the end of World War II.
Some of the deficit reduction — about 23 percent — is due to tax revenue increases, mostly from the deal to raise income tax rates to Clinton-era levels on households making $450,000 or more. And some is due to lower interest costs, and the slowing growth of health care costs, which is partly attributable to the health care reform law.
But about half of the reduction, the biggest part, is the result of $1.6 trillion in cuts over several years to discretionary spending demanded by Republicans in several rounds of budget negotiations. As a recent Times editorial noted, this has become the tragedy of the Obama administration, undoing the positive effects of the 2009 stimulus, keeping the economic recovery sluggish, and hurting millions of vulnerable people who depended on that spending for shelter, food and education.
Having prevailed over all of those liberal programs, why can’t Republicans acknowledge that the deficit has been vanquished? Just yesterday, they blocked a bill to provide expanded medical and education benefits for veterans, citing the looming deficit. “This bill would spend more than we agreed to spend,” said Senator Jeff Sessions of Alabama. “The ink is hardly dry and here we have another bill to raise that spending again.”
The answer, of course, is that Republicans never really cared about the deficit, having raised it to enormous proportions during the administration of George W. Bush. Their real goals were to stop government spending at any cost, and to deny President Obama even a hint of political victory or economic success.
And so Republicans will resist any attempt to use their budget triumphs for Democratic purposes. As Ms. Murray writes, that will create different kinds of deficits: a deficit of people working, of students studying, of roads and bridges and research projects that can lead to prosperity instead of the gloom of austerity.
By: David Firestone, Editor’s Blog, The New York Times, February 28, 2014
“Oh, The Irresponsibility”: Karl Rove–Presidents Who Leave Deficits, Bad Economies, And War Are The Worst
Karl Rove is most famous for being architect of one of the worst presidencies in American history and then a Superpac strategist/delusional Romney campaign-night dead-ender. I’m a Rove junkie, and just as a snobbish fan of any popular band must have some obscure album he finds superior to the band’s most popular work, the Rove career function I find most delightful and rewarding is his work as a Wall Street Journal op-ed columnist. This is the medium that truly pulls back the curtain on Rove’s fascinating combination of insularity from facts outside the conservative pseudo-news bubble, delusional optimism, and utter lack of self-awareness. The Journal column is a weekly gift to amateur Rove psychoanalysts everywhere.
Today’s column begins with Rove’s bizarre belief that the health exchanges in Obamacare are a “single-payer” system, reflecting his apparent confusion about what this term means. (The single-payer in a single-payer system is the government, not the insurance companies in the exchanges.) But the main point is the Orwellian proposition that “Mr. Obama’s pattern is to act, or fail to act, in a way that will leave his successor with a boatload of troubles.” What kind of president would bequeath a boatload of troubles to his successor? Oh, the irresponsibility. The first count in Rove’s indictment is the budget deficit, which “was equal to roughly 40% of GDP when Mr. Obama took office. At last year’s end it was 72% of GDP.” One possible cause of this deficit might be the over-trillion-dollar annual deficit, that one George W. Bush handed over when he left office, along with the massive economic collapse.
Rove’s column goes on to express very strong views on the need for fiscal responsibility:
Then there’s Medicare, whose Hospital Insurance Trust Fund will go bankrupt in 2026. For five years, Mr. Obama has failed to offer a plan to restore Medicare’s fiscal health as he is required by the law establishing Medicare Part D. When Medicare goes belly-up, he will be out of office.
The Congressional Budget Office projects the Affordable Care Act will reduce deficits by more than a trillion dollars in its second decade. Yes, the Hospital Insurance Trust Fund is expected to reach insolvency by 2026, but when Bush left office, that projected insolvency date was nine years earlier. Meanwhile, Medicare’s projected spending has fallen by nearly $600 billion since the passage of Obamacare:
You can plausibly argue that these changes, combined with other cuts to long-term deficits, including partial expiration of the Bush tax cuts, don’t go far enough. But Rove is trying to make the case that Obama’s policies made the long-term budget outlook worse, which is false.
You know whose policies made the long-term outlook way, way worse? Yes, of course you do. Literally the entire Bush agenda – tax cuts, new domestic spending, major expansions of the military — was financed by debt. Rove tries to paint Bush as fiscally responsible because Obama has “failed to offer a plan to restore Medicare’s fiscal health as he is required by the law establishing Medicare Part D.”
That sentence is really the best. The point of the column is that Obama is terrible for leaving deficits to his successor. Rove is supporting this charge by citing a law his president passed, that created a major new debt-financed entitlement that Obama inherited. And he’s presenting this as Obama’s irresponsibility because the debt-financed entitlement Bush passed required the next president to come up with a law solving Medicare’s problems. And because Obama has alleviated but not completely solved Medicare’s problems, this shows that Obama has sloughed problems off onto the future. What a slacker, Obama is, sloughing off problems onto his successor rather than solve them as the president who came before him required him by law to do.
This leads us to the most Rove-ian paragraph in the column, and possibly in the entire history of the Rove oeuvre:
From the record number of Americans on food stamps to the worst labor-force participation rate since the 1970s to rising political polarization to retreating U.S. power overseas and increasing Middle East chaos and violence, Mr. Obama’s successor—Republican or Democratic—will inherit a mess.
What kind of president would leave his successor with a bad economy and a violent Middle East?
By: Jonathan Chait, Daily Intelligencer, New York Magazine, February 14, 2014
“The Silence Of The Austerians”: Here’s Why 2014 Could Be The Year America Finally Ditches its Inane Deficit Obsession
The year 2013 will be seen as a year of crushing intellectual defeat for advocates of fiscal austerity. There were many smaller victories, but this big one came in April. Researchers at the University of Massachusetts examined the Austerian ur-paper, “Growth in a Time of Debt,” by Carmen Reinhart and Ken Rogoff, which said that countries whose debt-to-GDP ratio reaches 90 percent experience dramatically slower growth. The UMass folks found not only dodgy statistics and backwards causation, but a goof in the paper’s Excel spreadsheet. The causation and statistics errors were more serious, but the fact that elites around the globe had gleefully embraced something with a flub any office temp could understand was horribly embarrassing.
It was an intellectual rout that badly wrong-footed the Austerians, who have since been notably half-hearted in the face of a resurgent left now campaigning on economic justice. This includes, for example, increasing Social Security benefits, which was unthinkable two years ago, when the fight to stop benefits from being cut was nearly lost.
The question for 2014, then, will be whether this triumph can be consolidated and expanded into the policy sphere. Because despite the intellectual collapse, Austerian assumptions and reasoning still dominate United States policy, which is undertaking fiscal consolidation at a pace not seen since the WWII demobilization. If the current Austerian death grip on the framework of policy negotiation can be broken, there might be a chance.
The answer to this question turns on how one views intellectual debate. Given the history of the last few years, one could be forgiven for thinking it’s pointless. As the Polish economist Michal Kalecki demonstrated brilliantly, there are powerful cultural and class-based reasons for both political and business elites to favor austerity now.
We see this today, as Steve Randy Waldman has demonstrated, in the blatant double standards applied to austerity as compared to inequality or raising the minimum wage. Consider a recent paper by the liberal economist Jared Bernstein, which while outlining much excellent evidence about the economic harm of inequality, is stuffed with unnecessary hedging and hesitation. The Reinhart and Rogoff paper, by contrast, was weak even without knowing about the Excel and stats errors (as Paul Krugman, among others, observed at the time), but elites nearly tripped over their own feet seizing on it anyway. Their bogus “90 percent” conclusion was stated as economic fact by everyone from Paul Ryan to the Washington Post editorial board.
However, biased reasoning is different than no reasoning at all. Seizing on a fig leaf paper fulfills a deep psychological need. Current elites may be largely greedy, corrupt hypocrites, but the cultural credibility of science is such that what amounts to outright class warfare must have an “evidence-based” patina. It’s far too gauche to simply ram through one’s favored policies because you want all the money or to kick the poor.
Therefore, fiscal policy in 2014 and 2015 will hinge on whether the Austerian coalition can be split (assuming, as is probable, that progressive Democrats don’t sweep the 2014 midterms).
Roughly speaking, we’re talking about the center and the right, and there are good reasons to suppose that neither will be brought around. For the center, it takes an intellectual defeat roughly akin to the Battle of Trafalgar to get them to grudgingly abandon austerity. (And if some hack economist churns out another pro-austerity paper, they will probably grab it eagerly.) Meanwhile, “straight” reporters have been culturally conditioned to code deficit reduction as a non-ideological good thing, so even very recent straight reporting still contains buried Austerian assumptions.
And on the right, things look especially hopeless. Denial and motivated reasoning are so epidemic that even Mitt Romney believed the “unskewed” polls before the 2012 election. Ivory tower arguments alone are useless here.
However, all hope is not lost. The key is to change what is considered acceptable for budgetary negotiations. Right now, they all assume that any new spending must be “offset” by cuts elsewhere. That aversion to deficit spending is 100% Austerian.
So while Republicans are largely immune to evidence, it’s also true they don’t actually care about the deficit in and of itself. They favor reduced taxes on the rich, and cutting social insurance. What’s more, conservative reformists at places like National Affairs have gotten louder and bolder in their advocacy of new thinking, even including infrastructure spending.
So if the center, especially including President Obama, can be persuaded to drop their deficit obsession (and again, it’s hardly possible to overstate how badly this debate has been lost), we could trade tax cuts for some austerity relief, like re-extending unemployment benefits and food stamps. And, it’s important to note, both spending increases and tax cuts count as austerity relief. Tax cuts, especially on the rich, aren’t very good stimulus, but they still put money into people’s pockets.
But the main point is to shift ground for negotiation. This strategy of “tax cuts for more spending” has been suggested many times in the past few years and gone nowhere. But before that, it has been the basis for many successful bipartisan deals, including expanding Medicaid in the 80s and the CHIP program in the 90s.
So while the deck is stacked against the anti-Austerians, continuing the intellectual battle is by no account useless. It’s highly possible to influence even a crooked debate.
By: Ryan Cooper, The New Republic, February 5, 2014
“Deficit Of Truth”: What Republicans Hope You Don’t Know And Never Find Out
Listening to Republicans in Congress wailing incessantly about our spendthrift culture raises a nagging question: What would they do, besides talking, if they actually wanted to reduce federal deficits and, eventually, the national debt?
First, they would admit that President Obama’s policies, including health care reform, have already reduced deficits sharply, as promised. Second, they would desist from their hostage-taking tactics over the debt ceiling, which have only damaged America’s economy and international prestige. And then they would finally admit that basic investment and job creation, rather than cutting food stamps, represent the best way to reduce both deficits and debt, indeed the only way — through economic growth.
Fortunately for those Republicans and sadly for everyone else, the American public has little comprehension of current fiscal realities. Most people don’t even know that the deficit is shrinking rather than growing. According to a poll released on Feb. 4 by The Huffington Post and You.gov, well over half believe the budget deficit has increased since 2009, while less than 20 percent are aware that it has steadily decreased. (Another 14 percent believe the deficit has remained constant during Obama’s presidency.)
Unsurprisingly, perhaps, it is Republican voters, misinformed by Fox News, who most fervently and consistently insist on these mistaken ideas, with 85 percent telling pollsters that the deficit has increased. Less than a third of Democrats gave that answer. But nearly 60 percent of independent voters agree with the Republicans on that question and only 30 percent of Democrats understand the truth – an implicit repudiation, as The Huffington Post noted, of the president’s political decision to prioritize deficit reduction rather than job creation.
The facts are simple enough even for a Tea Party politician to understand. The federal deficit reached its peak – in dollar amount and as a share of the national economy – in 2009, which happens to be the year that Obama took office. Thanks to the profligate war and tax policies of the Bush administration — which undid the fiscal stabilization achieved under President Clinton — the Treasury had no financial margin when the Great Recession struck. Federal spending required to avoid another (and possibly far worse) worldwide Depression, combined with declining tax revenues that resulted from economic stagnation and tax cuts, all led inevitably to that record deficit.
Over the past five years, the red ink has swiftly faded. This year’s deficit will be about $514 billion, or about one-third of the $1.5 trillion deficit in 2009; next year’s will be even lower, at around $478 billion. As when Clinton was president, those marked fiscal improvements are mainly the product of a slowly recovering economy and growing incomes, along with federal budget cuts.
But not only is the good news about the shrinking deficit widely ignored; it isn’t actually good news at all. By avoiding a mostly mythical “budget crisis,” federal policy has created a very real jobs crisis that persists, with particular harm to working families. The latest Congressional Budget Office report on the fiscal outlook for the coming decade strongly suggests that the cost of reducing the deficit has been – and will continue to be – substantial losses in potential economic growth and employment.
The ironic consequence, as former White House economist Jared Bernstein recently explained, is that the fiscal outlook for the next 10 years will be somewhat dimmer than expected. In other words, we will return to higher deficits because fiscal austerity –enforced by Republicans and accepted by Obama – is still dragging the economy down.
To restore the kind of growth that lets families prosper and ultimately erases deficits, the Republicans would have to listen to the president — especially when he calls for public investment in infrastructure and an increased minimum wage, the first steps toward robust growth and fiscal stability.
If Americans understood the truth about deficits and debt – and how the federal budget affects their jobs and income – the congressional obstruction caucus, also known as the GOP, would have no other choice.
By: Joe Conason, The National Memo, February 6, 2014
“The Silence Of The Austerians”: Here’s Why 2014 Could Be The Year America Finally Ditches Its Inane Deficit Obsession
The year 2013 will be seen as a year of crushing intellectual defeat for advocates of fiscal austerity. There were many smaller victories, but this big one came in April. Researchers at the University of Massachusetts examined the Austerian paper, “Growth in a Time of Debt,” by Carmen Reinhart and Ken Rogoff, which said that countries whose debt-to-GDP ratio reaches 90 percent experience dramatically slower growth. The UMass folks found not only dodgy statistics and backwards causation, but a goof in the paper’s Excel spreadsheet. The causation and statistics errors were more serious, but the fact that elites around the globe had gleefully embraced something with a flub any office temp could understand was horribly embarrassing.
It was an intellectual rout that badly wrong-footed the Austerians, who have since been notably half-hearted in the face of a resurgent left now campaigning on economic justice. This includes, for example, increasing Social Security benefits, which was unthinkable two years ago, when the fight to stop benefits from being cut was nearly lost.
The question for 2014, then, will be whether this triumph can be consolidated and expanded into the policy sphere. Because despite the intellectual collapse, Austerian assumptions and reasoning still dominate United States policy, which is undertaking fiscal consolidation at a pace not seen since the WWII demobilization. If the current Austerian death grip on the framework of policy negotiation can be broken, there might be a chance.
The answer to this question turns on how one views intellectual debate. Given the history of the last few years, one could be forgiven for thinking it’s pointless. As the Polish economist Michal Kalecki demonstrated brilliantly, there are powerful cultural and class-based reasons for both political and business elites to favor austerity now.
We see this today, as Steve Randy Waldman has demonstrated, in the blatant double standards applied to austerity as compared to inequality or raising the minimum wage. Consider a recent paper by the liberal economist Jared Bernstein, which, while outlining much excellent evidence about the economic harm of inequality, is stuffed with unnecessary hedging and hesitation. The Reinhart and Rogoff paper, by contrast, was weak even without knowing about the Excel and stats errors (as Paul Krugman, among others, observed at the time), but elites nearly tripped over their own feet seizing on it anyway. Their bogus “90 percent” conclusion was stated as economic fact by everyone from Paul Ryan to the Washington Post editorial board.
However, biased reasoning is different than no reasoning at all. Seizing on a fig leaf paper fulfills a deep psychological need. Current elites may be largely greedy, corrupt hypocrites, but the cultural credibility of science is such that what amounts to outright class warfare must have an “evidence-based” patina. It’s far too gauche to simply ram through one’s favored policies because you want all the money or to kick the poor.
Therefore, fiscal policy in 2014 and 2015 will hinge on whether the Austerian coalition can be split (assuming, as is probable, that progressive Democrats don’t sweep the 2014 midterms).
Roughly speaking, we’re talking about the center and the right, and there are good reasons to suppose that neither will be brought around. For the center, it takes an intellectual defeat roughly akin to the Battle of Trafalgar to get them to grudgingly abandon austerity. (And if some hack economist churns out another pro-austerity paper, they will probably grab it eagerly.) Meanwhile, “straight” reporters have been culturally conditioned to code deficit reduction as a non-ideological good thing, so even very recent straight reporting still contains buried Austerian assumptions.
And on the right, things look especially hopeless. Denial and motivated reasoning are so epidemic that even Mitt Romney believed the “unskewed” polls before the 2012 election. Ivory tower arguments alone are useless here.
However, all hope is not lost. The key is to change what is considered acceptable for budgetary negotiations. Right now, they all assume that any new spending must be “offset” by cuts elsewhere. That aversion to deficit spending is 100 percent Austerian.
So while Republicans are largely immune to evidence, it’s also true they don’t actually care about the deficit in and of itself. They favor reduced taxes on the rich and cutting social insurance. What’s more, conservative reformists at places like National Affairs have gotten louder and bolder in their advocacy of new thinking, even including infrastructure spending.
So if the center, especially including President Obama, can be persuaded to drop their deficit obsession (and again, it’s hardly possible to overstate how badly this debate has been lost), we could trade tax cuts for some austerity relief, like re-extending unemployment benefits and food stamps. And, it’s important to note, both spending increases and tax cuts count as austerity relief. Tax cuts, especially on the rich, aren’t very good stimulus, but they still put money into people’s pockets.
But the main point is to shift ground for negotiation. This strategy of “tax cuts for more spending” has been suggested many times in the past few years and gone nowhere. But before that, it had been the basis for many successful bipartisan deals, including expanding Medicaid in the 1980s and the CHIP program in the 1990s.
So while the deck is stacked against the anti-Austerians, continuing the intellectual battle is by no account useless. It’s highly possible to influence even a crooked debate.
By: Ryan Cooper, Web Editor of The Washington Monthly; Published in The New Republic, January 5, 2014
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