“Someone Please, Alert The Media!”: The Budget Deficit Is Shrinking Rapidly And Most Americans Don’t Know It
The deficit is down 37.6 percent for the first 10 months of the 2013 budget year, according to the Congressional Budget Office. But a new survey conducted by Google at Paul Krugman’s request finds that more than 50 percent of Americans think it’s still growing.
Last year the government spent $973.8 billion more than it took in for the first 10 months of the budget year. The deficit for the same period this year is $607.4. This year’s deficit is projected to be $670 billion.
As a share of gross domestic product, the deficit was recently as high as 10.1 percent in 2009, when the deficit was $1.4 trillion. It is now closer to 2 percent of GDP, which means the deficit has been cut by more than half since then, in both actual dollars and as a share of GDP.
A poll in February found that only 6 percent of Americans were aware the deficit was shrinking. The new survey finds that a little over 17 percent of those polled know the deficit is shrinking, with only 8.3 percent giving the correct answer: that it has decreased by a lot.
The perception that the deficit is still growing has been fed by Republicans including House Minority Leader Eric Cantor (R-VA), who recently said the deficit is growing and Senator Rand Paul (R-KY), who said last week that we have trillion-dollar deficits.
What’s causing the deficit to drop so drastically? Probably even too quickly?
Economic growth, lower spending, increased taxes, and windfalls from government-sponsored mortgage corporations Fannie Mae and Freddie Mac brought on by the resurgent housing market.
Republicans are intent on keeping the so-called sequester in place, which will cut government spending by $85 billion, leading to the loss of up to 1,600,000 jobs. The government is only funded through September 30 and the debt limit will need to be raised soon after that. House Republicans have vowed to use both deadlines to demand even more cuts in spending, along with a delay in or defunding of Obamacare.
By: Jason Sattler, The National Memo, August 13, 2013
“Purifying The Republican Party”: The Destructive Rise Of The No-Government Conservatives
Nine months after a decisive loss in the 2012 elections, the battle for the soul of the Republican Party—or whatever’s left of it—has begun.
I’m not talking about a battle between moderates and conservatives. The conservatives won that fight a long time ago. Our children may never believe that moderate Republicans once roamed the Earth, advocating policies that would limit carbon pollution and invest in scientific research, reform our schools and build new roads, promote national service, reduce the influence of money in politics, and require individuals who can afford health insurance to take responsibility for buying it. Soon enough, these politicians will exist only in the minds of ’90s-era pundits and Aaron Sorkin’s writing staff.
The conservatives have finally purified the Republican Party, dispatching moderate infidels in primary after primary, demanding fealty to their agenda of huge tax cuts and drastically lower spending. They have used their sizable numbers in Congress to help realize that agenda, with periodic assists from a president who has always been more fiscally responsible than his enemies would admit.
Today the tax burden on the vast majority of families is lower than it’s been in decades. Domestic spending outside of Medicare and Medicaid is the lowest it’s been in more than half a century. A public sector that has grown under the last four presidents has significantly contracted under Barack Obama. And deficits are falling at the fastest pace in 60 years.
Conservatives remain unsatisfied. They want more tax cuts. More spending cuts. And I’m picking up signals that they’re not entirely thrilled with the Affordable Care Act.
But here, a new divide has emerged within the Republican Party. On one side are the traditional small-government conservatives, who have a rough acquaintance with the rules of politics and basic math. They may want to reduce the size of government further, but they also want to preserve the institutions of government, understanding that a functional democracy is necessary to provide for the common defense, promote a common prosperity, and tackle problems we can only solve together, as a nation.
These are Republicans like Chris Christie, who has witnessed the vital importance of robust federal aid in the wake of a terrible storm. These are Republicans like Jeb Bush, who has tried to reform public education without completely dismantling it. These are Republicans like John McCain, Lindsey Graham, and the handful of senators who have sought compromise with Democrats over issues such as immigration reform and finally ended the historically exceptional blockade of perfectly qualified executive-branch nominees so that the president can fill the jobs his administration is required to perform.
None of these actions have endeared the small-government conservatives to their rivals for power, the no-government conservatives. No-government conservatives take their inspiration from Grover Norquist’s famous quote that government should be shrunk to a size where it can be drowned in a bathtub. These Republicans, who make up most of the House and a healthy portion of the Senate, are on an uncompromising mission to abolish most government services, benefits, regulations, and taxes.
The goals of no-government conservatives are not primarily economic. They will propose more tax cuts in times of surplus and times of deficit. They care little when the nonpartisan experts and economists at the Congressional Budget Office say sequestration will cost up to 1.6 million jobs next year, or that immigration reform will boost our GDP, or that Obamacare will reduce the debt over time. No-government conservatives are not compelled by the evidence that temporary benefits such as food stamps and unemployment insurance put money in the pockets of those most likely to spend it at local businesses that will grow and create jobs as a result. Their only jobs agenda, their only growth agenda, their only deficit agenda is eliminating government, no matter how many people it helps or how big a boost it provides the economy.
Nor are the goals of no-government conservatives primarily political. They have advisers, they can read polls, and most of them probably know that shutting down the government or forcing a default would be, among other catastrophes, highly unpopular. They realize that rampant hostage-taking and filibuster-abuse are the chief contributors to the obstruction and gridlock that Americans of both parties hate.
They just don’t care. Jonathan Chait has written about the recent embrace of “procedural extremism” among many congressional Republicans, who have “evolved from being politically shrewd proponents of radical policy changes to a gang of saboteurs who would rather stop government from functioning at all.”
But for no-government conservatives, this has been their primary policy goal all along. Their fundamental philosophy is purely ideological—the idea that since government can’t do everything, it should do nothing. So as long as the public continues to see Washington as a dysfunctional circus of petty children, the conservative philosophy of government is vindicated. That is also precisely why no-government conservatives view the successful implementation of Obamacare as an existential threat—because it would prove that limited government intervention in the market can still be an effective force for good. It is why some Republicans are threatening a shutdown unless Obama agrees to defund the Affordable Care Act—a step they know can’t even be achieved through the annual budget process.
In 2016, Sens. Rand Paul and Ted Cruz seem to be the most likely champions of no-government conservatism, with Marco Rubio engaged in a delicate balancing act between purity and sanity. Whether Republican activists will still embrace traditional conservatives like Chris Christie, Jeb Bush, and others remains to be seen. But of one thing I am certain: while the single-minded pursuit of a no-government ideology may bring Republicans a fanatical sense of purpose, it will not bring them the 270 electoral votes needed to take back the White House, nor will it help our recovery gain the speed and strength it needs. The sooner the party faithful realize this, the better off the country will be.
By: Jon Favreau, The Daily Beast, July 30, 2013
“We Were Wrong”: What If Republicans Had Come To This Realization Sooner?
It took over 700 days, a recess appointment, and a nuclear-option showdown, but a prominent Republican senator yesterday took stock of his party’s efforts to reject Richard Cordray and nullify the Consumer Financial Protection Bureau. He reached an interesting conclusion.
“Cordray was being filibustered because we don’t like the law” that created the consumer agency, said Senator Lindsey Graham, Republican of South Carolina. “That’s not a reason to deny someone their appointment. We were wrong.”
That’s not a phrase we often hear from politicians, especially congressional Republicans, and it’s a welcome concession. Indeed, since I made the same argument on Monday, I’m delighted by Graham’s candor.
Perhaps, if Senate Republicans had come to this realization just a little sooner, Elizabeth Warren would be at the CFPB right now and Scott Brown would still be making Wall Street happy as a senator.
Regardless, the question many Senate Democrats are asking right now is whether yesterday’s breakthrough — which overwhelmingly tilted in their favor — can help lay the foundation for broader progress, at least in the upper chamber. Greg Sargent reported this morning:
Democrats plan to seize on yesterday’s events to exacerbate what they hope is a developing schism between the GOP leadership/hard right alliance and a bloc of GOP Senators who (Dems are betting) are genuinely fed up with that alliance’s continued flouting of basic governing norms. They hope to renew the push for a return to budget negotiations, with an eye towards replacing the sequester.”
Greg added that Sen. Patty Murray (D-Wash.), the chair of the Banking Committee and an influential member of the Democratic leadership, is set to deliver a pointed message on the floor this afternoon: “There is a group of Republicans — led by Senator McCain — who are very interested in ending the gridlock and working together to solve problems…. I am really hopeful that the bipartisanship we’ve seen this week will carry over into the budget debate, and that rather than listening to the Tea Party, Republican leaders will listen to the Republican members who prefer common-sense bipartisanship over chaos and brinkmanship.”
There are obviously a whole lot of hurdles between the painful status quo and competent governing, and even if there’s a Senate GOP contingent prepared to be responsible the odds in the House are far worse, but between low expectations and the events of recent years, “we were wrong” is a step in the right direction.
By: Steve Benen, The Maddow Blog, July 17, 2013
“The Big Shrug”: A Combination Of Complacency And Fatalism By Fiscal Policy Makers That Nothing Need Be Done Or Can Be Done
I’ve been in this economics business for a while. In fact, I’ve been in it so long I still remember what people considered normal in those long-ago days before the financial crisis. Normal, back then, meant an economy adding a million or more jobs each year, enough to keep up with the growth in the working-age population. Normal meant an unemployment rate not much above 5 percent, except for brief recessions. And while there was always some unemployment, normal meant very few people out of work for extended periods.
So how, in those long-ago days, would we have reacted to Friday’s news that the number of Americans with jobs is still down two million from six years ago, that 7.6 percent of the work force is unemployed (with many more underemployed or forced to take low-paying jobs), and that more than four million of the unemployed have been out of work for more than six months? Well, we know how most political insiders reacted: they called it a pretty good jobs report. In fact, some are even celebrating the report as “proof” that the budget sequester isn’t doing any harm.
In other words, our policy discourse is still a long way from where it ought to be.
For more than three years some of us have fought the policy elite’s damaging obsession with budget deficits, an obsession that led governments to cut investment when they should have been raising it, to destroy jobs when job creation should have been their priority. That fight seems largely won — in fact, I don’t think I’ve ever seen anything quite like the sudden intellectual collapse of austerity economics as a policy doctrine.
But while insiders no longer seem determined to worry about the wrong things, that’s not enough; they also need to start worrying about the right things — namely, the plight of the jobless and the immense continuing waste from a depressed economy. And that’s not happening. Instead, policy makers both here and in Europe seem gripped by a combination of complacency and fatalism, a sense that nothing need be done and nothing can be done. Call it the big shrug.
Even the people I consider the good guys, policy makers who have in the past shown real concern over our economic weakness, aren’t showing much sense of urgency these days. For example, last fall some of us were greatly encouraged by the Federal Reserve’s announcement that it was instituting new measures to bolster the economy. Policy specifics aside, the Fed seemed to be signaling its willingness to do whatever it took to get unemployment down. Lately, however, what one mostly hears from the Fed is talk of “tapering,” of letting up on its efforts, even though inflation is below target, the employment situation is still terrible and the pace of improvement is glacial at best.
And Fed officials are, as I said, the good guys. Sometimes it seems as if nobody in Washington outside the Fed even considers high unemployment a problem.
Why isn’t reducing unemployment a major policy priority? One answer may be that inertia is a powerful force, and it’s hard to get policy changes absent the threat of disaster. As long as we’re adding jobs, not losing them, and unemployment is basically stable or falling, not rising, policy makers don’t feel any urgent need to act.
Another answer is that the unemployed don’t have much of a political voice. Profits are sky-high, stocks are up, so things are O.K. for the people who matter, right?
A third answer is that while we aren’t hearing so much these days from the self-styled deficit hawks, the monetary hawks — economists, politicians and officials who keep warning that low interest rates will have dire consequences — have, if anything, gotten even more vociferous. It doesn’t seem to matter that the monetary hawks, like the fiscal hawks, have an impressive record of being wrong about everything (where’s that runaway inflation they promised?). They just keep coming back; the arguments change (now they’re warning about asset bubbles), but the policy demand — tighter money and higher interest rates — is always the same. And it’s hard to escape the sense that the Fed is being intimidated into inaction.
The tragedy is that it’s all unnecessary. Yes, you hear talk about a “new normal” of much higher unemployment, but all the reasons given for this alleged new normal, such as the supposed mismatch between workers’ skills and the demands of the modern economy, fall apart when subjected to careful scrutiny. If Washington would reverse its destructive budget cuts, if the Fed would show the “Rooseveltian resolve” that Ben Bernanke demanded of Japanese officials back when he was an independent economist, we would quickly discover that there’s nothing normal or necessary about mass long-term unemployment.
So here’s my message to policy makers: Where we are is not O.K. Stop shrugging, and do your jobs.
By: Paul Krugman, Op-Ed Columnist, The New York Times, June 9, 2013
“This Is Not 2009”: Democrats Have No Reason To Prematurely Throw Up Their Hands About 2014 Midterm Elections
With the scent of scandal encircling the White House, some Republicans are already licking their chops over the 2014 midterm elections, while some Democrats are pre-emptively licking their wounds.
Not so fast, folks. Retract those tongues.
While it is impossible to predict what might drive voter attitudes in an election 18 months away, there are quite a few signs that 2014 will be nothing like 2010, which produced tremendous success for Republicans.
First, the electorate is less conservative.
In May 2009, the Tea Party had just begun to flex its muscle and feel its power on a national level. Now, the movement has lost momentum.
An April 2012 Associated Press report included a finding from Theda Skocpol, a Harvard professor, that the number of Tea Party groups had fallen from about 1,000 to about 600. And a Washington Post/ABC News poll released this week found that the portion of people saying they strongly support the Tea Party, just 10 percent, was the lowest they had recorded since 2011.
Furthermore, according to a Gallup poll released Friday, the shares of Americans describing themselves as economic conservatives and social conservatives are down by more than a tenth since 2009, after having risen sharply following Barack Obama’s election a year earlier.
The portion of Republicans who said their position on economic issues was conservative — the Republican Trojan Horse for a retrograde social agenda — has seen little movement since 2009, dropping just five percentage points, from 75 percent to 70 percent.
(On the other hand, the share of Democrats who describe their positions on social issues as liberal has increased, from 45 percent to 50 percent.)
Speaking of economic issues, the economy is experiencing a resurgence, at least in some quarters.
In May 2009, the United States economy was nearing the end of the Great Recession. The unemployment rate had risen to 9.4 percent from 5.5 percent the previous year. People were losing their homes to foreclosures in record numbers. The Dow Jones industrial average had fallen to about 8,500 from more than 13,000 the previous May. And the deficit tripled from the 2008 fiscal year to the 2009 fiscal year, according to the nonpartisan Congressional Budget Office.
This had Americans rightfully worried and near-panicked about their economic prospects.
Now the economic picture couldn’t be more different.
The unemployment rate has dropped to 7.5 percent. The Dow is above 15,000 and continuing to set records. The housing sector is rebounding — “Sales of previously owned homes reached the highest level in more than three years, with the share of foreclosure purchases shrinking, as the housing market continued its rebound last month,” according to a report Thursday in The Wall Street Journal.
And the deficit is shrinking faster than expected, according to a report released last week by the budget office. The report found that if current laws are unchanged, “Relative to the size of the economy, the deficit this year — at 4.0 percent of gross domestic product (G.D.P.) — will be less than half as large as the shortfall in 2009, which was 10.1 percent of G.D.P.”
This takes almost all of the air out of the Republicans’ economic argument.
Lastly, legislative unease has become about what Republicans haven’t done, rather than what Democrats have done.
By May of 2009, President Obama had already signed the huge — though many still believe not huge enough — stimulus package, Chrysler and General Motors were in need of a bailout and the ball was rolling on the president’s historic health care law.
Conservatives were railing against what they saw as an unprecedented, ominous and ultimately ruinous expansion of government, driven by the president and made possible by a Congress controlled by Democrats.
Now, the tables have turned. Two of the most glaring legislative failures this year have ostensibly been the work of obstinate Republicans: the failure to avoid the sequester and the failure to pass expanded gun background checks legislation. According to that recent Washington Post/ABC News poll, most Americans still disapprove of the sequester’s automatic spending cuts, and according to a Pew Research Center poll released Thursday, 81 percent of Americans still favor the passage of a bill expanding background checks.
The next hurdle will be immigration reform. But Republicans may find a way to derail that legislation, too.
The signs look positive for Democrats this spring. This is not to say that they should prematurely lift their glasses, only that they have no reason to prematurely throw up their hands.
By: Charles M. Blow, Op-Ed Columnist, The New York Times, May 24, 2013
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