Scott Galupo

Blame the Recession for the Deficit, Not Democrats

August 23, 2010 RSS Feed Print

At this point, if you’re a Democrat, you might as well throw up your hands, weep, and pray for a better 2012. The “spending spree” charge has stuck to you, and there’s simply nothing you’re going to be able to do about it between now and November.

Glenn Reynolds highlights some data from a blogger who shoots down the notion that the Iraq War contributed appreciably to our deficit problem—which is fair enough.

Then there’s this:

Do you see alarming deficits or trends from 2003 through 2007 in the above chart? No. In fact, the trend through 2007 is shrinking deficits. What you see is a significant upward tick in 2008, and then an explosion in 2009. Now, what might have happened between 2007 and 2008, and then 2009? Democrats taking over both houses of Congress, and then the presidency, was what happened. Republicans wrote the budgets for the fiscal years through 2007. Congressional Democrats wrote the budgets for FY 2008 and on.

This is just an uncommonly idiotic partisan reading of the relevant data. “What might have happened between 2007 and 2008, and then 2009”? Oh, I don’t know, maybe the most severe economic crisis in a half-century? Congressional Democrats just decided to write budgets with Brobdingnagian deficits because they felt like it?

Good grief.

Listen: I think the Democratic Party is ripe for attacks over its utter lack of courage to do anything about entitlements and long-term debt. Yes, the healthcare law, as written, is paid for. But if it fails to rein in exploding healthcare costs, as I believe it will, then it will prove self-defeating on its own terms: that is, it will significantly expand access to care that grows ever-more expensive.

We’re still on the same disastrous course—a country living wildly beyond its means, consuming more than it produces—and the Obama-Reid-Pelosi triumvirate has shown no stomach for imposing the fiscal drawdown that will one day arrive, one way or another.

[See which industries donated the most to Pelosi's campaign.]

But the idea that we started down this course in November 2006 ... it takes a crack-like partisan narcotic to convince oneself of that.

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Tags:: Harry Reid,; 2010 election,; deficit and national debt,; Barack Obama,; Nancy Pelosi,; healthcare reform,; Congress,; economy,; recession,; Iraq war (2003-2011),; healthcare,; debt

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First of all, it was the Bush Administration who declined to prosecute the New Black Panther Party for their behavior at a Philidelphia polling place in the summer of 2008 during the primaries. No one from the all Black voting district cared and just walked right by the NBP militants. Two years later the issue is being used by the far right to play the race card over legal action that Bush himself refused to take. The failure to prosecute the NBP doesn't show government failure; it shows the failure of GOP politics and their pathetic wedge issues.
Social Security is no a ponzi scheme; it is the most successful government program in our history. It keeps over 20 million Americans out of poverty every year and is financially solvent. The fund currently has about $3 trillion in financial assets and receives interest on its non-tradeable bonds annually from the federal government. SS has been more successful than a lot of defined contribution plans that have lost value due to stock market declines. The main problem with the program's financial future is that as wealth and income concentrate at the top due to Republican policies increasing amounts of taxable income also concentrates above the current SS cap. In 1983, when Reagan stepped in to save the program, only ten percent of national income was above the SS cap; today it is over 16% and rising. The solution is to retrieve some of that money with a special tax by creating a donut hole somewhere between the cap and where the new tax would kick in.
You complain about criminals running the streets but we have more people locked up today than ever before. Maybe that's because as economic opportunity declines and the middle class disappears the poor find illegal means of survival. Street criminals, by the way, have the same values as the very rich; take what you want no matter who you hurt. In the case of the rich, politicians fix the laws to allow this to become the system's modus operandi. Blue collar criminals go to prison.
The insurmountable public and private debt you mention is the consequence of thirty years of declining real middle class incomes and the gutting of our once progressive tax system. Borrowing has replaced both taxes and wages and has enriched the banks in the process. It also created financial instability.
We have had jobless recoveries since 1991 and will continue to have them. One reason is that;
"...firms probably have the capacity to expand production without hiring new workers (or increasing worker productivity). All these firms have to do is give more hours to existing workers...not much help on the employment front."
Small businesses, lacking access to credit, don't hire. New technology raises the employment threshold increasing labor productivity allowing more growth with fewer workers. What really prolongs the recession is the lack of effective demand.
http://macroblog.typepad.com/macroblog/2009/10/the-growing-case-for-a-jobless-recovery.html

steve of IL 6:56PM August 25, 2010

The state of Oregon has limited resources and thus won't fund a drug treatment that doesn't meet the "five-year, 5 percent rule" or a 5 percent survival rate after five years. Oregon's Death with Dignity Law is controversial but not wrong. They can't afford to pay upwards of $4,000/month to keep someone alive less than a year. It makes no sense. Oregon doesn't force or even encourage people to take a lethal medication to end their lives if they are hopelessly terminally ill. They do make the option available and will fund it. I see nothing wrong with this.
Republicans and tea baggers bray on like so many donkeys about life being sacred yet they are not willing to put up the public funding to help "save" these hopelessly terminally ill people. Their hypocracy goes even further when you consider that over 20,000 people a year die for lack of access to basic health care which could easily have saved them. The GOP isn't about saving lives. They want to use the Oregon law as a wedge issue to oppose the very health care reform that will save thousands of lives a year for years on into the future.

steve of IL 6:10PM August 25, 2010

You wrote: "We are now in a liquidity trap, as Keynes called it because no one wants to borrow and invest despite low real interest rates. Investors, fearing price deflation of real assets, flee to the safety of highly liquid assets like bonds (or simply hoard cash); hence the term liquidity trap. Low effective consumer demand is constraining further borrowing and investment spending by businesses. Only a reflation of the economy and more government spending can bring about more spending by consumers leading to job creation, greater output and employment."
Fear and Faith share some common elements. Both are a firm believe in something that has not yet happened. The difference is Fear is a belief in something negative. Faith, on the other hand, is a believe in something positive. You cannot have Faith with Fear nor Fear with Faith.
You, a handful of hard-eyed progressives, and Obama are about the only ones left in the country that still wave the flag for MORE "Government Spending."
Your solution is essentially--"Have faith in government." Tell me, Steve, what has the government done to instill belief? A serious question. Sure, we have roads, bridges, and a military. But everyday I'm reminded about how little "government" cares. Illegal aliens waltz across the boarder daily. Convicts are slapped on the wrist giving victims little consolation. I see a court system thumbing its nose at a majority of voters in California. I see an amoral government encouraging the moral decline and depravity in America. I see a government that views thugs who intimidate voters with a jaudice eye. I see a governor of a major state attempting to sell a senate seat, I see a ponzi scheme called Social Security which gen Xers should call Social Insecurity. I see Senators who think they are above the law. I see a president taking his 6th vacation in as many months when millions of Americans likely can't afford to drive across town. I see massive government waste in Medicaid, Welfare, graft, and corruption. I see that nepotism is alive an well in government. I see an insurmountable debt saddle on the backs of my great, great grandchildren. I see a government that panders to special interest/fringe groups, etc.
The solution my friend is not "Government Spending." The solution is restore hope to America by eradicating fear in America. Eliminate taxes, cut spending, pay down the deficits, get hard on criminals, remove judicial activism, elect those who will serve the will of its people and not special interests, secure the boarders, foster the entrepreneurial spirit, control the balance of trade, place higher expectation on people by giving them a hand up rather than a hand-out, foster a culture of independence rather than dependece, etc.
The obstacle in America's recovery is its government, which, incidently, is contrary to progressive mantra. The solution, then, is we need to rid the nation of progressives and their stupid ideas.

david of ID 5:08AM August 25, 2010

Blame the Recession for the Deficit, Not Democrats

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