THE PLANK MARCH 5, 2009
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Ramesh Ponnuru, responding to my budget post from last night, writes, "Chait may also be understating how much flim-flam is involved in Obama's deficit claims." On the contrary, I think he's underestimating how much flim-flam was involved in President Bush's budgets. Those were based on assumptions everybody knew were false -- that the military would spend no money in Iraq starting immediately even when the administration was committed to fighting indefinitely, that the Alternative Minimum Tax would be allowed to grow instead of held steady as it in fact was every year, that cuts in medicare reimbursement would go into effect rather than be suspended as they were routinely, and so on.
Obama banished these gimmicks, which has the effect of making the deficit appear much larger, because Obama uses a baseline of current policy rather than imaginary policy. Nonpartisan budget analyst Stan Collender rejoiced at the change. Ramesh cites James C. Capretta, a former Bush OMB official writing on the Corner, who calls it "a sophisticated campaign to dress up the massive budget deficits they plan to run as fiscal conservatism." He would know!
It seems to me that current policy is a better baseline than imaginary policy. By that standard, Obama reduces the budget deficit. Ramesh writes, "I don't see, though, how you can claim to be troubled by Bush's deficits and unconcerned by Obama's." I'm not! I conceded in my post that Obama would still leave it too high. But there's a big difference between a president who inherits a great situation and leaves it terrible, and one who inherits a terrible situation and makes it somewhat less-terrible. To simply bracket them both into the category of "presidents who ran deficits" ellides a crucial distinction.
--Jonathan Chait
10 comments
Sorry, but blaming he mess on Bush won't cut it. It's Obama's budget now. It's his economy. He's presented a plan that is based on absurd GDP growth projections and that refutes his own argument, made in his inaugural address, that we now have to make "hard choices" and let "die" government programs that "don't work."
Obama's not reprising FDR, he's doing another LBJ. He has to start making some hard choices if we're to avoid the stagflation that was caused in large measure by LBJ's guns-and-butter profligacy.
If you want to cut back the military by hundreds of billions, or raise taxes on the middle tax brackets, then say so. But please stop pretending that we can avoid broad tax increases and substantial spending cuts. This isn't change, and despite all the good will the public has for Obama, fewer and fewer people are believing him.
- teplukhin2you
March 5, 2009 at 9:10am
I have problems with the notion that national budgets can somehow be kept in indefinite deficit. Over the past few months, productivity has increased and so have savings. These are the results of collective individual decisions and are desirable outcomes. Now the government wants to reverse those trends by throwing money into the system, thereby encouraging the precise behavior that got us here in the first place.
If Obama had said that he would spend $1 trillion over the next 2-4 years to build a high speed train system and a smart national electric grid, I would have applauded him. More so, if he reversed the ban on offshore oil drilling. Allowing Nancy Pelosi to fashion the most promiscuous spending bill in our history - and calling it "stimulus" - deserves my disdain.
- r-ennis
March 5, 2009 at 9:57am
Not trying to make excuses for the failures of Bush but he did inherit a bursting tech market bubble.
- eharder2
March 5, 2009 at 10:26am
r-ennis,
Savings have risen at the very moment the deficit has exploded. Is that a coincidence? Or maybe it's exactly what I've been saying. Federal deficits are required to fund private savings.
- acria multa
March 5, 2009 at 11:10am
Eharder2: That is correct and given the bursting of the bubble and the effects of 9/11, the Clinton surplus would have been drained away. But Walker Bush did everything possible to enhance the deficit in the most dishonest ways, in the manner that Jonathan enumerates.
- liberal reformer
March 5, 2009 at 11:29am
If you define the deficit as what you claim it is, then Bush's deficits were smaller than Obama's will be. There is far less fantasy involved in Obama's budget and deficit figures. Sure, Obama owns the problem now but only because all ongoing problems are handed to the new POTUS along with the keys to the White House.
Let's hold the outrage over the stimulus spending. When you take the tax cuts out of the stimulus, there's about $400-500 B of spending (I don't remember the exact number). That money will be spent over about a two year period, front-loaded in the first year, but call it $250B per year. That's not so different from the average operational cost for the war in Iraq over the last 5 years, which I have to repeat again was a WAR CHOSEN BY BUSH, not forced by a real imminent threat to the US. Bush and the Republicans claimed that anyone opposed to pissing hundreds of billions of dollars down a hole in Iraq was unpatriotic (not to mention the thousands of American lives and tens to hundreds of thousand Iraqi lives lost, and refugees into the low millions). Any supporter of that war has no standing to make any claim about wasteful spending until we have paid off all the loans we took out to finance Bush's personal vendetta/fantasy/debacle.
But, oh heavans, what a colossal waste if Obama and the Democrats want to spend a similar amount of money on infrastructure and work in this country. They should do as the Repubs did and bury the money in the Iraqi desert, and then pay Halliburton to set it on fire and blow it up. No waste there.
- JEFF FREY
March 5, 2009 at 11:38am
Teplukhin2you: The budget and the deficit are Obama's now but Jonathan is entirely correct to score Walker Bush for his dishonesty and for ratcheting up the deficit.
- liberal reformer
March 5, 2009 at 11:58am
True, faire un oeuf.
- teplukhin2you
March 5, 2009 at 2:21pm
"Sorry, but blaming he mess on Bush won't cut it."
IOW, fire the new accountant because he inherited a crappy balance sheet from the accountant that just retired. Brilliant!
- GSpinks
March 5, 2009 at 2:44pm
Only if the new accountant makes things worse, which it looks like he might.
- butchie b
March 5, 2009 at 4:28pm