Spending Binge First, Diet Later
With the "stimulus" bill, our elected idiots have just committed to, in California, for example, we're going buy antique street lamps and new kitchens for a public housing complex...yet, next we're going to worry about the deficit, Obama says. Right. Jonathan Weisman writes for the WSJ:
With a $787 billion stimulus package in hand, President Barack Obama will pivot quickly to address a budget deficit that could now approach $2 trillion this year.He has scheduled a "fiscal-responsibility summit" on Feb. 23 and will unveil a budget blueprint three days later, crafted to put pressure on politicians to address the country's surging long-term debt crisis.
Speaking Friday to business leaders at the White House, the president defended the surge of spending in the stimulus plan, but he made sure to add: "It's important for us to think in the midterm and long term. And over that midterm and long term, we're going to have to have fiscal discipline. We are not going to be able to perpetually finance the levels of debt that the federal government is currently carrying."
Along those lines, White House budget director Peter R. Orszag has committed to instituting tougher budget-discipline rules -- once the economy turns around. Those include a mandate that any "nonemergency" spending increases be offset by equal spending cuts or tax increases.
Officials say the budget blueprint to be released this month will also attempt to make public the full extent of the dire fiscal situation, by not repeating some of the accounting used in crafting President George W. Bush's budgets. Recent budget blueprints excluded from deficit projections the long-term costs of wars in Iraq and Afghanistan. Those budgets also didn't include the cost of preventing the alternative minimum tax -- instituted in 1969 to ensure the rich didn't escape taxation -- from hitting the middle class.
Officials are examining whether to include those costs. The budget will project out 10 years, not the five-year forecast instituted by Mr. Bush. And with the stimulus cost, the fiscal 2009 deficit in the document is likely to exceed the $1.2 trillion forecast by the Congressional Budget Office last month.
Obama aides say they aren't looking for quick action, but a start to the conversation. "We're going to bring some things to the table, but we're going to listen to everybody else," said Christina Romer, chairman of the White House Council of Economic Advisers, in an interview Friday. "It's a giant issue, and it's not one we can solve unilaterally."
George Bush, who was supposed to be for small government, spent like a Beverly Hills brat with an unlimited platinum card. When will we learn?
Oh, and P.S. Mr. Obama, raising taxes on the wealthy is not "slashing the deficit."
The government is necessary.
The government needs to be solvent, as much as possible.
How would you propose it be paid for? We the wealthy hurting before the Bush tax deferments? Was innovation stifled in the 1990's due to higher tax rates?
The consolidation of wealth is the greatest threat to Democracy. I would argue opposite of what you wrote "raising taxes on the wealthy is not slashing the deficit". Deferring taxes indefinitely is not reducing taxes. Now would be a time most all America would rally around a balanced budget amendment, exceptin the politicians, of course.
Eric at February 22, 2009 8:34 AM
I can quote so many lines and works of Ayn Rand right now that I find this very exercise futile. Can I simply say that Populism was never a good political ideology?
Toubrouk at February 22, 2009 8:42 AM
Amy Alkon
https://www.advicegoddess.com/archives/2009/02/spending-binge.html#comment-1635489">comment from EricThe government is necessary, but not to the degree that we have it. For example, they just passed a law mandating testing of all children's books and toys for lead -- even those that are made of nothing that could remotely contain lead. My neighbor, a stay-at-home mom with a toy company (board games on organic cotton silkscreened with the same stuff they put on t-shirts) has been shut down by this law. She has a bunch of games that cannot be sold because she can't pay the $4K in testing for each. Meanwhile, her husband lost one of the two jobs he works, and that's 2/3 of their monthly income gone. Great time to come up with an idiotic law, huh?
P.S. She mentioned friends of hers who make toys out of wool -- wool that comes from sheep, not from lead mines -- who are in the same position. She talked about how ludicrous this is. These are Waldorf school parents, who buy the wool from hippies raising sheep in the mountain snow, and who dye the wool with vegetable dye, probably made from eggplant skin and the like. And they, too, can't sell their stuff.
Amy Alkon
at February 22, 2009 8:48 AM
When you pay your taxes, you are paying your government to do it's job, just the same as you pay your electrician to do his job and fix your wiring. The government's job description is given in the Constitution, which precisely lays out it's duties & responsibilities. Just one example: education is NOT a responsibility of the federal government. Yet Porkulus includes over $ 100 billion in handouts to schools & universities. Someone should go line by line through Porkulus and calculate just how little of that $ 787 billion is to be spent on things that are the actual responsibility of the federal government.
Eric, a balanced budget will never be possible, no matter how much you tax the rich, until the federal government limits itself to its duties as laid out in the Constitution. Constitutional discipline is even more important than fiscal discipline, and both are woefully lacking.
Amy, regarding your friend and her board games: it's my understanding that this insane law applies to products sold in America. There's a whole world of potential customers out there. I found this out for myself when I opened a used, rare & out-of-print bookshop several years ago, selling mostly through Abebooks.com. Within 2 years, I had sold books to customers in over 40 countries, on every continent except Antarctica. Can she think of ways to design & market her games to make them appealing to Australians, Brazilians, whoever? Get in touch with toy & gamemakers associations in foreign countries?
Unless the cretins in Congress have made it illegal to ship & sell untested products overseas, then there ought to be some opportunities for her.
Martin at February 22, 2009 10:22 AM
Amy Alkon
https://www.advicegoddess.com/archives/2009/02/spending-binge.html#comment-1635503">comment from MartinAmy, regarding your friend and her board games: it's my understanding that this insane law applies to products sold in America. There's a whole world of potential customers out there.
I actually hooked her up with a friend in Europe who hooked her up with the president of his company. They liked her product, but determined that it would be too costly for them to manufacture. In selling in Canada, there would be shipping costs.
The thing is, she shouldn't be hobbled from selling these games here. It's especially galling because of the kind of person she is -- she is exceptionally concerned with safety for kids, and with creating games that are intellectually nourishing for them. The toys her kids play with reflect that. Last time I went to her house, her kids weren't watching TV (not that they ever do, except for movies and Jeopardy, with their dad); the 4-year-old and the 7-year-old were playing together, building a city out of cardboard bricks, populated by little figures from the little boy's Lego set. They told me I was the redheaded one, which I found exceptionally cute, and showed me the house they'd built for me.
Amy Alkon
at February 22, 2009 10:36 AM
>> Eric, a balanced budget will never be possible, no matter how much you tax the rich, until the federal government limits itself to its duties as laid out in the Constitution.
Stuff and nonsense. Clinton had the budget balanced at the end of his term, with a sizeable surplus. Had Bush imposed a war-tax, we would have paid for Iraq, and probably been outta there after 6 months.
>> Constitutional discipline is even more important than fiscal discipline, and both are woefully lacking.
Agreed. Look, I am no supporter of big government. I like a more "states-responsibility" approach because it imposes competitive discipline into the government model. My point is that we have all been living off a credit card for far too long, and we are now unhappy to be living within the consequences.
Vote for Pedro.
Eric at February 22, 2009 10:57 AM
Maybe people would understand the "stimulus" plan better if it were explained at a more personal level. The government is spending so that we don't have to! They are using our savings so that we don't have to. Are people so blind that they believe giving money to states, federal agencies, and government contractors is going to make us all rich?
The Department of GDP
The stimulus plan from the bottom up.
You can spend, or government will do it for you.
Andrew_M_Garland at February 22, 2009 11:36 AM
Eric:
A lie.
He had a "projected" surplus that would show up in ten years if GDP growth continued at its fraudulent 1998-1999 rates.
We found out in 2001 that the bulk of the economic "growth" from the second Clinton term was fraudulent. That's why we call it the "dot bomb". Can't blame Clinton for it, he didn't cause it. But he rode that bubble for all it was worth. That crash was already underway when the towers fell.
Every budget projection based upon the NASDAQ staying over 5,000 was a fantasy. The NASDAQ was never worth more than 2,000 at that time, and the rest of it was fraud. All of it. And only thy guys running Tyco and Enron went to prison for it, unless more prosecutions never made the news.
That's as may be, but why should I have my wealth confiscated at gunpoint to pay my neighbor's irresponsible mortgage?
brian at February 22, 2009 12:28 PM
>> They are using our savings...
Not quite accurate. They are borrowing using future tax receipts as collateral.
Eric at February 22, 2009 1:16 PM
Eric:
... a balanced budget will never be possible, no matter how much you tax the rich
California right now is demonstrating the fallacy of taxing the rich. The state income tax is so progressive that something like 144,000 households provide 50% of the state's take.
Narrowly tax bases are subject to wild swings. Bad idea.
Even worse, and this has happened already with federal income taxes, more and more people become, in effect, on the dole. That means we run the risk long associated with democracies: people voting themselves goodies others will pay for.
Clinton had the budget balanced at the end of his term, with a sizeable surplus.
I was wondering, since I have heard this repeated many times.
What relationship to that surplus did the dotcom bubble have?
As Brian has noted, Clinton cannot take the credit for that surplus, nor should Bush take the blame for it disappearing.
Hey Skipper at February 22, 2009 3:18 PM
>> As Brian has noted, Clinton cannot take the credit for that surplus, nor should Bush take the blame for it disappearing.
>> A lie.
Well, then it is the Federal Government's own historical tables that are lying.
http://www.gpoaccess.gov/USbudget/fy06/pdf/hist.pdf
page 26 of 322
Clinton came in to huge Reagan/Bush deficits, dropped the deficit each and every year (with prodding from Newt), and had surpluses in his second term. Bush instituted tax deferrals (I refuse to call them tax cuts, since he didn't decrease spending in tandem) that sent budget surpluses into deficits. Then 911 occurred and tax revenues shrank and spending ballooned (and has continued to balloon ever since).
>> What relationship to that surplus did the dotcom bubble have?
The funny thing is, the internet bubble popping actually increased tax revenues, temporarilly, since lots of people made lots of money even after selling their (insert your favorite internet stock here) stock, but the losers can only deduct $3,000 a year in capital losses!
>> That means we run the risk long associated with democracies: people voting themselves goodies others will pay for.
True. true.
Eric at February 22, 2009 4:08 PM
Can you give me a little finer granularity? I don't have time to shovel through 322 pages of dreck to figure it out.
brian at February 22, 2009 6:14 PM
I wrote:
Page 26.
If you are going to debate, there is truth in the details.
Eric at February 22, 2009 7:02 PM
Sorry, Missed that.
First off, that table says "off budget" makes up 160 billion of a 128 billion surplus for FY2001.
Off-budget means Social Security, for the most part.
Social Security is NOT part of the general fund. Counting it in the "surplus" is a lie.
I'll grant you the number for FY2000 being in surplus, but I do not know why, because at the time it was not so. I suspect that was an "adjustment" after the fact. But again, a good bit of the tax receipts of that year came from fraudulent enterprise, which should count as a net loss to the economy, although not to the government.
If you look at the same table for FY00 (change fy06 to fy00 in your link) the numbers are vastly different. And the number looks a lot like the "off budget" number reported in the later document.
As I said, the "surplus" was a lie. It was composed of money that the government had no business counting in the budget. Of course, using SS this way is part of the reason that it will be going bankrupt rather than paying out its obligations.
Of course, Bush's support for NCLB and Medicare Part D were horrendous wastes of taxpayer dollars. He cut taxes like a Republican, but he increased spending like a Democrat.
brian at February 22, 2009 8:29 PM
The funny thing is, the internet bubble popping actually increased tax revenues ...
Well, I know I paid for a lot of that "surplus" from cap gains as the bubble was expanding.
However -- and I could well be wrong here, so I'm not trying to score debating points -- I thought that if there had been no dot com bubble, there would also have been no surplus.
Hey Skipper at February 22, 2009 8:52 PM
Whatever the history, the critical point is where we are now: racking up deficits at an incredible rate. The rating agencies have already warned the government twice that US bonds could lose their current AAA rating as soon as 2012. That is not so very far away.
If this happens, the interest paid on the federal debt will go through to roof, making the deficits bigger, causing the bond rating to drop further. etc... Having the government essentially go bankrupt would be an effective - but extraordinarily unpleasant - way of balancing the budget.
bradley13 at February 22, 2009 11:56 PM
Having the government essentially go bankrupt would be an effective - but extraordinarily unpleasant - way of balancing the budget
Ever think thats what they are planning?
lujlp at February 23, 2009 9:17 AM
The downside to the USA going bankrupt is that it immediately pushes the value of the currency to zero.
And why is that a problem? The US dollar is the default reserve currency for just about every transaction in the world. The Euro is not in any position to become such, as the Eurozone is moribund. But if the US defaults, then we become, by default, a place where One Does Not Invest.
That would be catastrophic for the world economy. However it would be great for the power-seekers.
brian at February 23, 2009 11:18 AM
The USA going bankrupt wouldn't be all bad. For example, obesity would no longer be a problem. Traffic fatalities would plummet, and we wouldn't have to buy car seats for 7-year-olds. The War on Drugs would end. After a short spike from burning cities, overall CO2 emissions would decrease.
Always look on the bright side of life, you know.
Pseudonym at February 23, 2009 12:44 PM
That's the spirit!
(As only Roy batty could say...)
Eric at February 23, 2009 4:06 PM
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