Would Obama Get Rewarded For Deficit Reduction?
Paul Krugman posts this depressing but rather sobering observation:
But the political argument against focusing on the deficit is even stronger than he realizes — because there are very good odds that even if Obama exhibited iron fiscal discipline, voters wouldn’t notice. There’s a remarkable, depressing paper by Achen and Bartels that includes an analysis of voter views of the deficit in 1996 — by which time the huge deficit that Bill Clinton inherited had been drastically reduced. Here’s what voters thought they knew:
Yep: after one of the biggest moves toward budget balance in history, a majority of Republicans, and a plurality of all voters, believed that deficits had increased.
Perception and reality don’t always align in politics. There are people who would swear on a stack of Bibles that Reagan cut taxes and was fiscally responsible despite giving people the biggest tax increase in history. Republican branding of Democrats as “tax and spend” has obviously worked – just look at how suddenly the deficit is important again right when Obama got elected like it suddenly appeared on January 20, 2009. I guess it’s always going to be up to the Democratic party to clean up the messes left by the Republican party and not get any credit for doing it.
There is a big difference between what people say and what people actually do. Like I’ve said before, people in general are short-term concrete thinkers. It’s not that people are incapable of making long-term decisions, they are and many do. People know they need to spend less money and save more, but have trouble doing it. There’s always a need – Christmas, birthday, repairs to the car. Planning for the long term is difficult and that’s why most people don’t do it.
I think Democrats should address the budget deficit – eventually. It’s more important to get the economy working again, not just for huge megabanks but also for middle class people. Right now I feel that politicians are using deficits as an excuse to do nothing and to try to force Democrats not to live up to the promises of change that they made. I hope Democrats realize that their path to victory lies in putting successful programs in place and not slashing aid to people that need it.
Tags: Deficit, President Clinton
Great points. Reading this, it is no wonder that the media covers politics as one big soap opera – rather that an a kind of unfolding court case in which evidence is introduced and the relative validity of various arguments are debated.
It is all showbiz. The good news is that I think this administration gets it.
Amazing that Presidents Reagan, Bush 1 and Bush lite all raised the deficit and the size of government and Bill Clinton lowered the deficit and the size of government. Most of what people think they know comes down to their party affiliation, not facts. Republicans automatically think republican leaders lower spending and the size of government. They don’t. The last three republican presidents all left huge deficits for the democrats to clean up.
On another note, while most attention is focused on HCR, the Obama administration has been quite busy, signing into law hate crimes legislation (blocked by republicans for 11 years), making it easier for women to sue for equal pay (blocked by republicans for a decade), set aside land in the West from development (overturns Bush midnight regulations), gave the government the power to regulate tobacco and raise tobacco taxes to expand health insurance for children (Bush vetoed twice). Congress and the White House, in the new defense-policy bill, also killed weapons programs that have survived earlier attempts at termination, including the F-22 fighter jet, the VH-71 presidential helicopter and the Army’s Future Combat System.
Worse, the SOB Reagan cut taxes for the rich, and then when the budget ran short, signed the first-ever taxes on Social Security and unemployment benefits – the poorest of the poor.
When there is a Republican president, everything is Congress’s fault. They have FOX, and a network of wingnut columnists and bloggers to make sure we understand this.
They had a little tougher time explaining this theory when they controlled Congress and the White House under Bush. Fortunately for the GOP, Dems won back slim majorities in Congress in 2006 so the GOP is still able to blame Congress with a straight face.
Easy ways to reduce the deficit and the debt:
* Let the BushCo tax cuts expire
* Get people back to work
This is also one more piece of evidence that Dem leadership badly needs to get its messaging in order. President Obama’s Get A Mop theme would be a great place to start. As would an effort to make sure that they are talking about what they are paying for (health care) and what they are not (wars). And repubs are voting YES on all of the stuff that isn’t paid for.
From 2000-2006 with a republican president and a republican congress, they republicans went thru Clinton’s $4 trillion surplus plus another $9.3 trillion. Man, do those guys know how to spend money on pork and earmarks or what?
* Let the BushCo tax cuts expire
Unfortunately Obama promised to leave the biggest Bush tax cuts for the rich mostly undisturbed:
Sounds like a hefty increase, until you remember that before Bush, dividends were taxed as regular income with a top marginal rate of 39%.
The Bush dividend cut was especially pernicious since it fueled most of the short-term thinking on Wall Street.
By the way, that Obama plan was quoted from the WSJ in 2008.
Rewarded for cutting the deficit? You mean after he tripled it?
We will have to claw back the money from the people who benefited from the distortions of the Bush economy.
The Bush dividend cut was especially pernicious since it fueled most of the short-term thinking on Wall Street.
EXACTLY.
One problem with Enron Paul Krugman’s premise is that most people don’t know the difference between “deficit” and “National Debt”.
“Bill Clinton lowered the deficit and the size of government. Most of what people think they know comes down to their party affiliation, not facts. ”
sentence 2 is proved in sentence one. The deficit shrank to zero and then the budget went into surplus. The National Debt did not shrink as the surplus did not exceed the interest load on the debt. And the Government grew each year by an amount greater than inflation + population growth. The total Fed Empolyee head count did go down, through shrinking the military and greater use of outsourcing.
“The Bush dividend cut was especially pernicious since it fueled most of the short-term thinking on Wall Street.”
except that the lower capital gaines rate only aplies to Long Term Gains, ie: investments held for more than a year.
Liz I was talking about dividends, which do not need to be held in order to receive that enormous tax break. Do try to keep up.
But 15% capital gains doesn’t help corporations think long-term either; one year is not that long to kite your company along until you can cash out.
RICO here hasn’t got any facts again (which puts him in the company of Delusional David) but he would be quite wrong about debt reduction under Clinton.
The National Debt did shrink under Clinton and rose again after the BushCo tax cuts, the wars he didn’t pay for and Medicare Part D.
It is well past time that you people come to terms with the fact that the deficits and a decent part of the current debt being financed is due to structural deficits created by BushCo and cheered on by you morans as he was breaking the economy.
Anon, you are half right, Focus on short term results is a problem in corporate america, but the tax rate in capital gains is not a cause.
also, only libs are mind readers so for the rest of us, when you mean dividends you need to type d-i-v-d-e-n-d-s.
Why would I misspell dividends and stick in a bunch of hyphens?
Lizard you are a d-o-p-e.
I knew I’d get a laugh if I followed cassy’s link.
I’d try to explain the graph to you, but it requires math and that would send you into screams of “talking points”.
Translation: RICO has spent all day looking for something to debunk this and can’t.
So he is here making pretend that a whole bunch of people whose livelihoods depend upon math won’t notice that he can’t present any alternate data.
For the benefit of the educable, I will try.
The graph at the link above shows the ratio of National Debt to GDP.
The slope of the graph turns negative durring the Clinton administration. It does this because the denominator grew faster than the numerator. IE GDP grew faster (remember the tech buble) than national debt.
what it does not show is the dollar value of the national debt.
Decade over decade, the national debt has increased each decade since 1930.
There is some debate as to whether the total dollar debt actually decline in one year, 1998.
And the ratio is a routine expression of he debt capacity of this economy. By the same token, what you see in the BushCo numbers is proof positive that tax cuts do not pay for themselves. But I digress — the public debt decreased under the last 4 years of the Clinton presidency. Alan Greenspan started buying back 30 year bonds (expensive borrowing) at a pretty astounding rate — and stopped issuing them altogether (first year of BushCo)since surpluses were still projected and the interest rates were low.
The public debt plus Social Security obligations (since SS monies go right to the General Fund)went up during the last Clinton term because SS was bringing in more money since the economy was doing so well. Efforts to separate out the SS funds and keep them separate from the General Fund (remember the lockbox?) were killed by Congressional Republicans who didn’t want to face the new accounting.