What Spending? [John Ennis]

President Obama has released his first budget and the Times editorial board is thrilled, for it "recognizes what most of Washington has been too scared or ideologically blind to admit: to recover from George W. Bush’s reckless economic policies, taxes must go up."

Why were Bush's economic policies reckless? The deficit was too high, as the Times explains:

Mr. Obama’s blueprint, released on Thursday, commits to cutting by more than two-thirds, by 2013, the $1.75 trillion budget deficit that Mr. Bush dumped on the nation.

A credible pledge to reduce the deficit is imperative. Without it, foreign lenders — who financed the Bush-era deficits and are now paying for the stimulus and bailouts — could lose faith in the nation’s ability or willingness to repay in anything other than rapidly depreciating dollars. That would send interest rates up and the economy down, the worst-case scenario. Controlling the deficit is also necessary to sustain a recovery — when it comes.

Bush didn't dump all $1.75 trillion of the current deficit on the nation. The recently signed stimulus package will contribute a significant chunk to that figure. But, I won't spend too long quibbling over who is responsible for hundreds of billions in deficit spending. Let's assume Obama meets his startling unambitious goal of cutting the deficit by two thirds in 2013. That would still leave a shortfall greater than all of the Bush years except for 2009. So, Obama's goal would be Bush's second worst year.

How can this be if deficit reduction is so important and Obama has pledged to raise taxes? The answer is because Obama's proposed spending increases are enormous. Deficits are a two-figured equation: revenues minus expenses. If you only look at one half, as the Times has, you miss the bigger picture. The Times praises Obama for raising revenues, and ignores the explosion in spending.

This year's deficit was an aberration due to the recession, the bank bailout, and the stimulus. Obama is turning the aberration into a permanent expansion of spending that the tax hikes won't even begin to cover. The Times is willfully ignoring this by focusing on this year's deficit and not what the norm was earlier in the Bush years (average deficits of $250 billion).

When you get into this sort of doublespeak, you have a tendency to outright contradict yourself, as the Times does:

The collapse of the Bush-era economy is ample and awful evidence of the folly of unconstrained debt-fueled growth. The Obama administration has acknowledged the need for deficit spending to stimulate the economy but has vowed that unpaid-for government will not become the norm. Judging from the blueprint, Mr. Obama is not just talking the talk.

Obama's blueprint ends in 2019 and pledges increasing deficits starting in 2014. There is not a single projected surplus. If that's not "unpaid-for government" becoming the norm, what is?

Furthermore, the ten year projections are exceedingly optimistic. They assume economic recovery in 2010 and growth significantly higher than the Bush years despite a carbon cap being imposed, which is itself a hidden tax increase.  

Back to the Times on income taxes:

The proposed increases signal a serious attempt to tame deficits in a way that restores fairness to a tax code that has for too long been tilted in favor of the wealthiest Americans, resulting in budget shortfalls that disproportionately burden everyone else.

Forty percent of Americans don't pay any income taxes. Would any rational person describe our tax code as "tilted in favor of the wealthiest"? 

The Times concludes:

No one who really believes in fiscal responsibility could object to the proposed tax increases. And yet, each one presages a political fight. At issue is not only the tax burden on the wealthiest Americans or election-year debates, but the real-life difficulty of weaning people hooked on unsustainable debt — whether it is unpaid-for tax breaks or over-leveraged buyouts or junk mortgages. It’s a challenge avoided for too long.

If the Times truly believes what it wrote in this paragraph, why won't it look at the spending increases being proposed? The answer, of course, is that the Times does not believe what it wrote. Neither reducing the deficit nor exercising fiscal responsibility are its true priorities.

Comments

[BlogChecker]

You say 40% of Americans don't pay federal income taxes, and then provide a link that contradicts that statement. 40 million Americans don't. But that's less than 40% given that there are 300 million Americans. It's not even 40% of tax returns. You should appropriately represent the information in your own link.

That mis-statement is what brought me to the comment, but while I am here I will answer rhetorical question that follows: Would any rational person describe our tax code as "tilted in favor of the wealthiest"?

The answer is yes. Taxes come in many forms, not just income taxes. As a whole, taxes in the US are regressive. One has to take into account sales taxes, payroll taxes, vehicle taxes, energy taxes, property taxes, etc. Many of these have either codified or natural upper limits, which means that working class and middle class taxpayers spend a much higher percentage of their gross income on taxes.

I am sorry if that's irrational. But please don't misrepresent your numbers.

Also, in answer to your zeitgeist update, after eight years of Bush-Cheney, this is old news.

[Lucille]

Ah, thank you BlogChecker, for noticing the obvious. John Ennis loves to create "facts" and doesn't actually read the info on the links he provides. No surprise for those of us who know and "love" him.

I'd like to just take two of his statements and give my quick retorts:
"This year's deficit was an aberration due to the recession, the bank bailout, and the stimulus."
Really? The enormous Iraq War spending had nothing to do with this? Nor did the enormous tax cuts on the wealthy? (that were supposed to HELP the economy).

Tell us: what year of the Bush era didn't have a deficit? And how much did he put us into the red, keeping in mind that he started with a surplus?

"...Obama's blueprint ends in 2019..."

Yes, this is a 10 year forecast, which I'm sure confused you because George Bush never went beyond 5 years. . . yet, I don't remember one complaint from you on that front. Or on the fact that he NEVER included the cost of the Iraq War in his budgets. Maybe if he had (and looked beyond 5 years) . . . oh, but why wallow in the past?

I seem to recall George Bush and his minions blaming Bill Clinton for virtually everything that went wrong during his administration (even Katrina - I kid you not). Obama is doing what he promised to do, what the American people elected him to do.

I guess some people actually keep their promises.

[John Ennis]

Lucille,

Bush's deficits before this year ranged between $150-450 billion. For most of those years, we were fighting the Iraq War.

This year's deficit is $1.8 trillion. It is not because Iraq war spending has all of a sudden shot up. We spend about $150 billion a year in Iraq and Afganistan. They have nothing to do with the huge expansion in this year's deficit.

My complaint about Obama's 10 year projection is not that it's 10 years, but that deficits are not only included for all ten years - but they never come below $500 billion.

[John Ennis]

BlogChecker,

Return to the link and read again. This is what it says in the 2nd paragraph:

"During 2006, Tax Foundation economists estimate that roughly 43.4 million tax returns, representing 91 million individuals, will face a zero or negative tax liability. That's out of a total of 136 million federal tax returns that will be filed. Adding to this figure the 15 million households and individuals who file no tax return at all, roughly 121 million Americans—or 41 percent of the U.S. population—will be completely outside the federal income tax system in 2006."

How did I misrepresent that link? What exactly should I be correcting, BlogChecker? Thrill me with your wisdom and insight.

I have half a mind to take your comment down, since it is you who is clearly WRONG. If you want to dispute the numbers at the link, that's one thing. But, I DID NOT MISREPRESENT WHAT WAS SAID AT THE LINK.

[BlogChecker]

You are correct. I guess I assumed when I looked at the charts in the link, that the page wasn't counting children. If you count children, as the link does, then it does get to 40 percent. Thanks for the all caps, by the way, it clarified your irritation.

[John Ennis]

BlogChecker,

Thanks for your reply.
We all make mistakes. I'll go easier on the caps next time. Feel free to post in the future.