There are two basic truths about the enormous deficits that the federal government will run in the coming years.
The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.
The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II. . . .
. . . You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama. . . .
New York Times, America’s Sea of Red Ink Was Years in the Making, 10 June 2009
The nonpartisan Congressional Budget Office (CBO) says that President Obama’s budget and deficit projections are too low. The president’s budget will incur $9.3 trillion in federal deficits between 2010 and 2019 --$2.3 trillion higher than Obama had originally claimed. . . .
In fact, the budget office found that Obama’s projected deficits are more than double what they would be if the president had merely stuck with the current spending and taxation proposals left by the Bush administration.
. . . Obama’s record deficits mean a record national debt – one that totals $17 trillion, up from the current $6.7 trillion.
By 2019, the CBO said, a whopping 82 percent of the nation’s gross domestic product (GDP) will go to pay down the national debt. This means that in future years, the government could owe its creditors more than the goods and services that the entire economy can produce.
CNS News, Obama’s Deficit Projections Off by $2.3 Trillion, Congressional Budget Office Says, 24 March 2009
There is no way of getting around the fact that Bush was fiscally irresponsible. Indeed, as I was fond of saying on this blog, he and Republican Congress spent like drunken Democrats. But Obama and the Democratic left are in a class unto themselves, redefining the word "profligate."
So Bush leaves office with about a $500 billion defecit. Obama comes in, borrows and spends the deficit up by orders of magnitude, yet the NYT would have us believe the deficit Obama is running is mostly Bush's fault.
And indeed, It would seem impossible to reconcile the seperate conclusions quoted above of the non-partisan CBO, analyzing their own data, and the ulta-partisan NYT analysis of the exact same data. The NYT is asking us to take a leap out of the realm of rationality and into the world of fantasy, where Democrats bear no responsiblity for their actions and any ill effects are the work of evil Republicans. Ridiculous.
Although the NYT never shows their math, two things are obvious from the NYT individual conclusions. One, their analysis is static - by that, I mean the type of analysis where the NYT accounts for a 10% tax increase as equaling a 10% increase in actual revenues. I don't think they even teach that simplistic notion in Econ 101 anymore.
Two, the NYT's ignores the impact of Obama's policies on business and the economy. There is nothing that Obama has done that can be expected to stimulate growth in our economy. Instead, what we see are a bevy of policies that will, across the board, increase the costs of living and doing business in the U.S. For example, there is this gem from the NYT:
Some of [Obama's] proposals, like a plan to put a price on carbon emissions, don’t cost the government any money.
Wow. How many things are wrong with that statement. One, the NYT is doing an analysis that conflates our economy with the federal government. But our GDP does not come from government printing presses, it comes from private enterprise and private individuals creating the value which comprises the GDP. If the government money supply is in line with it, then we see a stable economy. Whether cap and trade is a direct expense of government is only a portion of the analysis. Whether cap and trade is a cost that detracts from GDP, thus indirectly effecting government revenues, is an equally necessary consideration.
Cap and trade will create a massive regressive tax on our economy. That will take money away from private enterprise and individuals, siphoning it to rent seekers such as Al Gore who produce nothing that adds value, and with a portion going back to the government. So all other things being equal, a tax of this magnitude will slow down if not smother growth, it will result in less avaialble capital across the board with which to invest and/or consume, and all of that means lower revenues flowing into government coffers.
Then there is this other gem from the NYT:
Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000.
Correct me if I am wrong, but hasn't Obama been promising to pay for all of his socialist goodies by not paying for a surge in Iraq extending out for a decade. I have no idea what assumptions the NYT adopted here vis a vis Iraq - again, they don't show their math - but I do know that Obama has been blowing smoke up our nethers for months with his claims about funding and the Iraq war. How that factors into the 'newmath' of the NYT is anyone's guess, but I'd eat my hat if the assumptions they use are even remotely realistic.
And the last bit there from the NYT is that maintaining the Bush tax cuts means Bush is responsible for x dollars that would otherwise be collected to reduce the deficit under higher taxes. That seems to be the part that all on the left just can't get through their class warfare muddled brains.
Tax policy is dynamic, not static. History tells us that keeping taxes low expands the economy at a quicker pace. Yes, we get a smaller percentage of the pie - and our class warriors don't get that warm comfy feeling as they go to sleep knowing that our government just stole 50% or so of the wealth from all the rich evil capitalists in our country. But the evil capitalists invest their money and the pie grows for everyone. That increases revenues into the government. It did under JFK. It did under Reagan. It did under Bush. Indeed, if you take a look at 2002 through 2004, after the Bush tax cut, you see the fastest increase in tax receipts ever recorded.
Obviously if that is true, then the reverse must also true. The NYT is using static calculations to assess that the failure to go from, say, a 10% tax on a $1,000 to a 15% tax means that Bush is responsible $50 of the debt. The NYT authors are either wholly ignorant or being deliberately disingenuous. If increasing taxes retards growth - and it always does - instead of netting an extra $50, we might only net $40 in year one and something similar in succeeding years, whereas with the tax cuts, we will eventually surpass the $140 mark and leave it far behind while staying at a 10% tax.
The bottom line, the NYT just published a ludicrous news article of pure fiction. The last time I heard such disingenous utter bull from the left was when they were screaming in front of every microphone that the fall of Enron - a company whose accounting misdeeds took place under Clinton's watch over a period of years - was somehow the fault of the months old Bush regime. Spin is one thing. Outright lies are entirely another. And all of this falls into the latter category.
Oh, and by the way, those Clinton surpluses the NYT mentions - all smoke and mirrors. They came from turning Social Security into a ponzi scheme and accounting social security receipts as part of the Congress's general funds.