Sometimes Business Section reporters are better than political reporters... The 2000 election will haunt us forever.
this is required reading for all republicans and "conservatives" who want to blame the current economic woes solely on obama. and dont even get me started on what a fiscally irresponsible president reagan was.
"...it’s obvious that the slump is responsible for the great bulk of the rise in the deficit. Anyone who says otherwise is either remarkably ill-informed or trying to deceive you." -Paul Krugman, today
In reading something like this i still don't get why Obama didn't let the tax cuts expire-atleast on the top income bracket to return to 2000 levels. It's obvious the government needed more revenue while at the same time needed to clean up spending. Don't blame it on GOP/tea partiers/conservatives either, our elected officials are in Washington to make the tough and necessary decisions regardless if they are politically popular or not.
Krugman was talking about 2007-2010. Context. Link: http://krugman.blogs.nytimes.com/2011/05/01/origins-of-the-deficit/
Alright then, try this post on for size: "During the pre-crisis period, spending grew slightly faster than GDP — that’s Medicare plus the Bush wars — while revenue grew more slowly, presumably reflecting tax cuts. What happened after the crisis? Spending continued to grow at roughly the same rate — a bulge in safety net programs, offset by budget-slashing at the state and local level. GDP stalled — which is why the ratio of spending to GDP rose. And revenue plunged, leading to big deficits." -Paul Krugman
Repubs would not let him do that, even though that's what Obama and a majority of Americans polled wanted. It was going to be either the Bush tax cuts expire or they don't. Obama didn't want them to expire on middle class folks, so he made the deal.
What do you have against both context and linking to sources? Courtesy of Google: http://krugman.blogs.nytimes.com/2010/10/18/even-more-on-the-origins-of-the-deficit/ Krugman has been pretty consistent in taking both revenue and spending into his analyses. And Krugman has very specific ideas about why Medicare costs increased and continue to do so. I encourage folks to read them for themselves. Often, Krugman is engaed in back and forth with other economists. Here is a good aggregator to track some of the conversations: http://www.rtable.net/index/rt/economics/recent/
I have nothing against context or links. I am not blaming spending. I never mentioned Medicare. He is clear that the deficit and debt are due in large part to the slump.
The article sort of lumps in the revenue loss due to the recession with the tax cuts. I think the main culprit to lowered revenue has been the recession. Of course it seems difficult to get good data on this. I even find articles that say the tax cuts actually increased revenue - which I highly doubt. But in any case, a 1.35 trillion dollar tax cut over ten years cannot be responsible for 14 trillion dollar debt.
I'm not sure that's meaningful to say though. We know the economy is cyclical and that a recession would come along sooner or later. The OP article is arguing that we had an opportunity to shore up our financial position before the next recession, and we chose not to take it.
The article does sort of blend in the revenue loss due to recession and the revenue loss form the tax cuts. To try to be objective, I would say the Bush tax cuts definitely did have a negative impact on the debt/deficit - but the recession probably has the greatest effect. Also - Krugman is not some Democrat saint. While he undoubtedly has his political leanings, just to say he thinks the recession is also responsible is NOT some attack on him or Democratic policies - moreso just pointing out that there are other larger factors involved here and that even board heroes such as Krugman think so too. You can attribute a large part of the deficit to the recession (which I don't think is Obama's fault at all) and still be against the Bush tax cuts. To do so is merely being opinionated and objective at the same time.
I wouldn't pin this squarely on the GOP. If you want to look into other things such as deregulation, etc. and the cause of the financial crisis which led to recession in the first place, that is another issue and you could very well have some very good anti-GOP ammo. Obama is between a rock and and place here. Huge deficit + recession + low Fed rate = not many options. Your fiscal and monetary levers have pretty much already been pushed several times. Trying to lower the deficit and turn around the economy simultaneously is probably next to impossible. I suppose lowering the interest paid on the debt can have positive effects for both but I'm no expert by any means. I just hope the CBO projections (which happened to be way off in 2000) - are equally way off for future projections (but on the other side =) ). Maybe their projections are based on current growth and hopefully that would underestimate revenue.
Budget historicals from the OMB says that even during the recession, incoming receipts have only been about $100B or so off the 2000 receipts (which was about ~$2 trillion). Receipts were lower in 2001-2003, but after the tax cuts passed in 2003, receipts rebounded with a vengeance. The federal government brought in ~$2.2T in 2005 and ~$2.5T in 2008. In fact, this year it's estimated that the government will bring in ~$2.2T. With revenues at or near all time highs even with the tax cuts, why is the deficit still to high? Because we have a spending problem, not a revenue problem. No matter what the tax rate, revenues will roughly equal about 18% of GDP over the long run. We need huge spending cuts across the board and that includes Defense spending. Medicare and SS have to be reformed, or it will break us. The federal government needs to figure out a way to get the private sector back to work so the economy will grow. Robust growth in the economy will "solve" the revenue problem.
I guess I was thinking of a different question. I wasn't interested in how much of the deficit is because of tax cuts and how much was due to recession. The article probably conflates the two because there's no reliable way to parse the two; cutting taxes was supposed to have a positive effect on business profitability to generate more efficient tax dollars, and maybe that actually did happen. But, you can't tell because so many variables are changing at once. The thing that interested me was that we had a strong fiscal position in 2000 and we could choose the improve our balance sheet (pay down the debt and fund our social net obligations) or improve our product (more government service (like fighting terror and nation-building) for less money (tax cuts)). We chose the latter then and apparently regret it now.
I think JuanValdez articulates my thoughts on this matter well. Recessions happen. Government should put itself in a fiscal position to deal with them when they do. When our nation had a healthy cash flow, the Bush Administration made poor spending decisions. Anyway, latest Krugman: Of course he is specific about policy decisions and not the composition of the debt. But across various analyses, Krugman more or less agrees with the OP article. The recession plays a significant role, but the policies enacted after Clinton were actively digging the hole in the budget. We know recessions occur and government should prepare for them (for example, by paying down debt in good times so deficits can fill the gap in bad years). After years of deficit spending, Clinton was doing just that, paying down the Regan Era debt. The Bush Administration put a halt to that. Their position was that deficits don't matter. Of course, Keynesians like Krugman disagree. The tax cuts were unnecessary and, in part, just a continuation of the republican strategy of starving the beast.
how much has medicare spending increased over the last decade? here's some government info i'm linking it because i might not be reading it correctly link table six is easiest to look at, medicare goes from $215BB in 2000 to $471BB in 09. over healthcare spending including medicare looks to have gone up $800BB in that time period.
