Category Archives: budget deficit

The conservative prophecy, self-fulfilled

Conservatives in general and Republicans in particular have chosen to bet the farm on the idea that government in and of itself is a bad thing. And every time they are voted into power, they do everything within their means to make that abstraction a reality.

Government is inefficient, they say, and then create odious budget deficits to prove their point.

Government cannot support itself, they say, and then explode the national debt to prove their point.

Government is bad for the economy, they say, and then destroy American jobs to prove their point.

For Chrissakes, they famously declared their intent to “drown government in a bathtub.” Why on earth would you ever choose them to run your government?

And yet we do. And are invariably surprised to reap the whirlwind.

In today’s New York Times, Paul Krugman illustrates how the BP oil spill exemplifies this phenomenon. The jury is still out on a comprehensive picture of the causes of the spill. But it’s clear even now that the destruction of common sense regulation during the Bush administration played a huge role.

[T]here is a common thread running through Katrina and the gulf spill — namely, the collapse in government competence and effectiveness that took place during the Bush years.

The full story of the Deepwater Horizon blowout is still emerging. But it’s already obvious both that BP failed to take adequate precautions, and that federal regulators made no effort to ensure that such precautions were taken.

For years, the Minerals Management Service, the arm of the Interior Department that oversees drilling in the gulf, minimized the environmental risks of drilling. It failed to require a backup shutdown system that is standard in much of the rest of the world, even though its own staff declared such a system necessary. It exempted many offshore drillers from the requirement that they file plans to deal with major oil spills. And it specifically allowed BP to drill Deepwater Horizon without a detailed environmental analysis.

Surely, however, none of this — except, possibly, that last exemption, granted early in the Obama administration — surprises anyone who followed the history of the Interior Department during the Bush years.

For the Bush administration was, to a large degree, run by and for the extractive industries — and I’m not just talking about Dick Cheney’s energy task force. Crucially, management of Interior was turned over to lobbyists, most notably J. Steven Griles, a coal-industry lobbyist who became deputy secretary and effectively ran the department. (In 2007 Mr. Griles pleaded guilty to lying to Congress about his ties to Jack Abramoff.)

Given this history, it’s not surprising that the Minerals Management Service became subservient to the oil industry — although what actually happened is almost too lurid to believe. According to reports by Interior’s inspector general, abuses at the agency went beyond undue influence: there was “a culture of substance abuse and promiscuity” — cocaine, sexual relationships with industry representatives, and more. Protecting the environment was presumably the last thing on these government employees’ minds.

In any case, now is the time to make that break — and I don’t just mean by cleaning house at the Minerals Management Service. What really needs to change is our whole attitude toward government. For the troubles at Interior weren’t unique: they were part of a broader pattern that includes the failure of banking regulation and the transformation of the Federal Emergency Management Agency, a much-admired organization during the Clinton years, into a cruel joke. And the common theme in all these stories is the degradation of effective government by antigovernment ideology.

Conservatives in general and Republicans in particular have no interest in the success of our government. Knowing that, we should never allow them to be in charge of it.

Never again.

Fuck the Republicans

No, really. Fuck ‘em.

Despite their protestations to the contrary, they are the single worst thing that’s ever happened to the American economy.

In addition to being the reigning champs at creating gargantuan budget deficits and exploding the national debt, they are also reprehensible job killers.

But don’t take my word for it. Try the Bureau of Labor Statistics:

The next time you hear a Republican use the term “fiscal responsibility,” try not to hurt yourself laughing.

Krugman on the debt

Following on from yesterday’s post regarding the makeup of U.S. budget deficits for the next ten years (recap: they’re almost 100% due to Republican policies), here’s a reasoned take on the way forward with regard to our national debt, courtesy of Paul Krugman in today’s NYT.

He makes two good points: 1) the national debt can be reduced much more easily than Republicans would have you believe, and 2) Democratic policies – specifically health care reform, defense cuts and the repeal of Republican tax cuts for the wealthy – are the best methods for doing so.

The Obama administration’s budget predicts that by 2020 we’ll have net federal debt of around 70% of GDP and a budget deficit of around 4 percent of GDP. Now, you don’t have to go to a zero budget deficit to make headway on the debt — a budget deficit of 2-3 percent of GDP would imply a steadily declining debt/GDP ratio. So if you believe the administration’s budget estimates, we’ll need to find another 1-2 percent of GDP in revenue or cost savings.

That’s not, in economic terms, a huge number. We could raise taxes that much and still be one of the lowest-tax nations in the advanced world. Or we could save a significant share of that total by not being totally prepared for the day when Soviet tanks sweep across the North German plain.

The only reason to doubt our ability to get things under control a decade from now is politics: if we’re still deadlocked, if sane Republicans are cowed by the Tea Party, then sure, we can have a fiscal crisis. And longer term, we’ll be in a mess unless we get health care costs under control — which is exactly what we’re trying to do, in the face of cries about death panels.

The numbers aren’t that bad; if we go wrong, the fault will lie not in our debt, but in ourselves.

How we got here: the Republican budget deficit

The Center on Budget and Policy Priorities recently published an analysis of U.S. budget deficits through the next decade, based largely upon CBO reporting. It’s worth having a look at it, because it illustrates very clearly which major budget components will be contributing to the deficit during that period.

Although the modern Svengali we call the GOP has mesmerized half the electorate into believing that Democratic programs like the American Recovery and Reinvestment Act of 2009 and the Health Care Reform bill that just passed Congress make up for the majority of the deficit, even a cursory review of the attached graph guts that assumption like a dead fish. In fact, our projected budget deficits for the next decade break down pretty unflatteringly for our Republican friends:

Some critics charge that the new policies pursued by President Obama and the 111th Congress caused the huge federal budget deficits that the nation now faces. In fact, the tax cuts enacted under President George W. Bush, the wars in Afghanistan and Iraq, and the economic downturn together explain virtually the entire deficit over the next ten years (see Figure 1).

If not for the tax cuts enacted during the presidency of George W. Bush that Congress did not pay for, the cost of the wars in Iraq and Afghanistan that were initiated during that period, and the effects of the worst economic slump since the Great Depression (including the cost of steps necessary to combat it), we would not be facing these huge deficits in the near term.
While President Obama inherited a dismal fiscal legacy, that does not diminish his responsibility to propose policies to address our fiscal imbalance and put the weight of his office behind them. Although policymakers should not tighten fiscal policy in the near term while the economy remains fragile, they and the nation at large must come to grips with the nation’s long-term deficit problem. But we should not mistake the causes of our predicament.

Make no mistake: President Obama owns this deficit now. Its implications were clear before he even began his presidential campaign. But if we ever hope to extract ourselves from our fiscal crisis, and ensure that it never happens again, we need to be clear about its causes, and be guided by them in the future.

Step 1: never voting Republicans back into office ever again.