Obama tunes out, and business goes on a hiring strike:
After April 13 Obama Democrats went into campaign mode. They staged a poll-driven Senate vote to increase taxes on oil companies.
They began a Mediscare campaign against Ryan’s budget resolution that all but four House Republicans had voted for. That seemed to pay off with a special election victory in New York’s 26th Congressional District.
The message to job creators was clear. Hire at your own risk. Higher taxes, more burdensome regulation and crony capitalism may be here for some time to come.
I’m hoping for not more than another year and a half, until January, 2013. We’ll probably survive that long, though there will be a lot of unnecessary suffering. I don’t want to think about another five years of it.
The Dems have been running against Herbert since 1928, but I doubt the Stupid Party will even have to guts to run against Barack Hoover next year, let alone in 2096.
A more probable explanation is businesses are waiting on the possibility of the Republican/Tea Party carrying out their threat to crash the economy by not raising the debt ceiling unless they get their contractionary fiscal plans approved. I know that is why most of the folks I know are cashing out of the market and putting off hiring plans. They don’t want to get caught when the Republicans/Tea Party push the dominoes over.
It seems Obama directly spent 650 million dollars in his entire campaign for president. (In the course of which violating his promise to use public financing) If you Include money spent independently to support Obama’s election I imagine over a billion dollars total was spent.
That’s our President, the billion dollar man. I wonder if he can pull it off again. One of the benefits of crony capitalism.
Thomas
I don’t understand how this is the republican/tea party’s fault. Not raising the debt ceiling WILL NOT in itself crash the economy. It does not neccessarily lead to default. It means we simply cannot borrow more money. The executive just has to choose what to fund based on the revenue we have. The reason conservatives don’t want to raise the debt ceiling is, every time we raise it, we hit the new higher limit. I was against this when Bush did it as well.
The fact is, Keynesian economics has failed. We have had massive stimulus spending, but it has not helped. We have seen massive new regulation. Government regulation is costing business an estimated 1.75 trillion per year. And Obama and his fellow lefties are running around demonizing success, slandering republican deficit reductions plans, threatening higher taxes, and using the executive to foist massive new regulations on business.
In light of all this, I am confused as to why you think that it is the right that is wrecking the economy. Your only point is the debt ceiling, when we would not be in this position if Obama had not pursued massive failed stimulus and would have adopted sane fiscal strategy.
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.
Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion.
Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we’ll spend on Medicaid and the State Children’s Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.
And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.
Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.”
Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006
It’s not “Mediscare” when you say that Ryan’s plan wants to destroy Medicare. It’s being truthful. Ryan wants to replace a guarenteed coverage system with a voucher system. Calling that “reforming” Medicare is like saying you are going to remodel your house by burning it to the ground and rebuilding it.
Roll Tide – yes, not raising the debt ceiling WILL crash the economy. We’ve already spent that money, so “deciding not to fund” activities means either “stiffing people who sold the Government stuff” or not paying somebody (Social security or Medicare beneficiary, government employee, soldier) who is owed money.
Larry J, ouch!
Yes, Ryan’s plan does completely change Medicare. But it is a good change. I don’t know why everyone is so in love with central planning. Let people make choices about their own healthcare. And, WE CAN”T AFFORD IT. You guys who say we can’t change anything rarely give your solution for deficit reduction. We are 14 trillion in debt. Taking all the assets from the rich would close our deficit for 1 year. Then we would be right back where we started.
So what is the solution. Pass a clean debt ceiling increase. Half the democrats in the house won’t do that. Obama has known since November that he would not get that, but he has not come up with any serious proposal. But again, the right is expected to bend over, grab our angles, and give Obama what he wants.
I know raising the debt ceiling would have bad effects, but it would not cause Armeggedon. Having a deficit of 1.65 trillion per year is okay? We have to get a handle on this. The way forward is budget cuts in exchange for a debt ceiling increase.
We have spend more than we have, now we have to spend less. That will neccessarily result in some people loosing services. I am 25. I am not counting on SS or Medicare. I am planning to take care of myself. I am a teacher in Virginia, I am by no means rich. What happened to self reliance?
We’ve already spent that money, so “deciding not to fund” activities means either “stiffing people who sold the Government stuff” or not paying somebody (Social security or Medicare beneficiary, government employee, soldier) who is owed money.
But that’s going to happen regardless, sooner or later — the money just isn’t there. And at some point, the US government is going to get cut off from borrowing. Might not happen tomorrow, but it will eventually.
Facing the budget woes now, today, mean painful stitches, yes. It’s better than having to take off the whole gangrenous arm tomorrow.
“It’s not “Mediscare” when you say that Ryan’s plan wants to destroy Medicare. It’s being truthful. Ryan wants to replace a guarenteed coverage system with a voucher system. Calling that “reforming” Medicare is like saying you are going to remodel your house by burning it to the ground and rebuilding it.”
Considering the old house is rotten and on the verge of collapse and it will be replaced with a better, more modern house, this is a good thing.
See, there’s your problem right there: on this forum you’re talking to a lot of old farts who, having paid for the gravy train their entire careers, expect to ride once they’re retired in a few years. “Kids” like us already know it’ll be busted in a generation and have factored that into our “retirement” calculus. It’s deck chairs on the Titanic because Stein’s law may kick-in 5, 10 or 15 years — doesn’t matter much to you or me, but it does to them.
Yes, we can modify or replace Medicare before it collapses (Ryan’s plan) or do nothing (Democrat’s plan) and let ObamaCare gut it in as little as 13 years. So far, those are the only two alternatives on the table.
In his analysis accompanying the recently released Annual Report of the Medicare Board of Trustees, Richard Foster, Medicare’s chief actuary, noted that Medicare payment rates for doctors and hospitals serving seniors will be cut by 30% over the next three years. Under the policies of the Patient Protection and Affordable Care Act, by 2019 Medicare payment rates will be lower than under Medicaid. Mr. Foster notes that by the end of the 75-year projection period in the Annual Medicare Trustees Report, Medicare payment rates will be one-third of what will be paid by private insurance, and only half of what is paid by Medicaid.
Altogether, ObamaCare cuts $818 billion from Medicare Part A (hospital insurance) from 2014-2023, the first 10 years of its full implementation, and $3.2 trillion over the first 20 years, 2014-2033. Adding in ObamaCare cuts for Medicare Part B (physicians fees and other services) brings the total cut to $1.05 trillion over the first 10 years and $4.95 trillion over the first 20 years.
These draconian cuts in Medicare payments to doctors, hospitals and other health-care providers that serve America’s seniors were the basis for the Congressional Budget Office’s official “score”—repeatedly cited by the president—that the health-reform legislation would actually reduce the federal deficit. But Mr. Obama never disclosed how that deficit reduction would actually be achieved.
So, do we try to modify a failing program (“ending Medicare as we know it”) or do nothing and let the current law of the land end Medicare as we know it?
Or, are there other alternatives?
Chris, if the house has a termite infestation that has destroyed its foundation and renders it unsafe to occupy, what would your prescription be? Putting it on the historic register?
Um, no. The money doesn’t get spent until it’s been borrowed, and it doesn’t get borrowed unless the debt ceiling permits it.
There is a simple solution to the growth in debt: let the Bush tax cuts expire. All of them. The debt-to-GDP ratio would then flatten out.
Regarding Medicare – it’s perfectly sustainable. In any event, even if it is a termite-ridden disaster, destroying it is not reforming it. If you want to destroy it, say so, or at least don’t get upset if you’re called on it.
Yes Chris. Great plan. Lets take more money out of our private sector economy. Use that to patch up our deficit (even though it won’t completely make up the difference. Then what will we do when revenues start going down again because less money is being spent in the private economy? Raise taxes again. That is the trap that people with the tax and spend philosophy get into.
The better solution is to cut spending and flatten the tax code, like Ryan has proposed. People have forgotten about his tax proposals. Lower corporate and capital gains rates. Eliminate write-offs and lower tax rates with a top rate of 25 per cent. This will create a wider tax base with lower rates.
Even with these cuts, the plan would end the deficit by 2015. How? Economic growth. That is the key. Temporarily filling the deficit and destroying our long-term prosperity is not a, to use the lefty’s favorite word, SUSTAINABLE option.
There is a simple solution to the growth in debt: let the Bush tax cuts expire.
You really need to spend some time with Dave.
There is a simple solution to the growth in debt: let the Bush tax cuts expire.
That is a fantasy. There were no “Bush tax cuts.” They were merely rate cuts. They were tax increases, relative to what would have been the baseline revenue, had they not occurred, given the parlous state of the economy in the wake of the tech bubble pop and 911..
A terrible straw-man. “Destroying” would mean eliminating it and replacing it with nothing. No one’s suggested that.
The only thing that has grown during the Obama administration is the use of straw men and O’s false use of the “false choice.”
Oh, and that’s funny, too, because if you actually read Krugman’s opinion, even he says that Medicare’s present level of generousity is — wait for it — unsustainable.
No shit, every entitlement program can be made “sustainable” if it demands more and pays less. That’s not rocket
scienceplumbing — it’s sophistry.Are Ryan’s vouchers the solution? A voucher is only as good as what your market can sell. Absent a robust medical insurance market (which Obamacare will not create), I’m very skeptical. But if it does, they can pat themselves on the back — maybe the Dems will even co-opt the idea in 10-15 years and take full credit. Whatever.
I think a lot of things could have come to pass — the Ryan Plan, electing someone other than Mr. Obama in 2012 — these things could have worked out were it not for Mr. Walker’s experiment in the State of Wisconsin.
Governor Walker’s agenda was an ambitious plan, a bold plan, in hindsight too bold. When Republicans were handed legislative majorities in many state houses, this was more a repudiation of the Obama record. But like Operation Market-Garden, a “hey diddle diddle right-up-the-middle” seizing of the initiative to rock the opposition back on their heels, the Scott Walker agenda has been a Bridge Too Far.
No, the Democrats and their Labor partners are not winning any counter-offensive, but the Walker agenda is pretty much stalled in the courts. The hopes for a breakout and an early Conservative victory — that has been pretty much been put off until 2016 at the earliest.
I mean, don’t you people read your B. H. Liddell Hart and know anything about the shortcomings of what he called the “direct approach” — that is, thinking of having the “combat power” and using it to engage in a frontal assault? The Walker agenda is stalled, the Ryan Plan is just plain stuck, and the chances of Mr. Obama being reelected in 2012 are being strengthened by Right Blogosphere sniping about the field of GOP candidates (cough, Mitt, cough, Newt, cough).
Raising the debt ceiling without seriously addressing the runaway deficit spending would raise question of the ability, even the intent, to pay off debt. We’re already seeing hesitancy to loan the federal government more money, and a growing portion of bonds are being bought with funny money from the federal reserve, damaging the value of the US dollar.
In the end, failure to control runaway spending will result in hyper-inflation and total economic collapse of the US. The worst I expect from a failure to raise the debt ceiling and spend money we don’t have is welfare riots.
According to Gerrib, we were out of the recession last year; when he saw the job growth numbers after the Census workers were hired. Thus, Gerrib’s tune a year ago was that Obama’s Keynesian principles had turned around the economy.
This year, Gerrib’s back to blaming Bush. So by all means Gerrib:
If you want to destroy it, say so, or at least don’t get upset if you’re called on it.
Anyone who thinks we can simply raise taxes and not cut spending to balance the budget is a fool. Congress has a proven track record – any increase in revenues is matched by even bigger increases in spending and promises to cut spending are lies. When revenues increased during the 1980s, spending increased by about $1.50 for each additional dollar in revenues. When Bush 41 broke his “read my lips” pledge to pass a tax increase with the certain promise of spending cuts, the tax increases happened but the spending cuts didn’t.
Fool me once, shame on you.
Fool me twice, shame on me.
Fool me all the time, I’m a Democrat.
Working backwards through the comments:
A) If there were a reluctance to lend the government money, T-bill rates would go up, to attract investors. They are either steady or down.
B) We are actually out of recession – employment is growing. It’s not fast enough.
C) Rand – your pedantic approach to taxes doesn’t obscure the facts that:
1) people paid less taxes during Bush and now during Obama than under Clinton
2) Economic growth and job growth, even excluding the recession, was better under Clinton than Bush. So, tax cuts didn’t stimulate the economy and hikes didn’t hurt it.
D) The problem with claiming that Ryan’s plan reduces the deficit is that it doesn’t. Ryan’s plan only works if you reduce spending including defense to 3% of GDP. That level was last seen under Calvin Coolidge.
Regarding Keynesian economics, and bearing in mind my limited knowledge:
It is my understanding that Keynesianism involves the borrowing of money in economic downturns to stimulate the economy by spending money on capital projects – such as roads, hydroelectric dams, schools… that in the medium to long term will improve the economy.
If that understanding is correct, then I submit that Keynesian economics has not been tried for fifty years or more, anywhere. What is happening is that government is borrowing the money – and then using it to pay more money to legions of chair-warmers (in both public and private sectors) who create nothing whatsoever, and who actually decrease the capital of the country by sending it to China for such things as televisions and flashy cellphones.
I could get behind the idea of government in the UK (about which I know more, being British) spending money on new power stations, roads and schools. But not on employing more NHS managers.
High Speed Trains!
Fletcher,
Your are close. Basically it’s running a deficit during recessions via a combination of lowering taxes and increasing spend to counter the lack of spending in the private sector. The second part which folks forget is for the government to run an equally large surplus during an expansion via increasing taxes and reducing to prevent the expansion from becoming a bubble. The Reagan policy of cutting taxes and increasing spending in the early 1980’s was pure Keysanian but he needed to cut spending and raise taxes in his second term, which is when the debt started getting large. Of course the major taxes cuts in the 1990’s and under President Bush only made matters worst.
BTW Prof. Keynes stated in his book the would be what actually since most political leaders would lack the courage to rein in an expanding economy least the voters object.
“So, tax cuts didn’t stimulate the economy and hikes didn’t hurt it”
Yes, and also, the whole country got older, percentage-wise, during Clinton’s eight years than under Bush’s.
Mr. Matula, thanks for that. The question of what to spend the money on remains, however.
Weren’t things like the TVA and Hoover Dam at least partly a Keynesian response to the Depression? Compare and contrast to the actions of various governments in late 20th and early 21st centuries.
TM:
I cannot parse this sentence:
“BTW Prof. Keynes stated in his book the would be what actually since most political leaders would lack the courage to rein in an expanding economy least the voters object.”
What were you trying to say?
Sorry, using an iPhone.
Prof. Keynes predicted that politicos would only do the spending part and not have the courage to rein an economy that is expanding too fast.
Rein in an economy
Fletcher,
Although Prof. Keynes wrote his book in the 1930’s it really didn’t have an impact on policy until after WW II. The spending in the U.S. in the 1930’s on infrastructure was just seen by the advocates as common sense measures to get folks working productivily. Policy makers weren’t as handicapped by theory and ideology as they are today.
Fletcher,
BTW that is one the key features of Complexity Economics, that initial conditions, how the money is spent, is critical and this is how it’s different from Keynesian Economics. For example if you are doing a stimulus then it should be spent fixing the 1.5 trillion in infrastructure that has been falling apart since the 1980’s because it will produce benefits.
Mr. Matula, no arguments there. On a much smaller scale: My town (Blackpool, NW England) has crumbling roads full of potholes, storm drains that don’t work, about 10% of the streetlights are out and at least one of the (government-owned) town centre car parks is falling down. It’s also infested with huge flocks of pigeons and also with large numbers of addicts, drunks and aggressive beggars. What did the local council just finish spending about £500,000 on? New offices – in a prime town centre site.
Any towns like that in the USA?
Fletcher,
Yes, we have towns like that here as well.
Oh, and one more thing – this town I’ve just described expects to continue making its money from tourism.