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Deficits and Democrats

What did Bush's first set of tax cuts, Bush's second set of tax cuts, Medicare Part D, the Iraq War, the Afghanistan war, and No Child Left Behind have in common?

Two answers: First, they all passed atop Republican votes. Second, they were all deficit-financed.

This made them easier to pass, of course. Earlier today, I wrote about the immense difficulty the White House is having trying to find new revenues to offset the new spending in health-care reform. Unions won't let them cap the employer tax exclusion. Republicans and conservative Democrats won't let them raise taxes. Seniors don't want them to touch Medicare. Bush managed to sidestep all these problems by just adding trillions of dollars onto the deficit. Obama decided to face these problems, and as a result, he's being pounded by Republicans for proposing new spending in a time of deficits — even if that spending is paid for — and pounded by every group that stands to pay more under the new policy.

The lesson of this is that there are no points for being fiscally responsible. Conservative groups that care about the deficit and business groups that worry about interest rates and centrist Democrats who worry about debt and serious conservatives who fear governmental default should ask themselves if that's really a good lesson to be teaching this president, and all who come after him.

By Ezra Klein  |  September 4, 2009; 2:07 PM ET
Categories:  Barack Obama , Budget  
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Comments

We had better hear this loud and clear from Obama in the speech. "All of you in congress that voted for Bush's first set of tax cuts, Bush's second set of tax cuts, Medicare Part D, the Iraq War, the Afghanistan war, and No Child Left Behind, have no credibility complaining about how health reform might impact the deficit." Fat chance....

Posted by: srw3 | September 4, 2009 2:28 PM | Report abuse

It's worth remembering too that the Iraq War was sold as self-financing. Essentially $40 billion. max for the invasion and the reconstruction paying for itself was the White House line.

Never mind that the final price tax will probably end up being somewhere closer to $2 trill. when you factor in replacement costs and long-term care for wounded vets.

To Obama's credit, at least he's being upfront about the accounting. Call me a skeptic too when I hear so-called fiscal conservatives worrying about the price tag of health care. They didn't balk either at the $400 bill. Medicare Plan D benefit a few years ago.

Posted by: JPRS | September 4, 2009 2:36 PM | Report abuse

This is the item that definitively defines the opponents to health care reform, in particular the Blue Dog Democrats and Judd Gregg Republicans, as lying sacks of dung.

They created these structural deficits with truly ill-advised tax cuts, stupid and immoral military adventures, and insane military spending, while all the while rewarding companies for shipping jobs overseas (funny how people don't talk much about how those lost 2,000,000 manufacturing jobs hurt our tax base).

And now they are opposing health care reform, which is the first step in reigning in skyrocketing health care costs?

They have no clothes, except the dunce cap of obvious hypocrisy and their gold-plated boots of corporate contributions.

Posted by: Dollared | September 4, 2009 2:44 PM | Report abuse

EzK: "The lesson of this is that there are no points for being fiscally responsible."

Nobody's really made a concerted effort do do so yet - in my lifetime at least.

EzK: "...should ask themselves if that's really a good lesson to be teaching this president, and all who come after him."

So what are you saying, we shouldn't make him pay a price for proposing an irresponsible plan otherwise he'll remove all restraint and be every bit as irresponsible as he'd truly wish to be?

Ezra, Krugman's way ahead of you. He's been working overtime for more than a year to rationalize massive deficit spending. The bigger the deficit has yawned in the intervening months the harder he's worked to provide cover for Democrats who'd like nothing more to spend - sorry "invest" - the way they've always wanted - deficits be damned.

Posted by: tbass1 | September 4, 2009 2:55 PM | Report abuse

here are no points for being fiscally responsible

You can take the word 'fiscally' out of that sentence, and its truth value remains unchanged.

Posted by: vagueofgodalming | September 4, 2009 3:00 PM | Report abuse

The unions are very wrong on this. A union member is much better off paying a little more in taxes for his elaborate benefits, in order to in return know that if he loses his job, he will still have health insurance. As well as to know that his children, relatives, and other loved ones, who easily may not get union jobs in this day and age, will still have health insurance through a good universal health care bill.

If I were a union member this is a tradeoff that I'd take in a second, that I'd, in fact, fight hard for.

The unions are acting greatly against the best interests of their members here. I expect acting greatly against the best interests of your members from the Republicans, but not from the unions.

Posted by: RichardHSerlin | September 4, 2009 3:04 PM | Report abuse

JPRS: "They created these structural deficits with truly ill-advised tax cuts, stupid and immoral military adventures, and insane military spending..."

Your point is well taken but how much of our structural deficit - both today and projected into future years - is attributable to unfunded entitlement programs ushered in by Democrats? Rather more, I'd think. Medicare - the last great gov't health care plan bequethed to us by the Democrats - is insolvent. Better, I think, for the Dems to focus on controlling health care costs in the government health programs we already have before creating yet another unfunded liability.

Posted by: tbass1 | September 4, 2009 3:05 PM | Report abuse

I believe Bush's war spending bypassed the deficit and got added right onto the debt, which made his deficits seem smaller than they were. Obama did himself another disservice by bringing war spending back into the open.

Nobody gave a flying fig about deficits for 8 years but now it's the #1 issue.

And I dunno, Tbass1, but it seemed there was a lot of fiscal sanity during Clinton's presidency. Maybe it was the divided government but towards the end the budget was balanced and we were beginning to pay down the debt. That seems like a very long time ago.

Posted by: luko | September 4, 2009 3:37 PM | Report abuse

tbass1, possibly you weren't alive in the late '90s. that's the only excuse you have for claiming that no one has ever been fiscally responsible in your lifetime (in that case, though, congratulations on your excellent command of the language given that you are only 8 years old).

as for structural deficit, no, medicare is not the root issue of the structural deficit: low taxes are the root issue, followed by insane amounts of defense spending (surely an entitlement by any reasonable standard, only it's an entitlement for the military-industrial complex).

the actual out-of-pocket for medicare (that is, medicare costs not covered by medicare-specific taxes and paid for by general revenues) is around $200B or so, which isn't insubstantial but is in no way the core issue in the current deficit.

it takes no time at all to do homework on this matter: perhaps you should impress us with your 9-year-old research skills and not just your 9-year-old typing and writing skills.

as to ezra: there is a reason to behave in a fiscally responsible matter. the economy performs better.

Posted by: howard16 | September 4, 2009 5:08 PM | Report abuse

luko, you are essentially correct. bush treated the annual spending for iraq as an emergency appropriate each and every year. this led it to be excluded from discussions of the deficit as such, although there is no such thing as "bypassing" the deficit and going straight to debt.

Posted by: howard16 | September 4, 2009 5:09 PM | Report abuse

And I dunno, Tbass1, but it seemed there was a lot of fiscal sanity during Clinton's presidency. Maybe it was the divided government ...

Yes, that was an accident of divided government and a one-time draw down from the end of the Cold War, not the result of a concerted effort to restore fiscal responsibility. Clinton came into office promising to reform health care and other costly "investments" but was largely unsuccessful in passing them. The Republicans talk a good game but haven't walked the talk.

The growth of government spending has grown inexorably through both Democratic and Republican presidencies and Congresses and the main driver has been the entitlement programs. Disagree?

Posted by: tbass1 | September 4, 2009 6:19 PM | Report abuse

howard16:

"...as for structural deficit, no, medicare is not the root issue of the structural deficit: low taxes are the root issue...

Medicare/caid and Social Security account for about 45% of the federal budget. That's twice defence spending even as we are engaged in two wars. Win or lose, presumably the wars will wind down in the coming years, but spending on entitlements is set to explode as the baby boomers reach retirement age.

"perhaps you should impress us with your 9-year-old research skills and not just your 9-year-old typing and writing skills."

Whatever my chronological age, I'll not stoop to ad hominem as that would be immature.

Posted by: tbass1 | September 4, 2009 6:37 PM | Report abuse

tbass1, apparently you are older than 8, so it was actually a dishonest remark on your point that you've never seen fiscal responsibility in your lifetime.

and no, it didn't arise as a result of divided government: the first step to fiscal responsibility was the clinton 1993 tax hike, passed with no republican votes at all.

what divided government resulted in was a standstill on new programs, so i'm perfectly willing to provide it some credit, but let's keep the horse in front of the cart, shall we?

nor did clinton stop with simply achieving a surplus on the unified budget: in his last 2 years, clinton achieved a general fund surplus. that wasn't lucky, and it didn't happen by accident, and it was a concerted effort to restore fiscal responsibility, so concerted that even george bush had to lie during the 2000 campaign and claim that he could cut taxes and preserve the lockbox, code for fiscal responsibility.

and just for the record, it wasn't a one-time benefit from the end of the Cold War. the simple fact is that in real dollars, the average annual clinton defense budget was higher than the average Cold War defense budget. what happened was that the super-aggressive reagan/bush 41 defense buildup was slowed, not that there was some miraculous cut in defense spending that made the difference.

as for the growth of government spending, no, we cannot claim the growth of entitlements has been the driver. first off, fiscal responsibility is not a matter of low spending: you can have low spending and lower taxes and therefore be fiscally irresponsible, or you can have high spending and high taxes and be fiscally responsible.

fiscal responsibility is paying for the spending you think appropriate.

as for the growth of government spending, you might want to bear in mind the amazing rise in defense spending that began post 9/11 and you might want to bear in mind the cost of financing the national debt when you consider drivers of spending.

you might want to bear in mind that the largest entitlement program, social security, is financially self-sustaining.

you might want to bear in mind that medicare's general fund cost is something like $200B, which isn't close to either defense or interest spending, and indeed isn't really that much bigger than agricultural supports.

after you bear this all in mind, maybe you'll stop typing silly things about "agreeing" that "entitlements" are what has driven government spending. it ain't true just because rush limbaugh says it.

Posted by: howard16 | September 4, 2009 6:41 PM | Report abuse

I never understand this argument:
"as for structural deficit, no, medicare is not the root issue of the structural deficit: low taxes are the root issue"

Especially as it was later followed by this comment:
"but let's keep the horse in front of the cart, shall we?"

In what sort of backwards world does one look at his financial situation and say only "The reason I'm broke is not these 7 Ferraris I bought, the reason I'm broke is that my stupid boss won't give me more money."

Starting from this sort of vantage point I guess is what causes people to think the government has the right to do as it pleases. But let's do put that cart behind that horse: the government has no money. The people do. When the government spends more than they will take in, the problem is not low taxes. The problem is stupid people running our government.

Posted by: kenobi1 | September 4, 2009 8:20 PM | Report abuse

kenobl1: if indeed it were an appropriate analogy to compare medicare to buying 7 ferraris, you'd have one helluva argument.

but it's a ridiculous analogy, one better suited to defense spending.

which is my point: insofar as you want to talk about what contributes to overspending, you start with defense. you don't start with medicare, because it's not nearly as close a contributor.

that's simple fact.

more broadly, your analogy stinks on a second level, too: there are people who can afford 7 ferraris. there are people who cannot. the key is to live within your means.

and again, as i noted, the recent (indeed, the longer term) evidence is that the democratic party, when in the white house, attempts to match revenues and expenses and republicans do not (the last fiscally responsible republican president was dwight eisenhower).

whether you want to match revenues and expenses at a higher level or a lower level are equally fiscally responsible choices. what is fiscally irresponsible is to increase expenses and cut tax revenues.

funny how often that's happened since tax cuts uber alles ideologues have controlled the republican party.

Posted by: howard16 | September 4, 2009 8:37 PM | Report abuse

howard16
You're arguing with someone else, not me. I said nothing about Medicare vs. defense spending. Nor did I mention parties. Clearly, both are prone to overspending. And clearly the deficit has been added to by both defense spending and Medicare, and will continue to be added to by Medicare expenses as the baby boomers get older.

But while it is not necessarily fiscally responsible to increase expenses and cut taxes, it's also not fiscally responsible to spend willy nilly because you plan on taxing the hell out of the rich later. That's not responsibility. That's political dishonesty and vote buying.

Posted by: kenobi1 | September 4, 2009 8:53 PM | Report abuse

The true leader steps back and says to himself "people always have and always will be against taxes"... but I have researched this problem and have come to the conclusion that it warrants new taxes and so that is what we will do for the good of the people and the long term good or the country.

And the people will follow him ... if the taxes are fair and the cause is worthy.

Posted by: cautious | September 5, 2009 2:07 AM | Report abuse

Isn't the current tally with respect to social security/medicare and the deficit very much in the positive. They are funded by dedicated taxes that have been in surplus for about 25 years. That surplus has been used to reduce the current deficit, so positive contribution.

Posted by: williamcross1 | September 5, 2009 2:13 PM | Report abuse

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