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Posted at 6:12 AM ET, 02/15/2011

Wonkbook: Washington reacts to the budget

By Ezra Klein

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Today's sunrise marked the first dawn after the release of Barack Obama's proposed budget for 2012. Look closely, and you'll see the changes: Children no longer hold their parent's hand as they walk down the street. Cars drive backwards. All drinks are carbonated. Every television station is live streaming Twitter -- and everyone is watching. And the debt? Totally repaid.

Or not. The budget was not terribly well received. Republicans and many deficit hawks were loudly horrified at the proposal's modest cuts and its decision to sidestep entitlements. They wanted the Fiscal Commission -- or something close to it -- and they didn't get it. Democrats were less distressed, but far from pleased: The cuts that were included in the budget are painful for them, many wanted to see more aggressive action on tax expenditures and military spending, and the much-touted investments made in the document are scattershot. The Atlantic's Derek Thompson summed the reaction up well: "The same way a spork makes a incomplete fork and an ineffectual spoon, this compromise budget provides for both incomplete investment and ineffectual deficit reduction." And so it has found few friends.

But it's worth remembering that this is the White House's opening bid in a negotiation that's just getting started. They have made a decision -- perhaps savvy, perhaps not -- to leave it to the Republicans to take the first step on entitlements and tax reform. The Republicans, due to their criticism of this budget, now have to offer something more far-reaching in their proposal. If they come up with a plan people like and some votes for it, the White House can join with them in negotiations and eventually sign onto a grand compromise. This budget will be largely forgotten. If they come up with a plan people hate that clearly can't get the votes, the White House can attempt a replay of the mid-1990s and hammer them with it.

This budget doesn't lead on long-term deficit reduction. But that's not necessarily because the White House is uninterested in that discussion. Note the section laying out the White House's interest and position on Social Security reform. Rather, they're keeping their options open until Congress makes the first move. This is a strategy that frustrates Washington -- think back to the bipartisan criticism of the leeway the administration gave Congress during health-care reform and the stimulus -- but it's tended to be how the White House approaches major reforms.

Budget Reax

Read Obama's official budget request here: http://bit.ly/aEariq

Lori Montgomery summarizes: "President Obama submitted a budget blueprint for fiscal 2012 on Monday full of surgical cuts and cautious trade-offs to lawmakers clamoring for bold action to reduce government spending and control a budget deficit expected to rise to a record $1.6 trillion this year. The $3.7 trillion plan proposes to trim or terminate more than 200 federal programs, striking areas long favored by Democrats to make room for increases aimed at boosting the economy. The new priorities include spending on education, energy and medical research, and a push to bring high-speed Internet to virtually every American...His budget calls for $1.6 trillion in fresh revenue over the next decade, primarily through higher levies on businesses and the wealthy."

Check out the Post's run-down to see which departments gain and lose: http://wapo.st/hR2G7X

Annie Lowrey explains what the budget would look like if the US made as much as a typical household: "The Obama budget throws around some very big numbers, a dizzying array of billions and trillions, and they are difficult to parse and compare. So let's cut them down to a useful, human, household size. Next year, the government plans to take in $2.63 trillion—and to spend $3.73 trillion. For our purposes, let's use $60,000 as the government's income and $85,000 as its expenses. Where does all of that spending go?"

The business community is skeptical, report Jia Lynn Yang and Michael Fletcher: The fiscal 2012 budget outlines more than $200 billion in higher taxes for oil and gas companies, banks and multinational firms - ideas that have been offered in the past and vehemently opposed by industry. It does not detail a core part of Obama's effort to win the trust of big business: an overhaul of the corporate tax code that would lower the overall rate that firms pay. 'I'm just extremely disappointed,' said Caroline Harris, chief tax counsel for the U.S. Chamber of Commerce. 'I certainly did not expect to see a full plan. But I did think some good-faith effort would have gone a long way with the business community.'"

The GOP wants $61 billion more in cuts: http://wapo.st/fqYCEx

The budget strikes a good balance, writes Robert Greenstein of the Center for Budget and Policy Priorities: "Given current fiscal and political circumstances, the budget strikes a tough but generally sound overall balance among the need for fiscal restraint, the need to avoid large immediate cuts while the economy is still weak, the need to protect effective high-priority programs (especially those that represent effective long-term investments), and the need to avoid inflicting serious harm on the poorest and most vulnerable members of our society...The Administration was on sound footing in not offering, in the budget, various controversial proposals for long-term deficit reduction that policymakers could consider more constructively as part of future deficit-reduction negotiations."

The budget does not go nearly far enough, writes Maya MacGuineas of the Committee for a Responsible Federal Budget: "It is encouraging that the Administration identifies some areas for real savings. However, the total level of savings is far short of what is needed and too many heroic assumptions are used to achieve them. This budget fails to meet the Administration's own fiscal target, it fails to tackle the largest problems areas of the budget, and it fails to bring the debt down to an acceptable level. While we can certainly appreciate the difficult political environment in which the budget is introduced, the glaring omission of any significant entitlement reforms and the excessive use of 'fill-in-the-blank' budgeting does not help to advance the conversation."

Good start, but more needed, says Senate Budget Committee Chairman Kent Conrad: "The President’s budget gets it about right in the first year. Even as it moves to cut spending, it continues investments in the critical areas of education, energy, and infrastructure. These investments will help strengthen the economic recovery, create jobs, and build the foundation for long-term economic growth. But we need a much more robust package of deficit and debt reduction over the medium- and long-term. It is not enough to focus primarily on cutting the non-security discretionary part of the budget, which accounts for just 12 percent of spending this year. Instead, we need a comprehensive long-term debt reduction plan, in the size and scope of what was proposed by the President’s Fiscal Commission. It must include spending cuts, entitlement changes, and tax reform that simplifies the tax code, lowers rates, and raises more revenue."

Obama's budget represents a failure of leadership, writes House budget chair Paul Ryan: "Failing to heed the warnings of economists and the demands of the American people, the President’s budget accelerates our country down the path to bankruptcy. Far from ‘living within its means,’ the President’s budget puts the government on track to nearly double in size since the day he took office - a direct result of his party’s reckless spending spree. His budget destroys jobs by imposing a $1.6 trillion tax hike, adding $13 trillion to the national debt and fueling uncertainty in the private sector. We cannot tax, spend and borrow our way to prosperity. Where the President has fallen short, Republicans will work to chart a new course - advancing a path to prosperity by cutting spending, keeping taxes low, reforming government, and rising to meet the challenges of our time.”

The budget is a window into what the federal government really does these days, and what it really does these days is insure people, writes Ezra Klein: "Two of every five dollars goes to Social Security, Medicare or Medicaid, all of which provide some form of insurance. A bit more than a buck goes to the military. Then there’s a $1.50 or so for assorted other programs -- education, infrastructure, environmental protection, farm subsidies, etc. Some of that, like unemployment checks and food stamps, is also best understood insurance spending. And then there’s another 40 cents of debt repayment. Calvin Coolidge once said that the business of America is business. Well, the business of the American government is insurance. Literally. If you look at how the federal government spends our money, it’s an insurance conglomerate protected by a large, standing army."

The changes from last year's budget are cosmetic, writes Douglas Holtz-Eakin of the American Action Forum: http://bit.ly/fVvshM

The Obama administration is finished with stimulus, writes Paul Krugman: "The important thing, I think, is that he has effectively given up on the idea that the government can do anything to create jobs in a depressed economy. In effect, although without saying so explicitly, the Obama administration has accepted the Republican claim that stimulus failed, and should never be tried again."

The budget doesn't do nearly enough on long-term deficits, writes Howard Gleckman: "Mostly due to one-off responses to the Great Recession, such as TARP and the stimulus, all spending as a share of Gross Domestic Product ballooned in 2009-10. While spending will slowly fall over the next couple of years--thanks to an improving economy, the merciful end to various government bailouts, and President Obama’s proposed spending freeze for some domestic programs, overall outlays would settle in at about 23 percent of GDP through the end of the decade according to Obama’s fiscal plan. That’s too high, especially since most costs of the aging Baby Boomers won’t have kicked in yet."

The budget is passive aggressive -- but in a good way, writes Jonathan Chait: "People support most actual programs, but they think foreign aid constitutes a huge part of the budget and you can generate mass savings by eliminating waste and bureaucracy. They've believed those things for a long time. What's more, I actually see the administration's budget gambit as a subtle attempt to change peoples' minds. The administration is loudly publicizing the fact that it's cutting programs it thinks are necessary. The message, sometimes made explicit, is that the budget actually does not contain a lot of waste. It's filled with programs that have survived many previous rounds of belt-tightening for a reason. If you want to cut the budget, you have to cut useful and necessary things. I don't think this will have a big effect. But I do think Obama is trying, in a passive-aggressive way, to do what liberals have demanded. He's explaining to the public that the free-ride view of budget cutting -- we can cut our way out of the deficit by eliminating waste and spending that only benefits foreigners -- is wrong."

Grammy-validated interlude: Arcade Fire plays "No Cars Go" at Glastonbury.

Still to come: Noam Scheiber profiles Tim Geithner; Obama's "doc fix" plan faces criticism; the budget includes more funding for education; the White House is defending its cuts to heating aid; and the 8-bit The Great Gatsby video game.

Economy

Noam Scheiber profiles Treasury Secretary Tim Geithner: "Geithner is the lone remaining member of the president’s original economic team and arguably the administration’s second-most valued official. Indeed, that the White House was willing to let him face down Issa is only the latest sign of a rather remarkable transformation. (Issa ultimately blinked.) Geithner owns the economic portfolio with China and has been tasked with confronting Republicans over the nation’s debt limit. He has taken the lead on corporate tax reform and overhauling Fannie Mae and Freddie Mac. With his former lieutenant, Gene Sperling, now running the National Economic Council, Geithner will no longer form part of the multiheaded 'war cabinet' that included Sperling’s predecessor, Larry Summers. He is set to play the first-among-equals role of a traditional treasury secretary."

The budget includes a cut to the mortgage deduction for the rich: http://bit.ly/eNAFCa

Banks are still fighting the Fed's new debit card regulations, reports Justin Doom: "The Federal Reserve Board’s proposed caps on debit-card transaction fees have drawn 'broad and deep opposition' from U.S. banks and payment networks and should be withdrawn, according to an industry panel. The Fed’s approach 'misinterprets and misapplies the Durbin amendment,' said a summary of a meeting between the Board of Governors and the Federal Advisory Council dated Feb. 4 and released today by the central bank...The Fed has proposed capping debit-card interchange fees charged to merchants at 12 cents for each transaction, replacing a formula that averages about 1 percent of the purchase price. Visa Inc. and MasterCard Inc., the world’s biggest payment networks, currently set interchange rates and pass the money to card-issuing banks."

Obama and the House GOP are working together to hurt the working poor, writes David Cay Johnston: http://bit.ly/dHY24R

We need to cut corporate tax rates more than Obama is willing to, writes Martin Feldstein: "The U.S. corporate tax rate is 35% at the federal level and 39% when the average state corporate tax is included. The average rate in the other industrial countries of the Organization for Economic Cooperation and Development (OECD) is just 25%. Only Japan has as high a rate. Eliminating every loophole in the taxation of domestic corporate profits identified by the administration's own Office of Management and Budget would raise less than $60 billion of extra revenue in 2011, enough to lower the combined federal-state corporate rate to 35%. The U.S rate would still be higher than in every other country but Japan, and a full 10 percentage points higher than the average in other industrial OECD countries."

The latest technological innovations don't bring a lot of new jobs with them, writes David Brooks: "For example, imagine a man we’ll call Sam, who was born in 1900 and died in 1974. Sam entered a world of iceboxes, horse-drawn buggies and, commonly, outhouses. He died in a world of air-conditioning, Chevy Camaros and Moon landings. His life was defined by dramatic material changes, and Sam worked feverishly hard to build a company that sold brake systems... Sam’s grandson, Jared, was born in 1978... He loves Facebook, YouTube, Wikipedia and his iPhone apps. But many of these things are produced outside the conventional monetized economy. Most of the products are produced by people working for free. They cost nothing to consume. They don’t even create many jobs."

Seems-like-a-joke-but-isn't interlude: The Great Gatbsy NES game.

Health Care

Obama's plan for paying for a Medicare "doc fix" is facing criticism, report Mary Agnes Carey and Christopher Weaver: "Critics quickly pounced on President Barack Obama’s proposal to head off scheduled cuts in Medicare payments to doctors, saying his funding method would cause serious problems. In his fiscal 2012 budget plan released Monday, Obama proposed a two-year, $54 billion solution to stop the payment cuts, which otherwise would go into effect Jan. 1. To finance what insiders call the 'doc fix,' the president would reduce waste, fraud and abuse and draw on savings from a variety of sources, including the states, drug makers - even power wheelchair retailers...Some state officials complained about the impact on Medicaid, the state-federal health program for the poor and disabled."

The budget cuts HHS for the first time in history: http://nyti.ms/gt832H

States need relief from health care reform's Medicaid provisions, writes Peter Suderman: "To consider what the expansion of Medicaid under ObamaCare might do to the states, take a look at Massachusetts and Tennessee. In 2006, Massachusetts overhauled its entire health-care system, including a significant expansion of Medicaid. This expansion is costing the state far more than expected. Gov. Deval Patrick approved a record-setting $9.6 billion to cover its share of Medicaid costs last July. It wasn't enough. He's already gone back to the legislature twice, adding almost $600 million in additional funds...Between 1994 and 2004, [Tennessee] expanded its Medicaid program, called TennCare, to cover roughly one in four residents. The price tag reached a quarter of the state budget by 2004."

Passing a public option would save $47 billion easily, writes Jonathan Zasloff: http://bit.ly/fJ8CV2

Domestic Policy

The budget raises spending on schools, report Sam Dillon and Tamar Lewin: "President Obama proposed a 2012 Department of Education budget on Monday that would, if approved, significantly increase federal spending for public schools, and maintain the maximum Pell grant -- the cornerstone financial-aid program -- at $5,550 per college student. Whether it will be possible to keep that Pell maximum remains uncertain, however, given that House Republicans have proposed cutting the maximum by about $845, or 15 percent, in their proposal to extend the current budget. The administration’s education proposal asks for $77.4 billion. That includes $48.8 billion for the portion of the education budget that does not include Pell grants, or an increase of about 4 percent above the 2010 budget. Congress has not yet enacted the 2011 budget."

The budget cuts aid for summer classes: http://nyti.ms/hiP6ZU

The budget maintains the pay freeze for federal workers, report Ed O'Keefe and Eric Yoder: "President Obama's proposed 2012 budget recommends a 1.6 percent pay increase for members of the military but keeps intact a two-year pay freeze for civilian federal employees. The government's civilian employees are 'patriots who work for the nation often at great personal sacrifice; they deserve our respect and gratitude,; Obama's budget document said, but the ongoing freeze 'reflects the shared sacrifices we must make.' Federal workers still will be eligible for bonuses, longevity-based raises or higher pay upon promotion. The freeze should save about $28 billion over the next five years by lowering the government's base compensation over the next two years, according to the White House."

It's in the GOP's best interest to embrace immigration reform, writes Harold Meyerson: http://wapo.st/f5XKMy

The GOP budget request includes millions in pet funding for John Boehner, reports Scott Lilly: "There are two things the leaders of the new majority in the House of Representatives have made clear since they began to assume the reins of power three months ago. They would: Cut spending, Eliminate earmarks. Those two frequently repeated objectives are being translated into legislation in a 359-page bill filed on the House floor Friday evening...The legislation added an estimated $450 million for a particular bit of defense spending that the Department of Defense did not ask for and does not want...with a big portion of the funds flowing to two cities in Ohio--Cincinnati, where Speaker of the House John Boehner (R-OH) grew up, and Dayton, the largest city in his congressional district."

Adorable animals suffering from sleep deprivation interlude: The world's tired-est puppy.

Energy

The White House is defending its heating aid cuts, reports Ben Geman: "The top White House budget official on Monday defended plans to slash billions of dollars in low-income heating and cooling aid in the fiscal 2012 budget proposal. President Obama has drawn fire from several Democrats over the White House proposal to cut $2.5 billion -- or roughly 50 percent -- from the Low Income Home Energy Assistance Program. But Jacob Lew, who heads the White House Office of Management and Budget, said the budget proposal that Obama is sending to Congress on Monday is packed with tough choices aimed at freezing discretionary spending. Lew, in a CNN interview, also said the proposed heating-aid cut reflects price trends."

The budget also includes new offshore drilling fees: http://bit.ly/fgYGS4

The EPA's watchdog group is protesting its proposed budget cuts, reports Stephen Power: "The Environmental Protection Agency’s in-house watchdog apparently thinks President Barack Obama’s spending blueprint for fiscal 2012 doesn’t give him enough money to do his job. A note accompanying Mr. Obama’s budget proposal, released Monday, says that EPA Inspector General Arthur A. Elkins Jr. has submitted comments setting forth [his] conclusion that this Budget’s request...would substantially inhibit the Inspector General from performing the duties of the office.'...The president’s proposal calls for giving Mr. Elkins $46 million next year - compared with $45 million that was enacted in 2010. Overall, Mr. Obama proposes to cut the EPA’s budget by 12%, to about $9 billion."

The GOP wants deeper EPA cuts than Obama is proposing: http://bit.ly/f4jngZ

The budget includes more money for nuclear energy, reports Andrew Restuccia: "President Obama’s fiscal year 2012 budget outlines a plan for reviving the country’s nuclear power industry, calling for $36 billion in government-backed loan guarantees for new nuclear reactors and setting aside more than $800 million for nuclear energy research. Obama has said that nuclear power is a key component of the country’s energy future. In his State of the Union speech last month, he outlined a plan to generate 80 percent of the country’s electricity from low-carbon sources including nuclear by 2035. But the prospect of reviving a U.S. nuclear energy industry faces significant obstacles. The country has not seen the completion of a new nuclear reactor for decades and projects have been hobbled by high costs."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams. Photo credit: Carolyn Kaster photo.

By Ezra Klein  | February 15, 2011; 6:12 AM ET
Categories:  Wonkbook  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Reconciliation
Next: The White House's 'two big theories of action'

Comments

So, if private enterprise wants gvmt out of its way, and can accomplish great things without gvmt, why must the gvmt spend any money at all to subsidize nuclear power?

Why haven't these companies already gotten the needed permits and built dozens of nice profit generating plants and made a point, perhaps through advertising, that they didn't need a single federal dime to succeed?

Doesn't this mean they aren't really profitable on their own?

Hey, I want nuke power so we can start building a network of electric car charging stations across the country, but I'm just wondering about things....

Not being flippant here, just need to understand the issue a little more because on this issue I think there's a lot of agendas/politics in the arguments that are hard to see through.

Posted by: lauren2010 | February 15, 2011 7:53 AM | Report abuse

Serious question: were any of the significant entitlement reform deals or the 1986 tax reform deal initiated through a President's budget? I would be surprised. In my recollection, changes in discretionary spending, sometimes defense, and some taxes may begin with a budget proposal, but little else. If that's correct, then the budget's focus is appropriate -- and less about politics than about understanding how the process actually works.

Posted by: LACinDC1 | February 15, 2011 8:32 AM | Report abuse

Annie Lowrey lost one of our current wars. She lists spending on Defense and the war in Afghanistan. Where's the Iraq war?

Is this really the WTF of the Obama administration budget? Win the Future by Losing the Iraq war (from the budget).

It might be worthwhile noting that Defense spending increases 5 percent this year (above the prior year). The Defense budget gets the minor (as portion of total size) cuts in 2014 and 2015.

Eat the future is right.

And quit talking about Social Security. There is no negotiation there -- with crazy, fundamentalist, fact-free wing-nuts they will take everything you "put on the table" and then break the deal and shoot your dog just for spite. There are enough asthat Democratic Party senators to broker a "deal" that will put Obama on the wrong side of history. So just quit talking about it. A "fix" that would be in line with the CAP proposal ain't gonna happen. If you really care about saving social security, just quit enabling the "save social security" talk until the House moves to the Democrats again.

Posted by: grooft | February 15, 2011 8:47 AM | Report abuse

--*Passing a public option would save $47 billion easily*--

Nickel and diming down the path to bankruptcy.

Posted by: msoja | February 15, 2011 8:55 AM | Report abuse

""To consider what the expansion of Medicaid under ObamaCare might do to the states, take a look at Massachusetts and Tennessee. In 2006, Massachusetts overhauled its entire health-care system, including a significant expansion of Medicaid. This expansion is costing the state far more than expected. Gov. Deval Patrick approved a record-setting $9.6 billion to cover its share of Medicaid costs last July. It wasn't enough. He's already gone back to the legislature twice, adding almost $600 million in additional funds...Between 1994 and 2004, [Tennessee] expanded its Medicaid program, called TennCare, to cover roughly one in four residents. The price tag reached a quarter of the state budget by 2004."

Good job!

Posted by: krazen1211 | February 15, 2011 9:37 AM | Report abuse

It's not an opening bid, it is junk. Designed to be junk, to exhibit capitulation and deference to the oligarchs.

Posted by: JF11 | February 15, 2011 9:41 AM | Report abuse

"The budget cuts aid for summer classes"

"In my earlier post, I asked for evidence that the summer grants did not help lift graduation rates. The administration official preferred to ask a different question: What evidence exists that summer grants, which began last year, have lifted graduation rates? Or, as the official put it, “Is the evidence adequate to justify a $5 billion new entitlement?”


I'm not familiar with Dave Leonhardt's work, but I guess he's been infected by proximity to Krugman. Notice how he phrases the question which happens to all government programs once started, prove that they don't work, rather than the administration's prove that they do.

The idea of summer Pell Grants stands the world on it's head of course to any real world person. Many of us from working class families worked long hours at a summer job to enable us to pay in part for our education in the full year.

Summer Pell Grants says oh no, you shouldn't be working for the cost of your education at any time. You should be taking classes year round, and be entirely dependent on loans and handouts.

Krugman disesase it's everywhere!

Posted by: johnmarshall5446 | February 15, 2011 9:45 AM | Report abuse

The Great Gatsby NES game is definitely a joke. Go to the contact page.

Posted by: bampote | February 15, 2011 9:48 AM | Report abuse

More proof out today that Krugman is a fraud when he wears his economist hat. (notice I didn't say a bad economist, just that he chooses to use his vocation to lie and dissemble in order to further his political goals)

"U.S. import prices jumped in January as energy costs shot higher again, a Labor Department report showed on Tuesday.

Import prices rose 1.5 percent, or nearly double the consensus forecast of 0.8 percent in a Reuters poll of economists."

So much for the idea that inflation is nothing eh Paul?

Posted by: johnmarshall5446 | February 15, 2011 9:49 AM | Report abuse

sheer and utter cowardice by the President. For someone who promised "hope and change" this is none of that. Hope and change would be an actual discussion on entitlement reforms that taking up an even increasing percentage of the budget. A President should lead. This President is doing none of that and should be ashamed and he's sent his minions to spin it so it doesn't look so bad. If a Republican President had done something like this then Ezra would rightfully bash him forever for it.


Posted by: visionbrkr | February 15, 2011 10:00 AM | Report abuse

vision:

Let's be real, Obama is looking to get re-elected, like all presidents. Voters don't vote budget cuts, despite what columnists say, they vote budgets, as in what they receive.

If you call for entitlement cuts, then you play into the hands of the GOP because having established your position, they can push you even farther in their direction because you've already made a public comittment. This way, if a deal is made on SS, then the GOP at least shares the blame if not takes it outright, when in November voters prove me right about the reasons they vote!

Bad budgeting but smart politics by Obama.

Posted by: johnmarshall5446 | February 15, 2011 10:08 AM | Report abuse

and the fact that Krugman believes that stimulus is gone forever is ludicrous. The budget in 2006 had spending of $2.6 Trillion. The first three Obama budgets are $3.552 Trillion, $3.83 Trillion and $3.73 Trillion.

Stimulus is alive and well its just not called that because we don't want people to see that it doesn't work.

Posted by: visionbrkr | February 15, 2011 10:08 AM | Report abuse

@johnmarshall,

That's fine but then don't come in here on a promise of "hope and change" when all you're doing is the same old crap that all politicians do.

And SS isn't the issue and shouldn't be. Medicare and Medicaid should be. That's like telling a stage 4 cancer patient that they're getting a mole removed when they need radiation treatment.

I understand why he did it but it doesn't make it right. It makes him like any other politician who wants to get re-elected. Will he attack these things in 2013 when he's re-elected. I hope so.

Posted by: visionbrkr | February 15, 2011 10:23 AM | Report abuse

The areas where gvmt stimulates (dod, drs, hospitals, insurers, debt investor debt, autos, wallstreet) are doing quite well indeed.

Big business is raking in the cash.

Corps are not suffering a recession anymore.

Also state capital economies have fared well during the recession.

Krugman and others Keynesians are calling for bottom up stimulus that creates jobs for average Americans or to help them thru tough times. This kind of stimulus is what krugman is calling dead.

I personally believe we need to also stop the stimulus for the well to do as well.

Posted by: lauren2010 | February 15, 2011 10:23 AM | Report abuse

vision

do you ever stop with the partisan rhetoric?

Do you ever try to discuss issues in a fair way, recognizing and admitting the absurdities and shortcomings with BOTH parties?

I, for one, have discussed ad nauseum my personal issues with Democrats and Obama. But all I see you do is heaping on, whether fairly or unfairly, as if you were Sarah Palin.

And John seems to have an issue with Krugman, though I've never seen him fire off on a conservative economist, most of which IMO make krugman look like a boyscout.

I mean we have like two liberal economists who are allowed to get on TV, and yet all you smartypants can do is gang up on them instead of holding the majority to the fire (you know the guys who basically dictate how things actually work in the USA and who have helped bankrupt us).

Your inclinations are showing, and frankly, I laugh when folks like you then try to pretend your are fair and balanced or sound like you are straight shooting, though of course, you aren't.

Posted by: lauren2010 | February 15, 2011 10:33 AM | Report abuse

"The first three Obama budgets are $3.552 Trillion, $3.83 Trillion and $3.73 Trillion."

So what would those budgets have been had W stayed in office until now?

And what would the differences be? Can you list them so we can get a handle whether your observations have some kind of value?

Posted by: lauren2010 | February 15, 2011 10:36 AM | Report abuse

john

What, and how much, would be a good budget for you?

What would you do with major programs (DoD, wars, SS, health, energy, taxes, etc)?

Posted by: lauren2010 | February 15, 2011 10:39 AM | Report abuse

vision wrote:

"I understand why he did it but it doesn't make it right. It makes him like any other politician who wants to get re-elected"

Who ever thought otherwise?

Posted by: johnmarshall5446 | February 15, 2011 10:39 AM | Report abuse

BTW, john

Where is the link to that inflation report?

And why aren't you at the krugman site commenting there instead of posting OT comments here?

Hey, not saying it's bad or improper to post OT (I do it all the time). But it just seems you are stalking Krugman, and to me that sounds a little weird, as if maybe you are part of an organized effort to smear krugman wherever you guys can.

What exactly do you do for a living John?

Posted by: lauren2010 | February 15, 2011 10:43 AM | Report abuse

@lauren,

while I don't need to justify myself to you I have said before if you chose to see it that we shouldn't be in Iraq or Afghanistan and that all discussions of entitlement reform from Republicans should START with Defense department reductions. That way the Dems can't politicize your agenda. Will the Republicans do that, no. Should they, YES.

that being said Bush's last 3 budgets had expenditures of $2.78 Trillion, $2.9 Trillion and $3.107 Trillion.

He's (BUSH) not much better but that's a huge jump and the answer can't always be "raise taxes" because as was clearly pointed out in Wonkbook our Corporate tax rates even when you factor in deductions are 10% higher than the average of OCED countries. Many liberals correctly stress about jobs moving overseas but what happens when entire corporations move overseas because of corporate tax rates??

Posted by: visionbrkr | February 15, 2011 10:45 AM | Report abuse

Am I the only liberal here?

You liberals are PU**IES

Get off your butts and start talking or doing something to fight for what you believe.

PU**IES !!!!

You all should be ashamed of yourselves.

Posted by: lauren2010 | February 15, 2011 10:45 AM | Report abuse

Lauren:

There's nothing wrong with SS, a fact that keeps getting obscured by the fight over Medicare Medicaid.

Those two are an unholy mess. I'm not informed enough to know how to stop the budgetary rise going on in those two, and my simplest suggestions would bring back the "death panels" argument. Namely I believe we have to stop funding so much end of life care. Case in point Provenge a drug for terminal prostate cancer patients that extends their lives an average of three-five months in trials, but costs $73,000 to $90,000 for the treatment.

"PROVENGE's fate lies with Center for Medicare and Medicaid Services (CMS), which will determine next month whether the drug will be covered. Note that prostate cancer mainly strikes elderly males, making Medicare the biggest likely insurer to reimburse of the drug. The majority of industry watchers believe it will receive full CMS reimbursement status, though only for prostate cancer"

Note that these are terminal patients, but CMS is expected to approve the use anyway.

We have become a country of, by, and for the old, so I don't know how we can stop this. Sorry for lacking a better budgetary answer.

Posted by: johnmarshall5446 | February 15, 2011 10:52 AM | Report abuse

@johnmarshall,


Oh i never did but there's a whole segment of the population that I suspect bought into that "hope and change" credo that he sold. A lot of independents that helped him get elected I suspect.

oh and I've got a personal problem with politicians that get elected on a mantle of "X" but then go ahead and drop that the moment the get elected.

Posted by: visionbrkr | February 15, 2011 10:54 AM | Report abuse

Obama is most certainly SUPERIOR to Bush in budgeting.

Most (4/5) of the current deficits are due to Bush. If you subtract the deficits, then we see that Obama would prefer to spend less than Bush and do it on things that actually help us.

It takes time to wind down 8 years of budgetary excess and momentum under an incompetent President who doubled the debt in 8 years and hid the true cost of the wars off books.

As for corporate tax rates, I'd gladly lower or reform them in exchange for raising high-end personal income tax rates so that businesses have incentive to keep that money for business purposes instead of wasting it on high exec pay, half of which ends up in overseas investments or hidden in tax shelters, etc, and little of which end up solving societal problems.

People like TB Pickens and the Bushes instead run around buying up natural resources overseas (water, oil, gas, etc) in order to enrich themselves and make profits off of the local people and everyone else. There are a few good billionaires, but most of them are rotten and irresponsible.

Posted by: lauren2010 | February 15, 2011 10:56 AM | Report abuse

lauren:

Here's the link

http://www.cnbc.com/id/41596731.

Last time I checked, the NYT doesn't allow uncensored commentary, but selects what appears. Perhaps things are different now?

I am lucky enough to be an investor, which means I'm fiscally conservative and socially liberal, in other words a pariah in both parties! LOL

Posted by: johnmarshall5446 | February 15, 2011 10:59 AM | Report abuse

Obama has already run up about $3.5 trillion in debt.

It will be about $5.5 trillion before he leaves office in 2013, coupled with the worst economic growth in post WWII US History.

Posted by: krazen1211 | February 15, 2011 11:03 AM | Report abuse

john

Without a better answer, your criticism of Obama's budget can't be properly evaluated.

You may just be full of *&%! and not really care what the budget is, but we don't know.

I, on the other hand, have made specific proposals and comments as to a) Obama's budget will bring us ruin, just like the GOP's budget, b) we need to cut spending across the board and raise taxes on the wealthy, etc.

Do you support raising high-end tax rates back to the Clinton era?

Do you support significant DoD budget cuts and ending the wars in addition to reforming health care programs?

Even some basic "Yeah, sort of" answers could help us understand who you are and WHY you comment here.

And again, what do you do, or did you do, for a living?

And why are you stalking Krugman instead of any number of conservative economists who dominate the airwaves or papers? You certainly can't believe they are more correct or less political than Krugman? I mean, Krugman is not mainstream and his philosophy does not hold sway in the actual, practicing world, and therefore has not contributed to the recession or our debt. Again, what's the special beef with Krugman? Seems sort of wierd to me you keep commenting on him out of the blue.

Posted by: lauren2010 | February 15, 2011 11:06 AM | Report abuse

"Obama has already run up about $3.5 trillion in debt."

Wrong.

It is clear "the system" ran up that debt.

Obama inherited a legacy of debt and falling gvmt revenues from a thoroughly disgraced herbert hoover--I mean, George W. Bush.

That said, I am not happy with Obama not doing more to fight for reductions in DoD spending and stopping the wars, etc.. But it does take time to unwind from a disaster like BushJr, and perhaps Obama's opening salvo here is a negotiation stance, though I doubt it.

Posted by: lauren2010 | February 15, 2011 11:09 AM | Report abuse

"It is clear "the system" ran up that debt.

Obama inherited a legacy of debt and falling gvmt revenues from a thoroughly disgraced herbert hoover--I mean, George W. Bush"

I've already debunked this lie before. The numbers prove otherwise.

Posted by: krazen1211 | February 15, 2011 11:10 AM | Report abuse

investor?

Cool.

Should I stay in the market or get out?

Give me some tips.

Posted by: lauren2010 | February 15, 2011 11:11 AM | Report abuse

"There's nothing wrong with SS, a fact that keeps getting obscured by the fight over Medicare Medicaid.

Those two are an unholy mess. "


Yes they are. About 50% deficit for the last year is solely due to the Medicare and Medicaid programs authorized but not paid for by the Democrats.

These 2 programs are also responsible for nearly all the deficit spending in the 1980-2008 period.

Posted by: krazen1211 | February 15, 2011 11:16 AM | Report abuse

lauren:

I already told you that I am an investor, that IS how I make my living. Why do you think I'm at the computer so much? (of course I'm homeless and it's a public library computer, but that cuts down on my expenses LOL)

I wasn't expecting an "evaluation" of my answers.

I don't run the show, I just try to profit from the tendencies of those who do. So for instance I have no problem going long the euro and shorting the dollar, or vice versa, depending on where the trade is.

I think people should take the advice of Lord Palmerston though he was speaking about nations not individuals:

“Nations have no permanent friends or allies, they only have permanent interests.”

Ezra includes links from Krugman almost every day. Why shouldn't I chat about them?

Posted by: johnmarshall5446 | February 15, 2011 11:19 AM | Report abuse

@lauren,

I've already proven to you that I'm not partisan but I'll take exception to your stance that President Bush had falling gov't revenues.

2006- 2.41 Trillion
2007- 2.54 Trillion
2008- 2.7 Trillion
2009- 2.7 Trillion


His revenues increase as per Wikipedia. now maybe they're wrong and you have a better source and I don't have 2005 and prior from Wikipedia but now its not me being the partisan its you. Again another pet peeve of mine. Don't accuse me of doing something that I'm not but you're doing.

Posted by: visionbrkr | February 15, 2011 11:24 AM | Report abuse

lauren wrote:

"investor?

Cool.

Should I stay in the market or get out?

Give me some tips"

I already did, more than six months ago. I told everybody in this very space to go long commodities and financials, short Treasuries, and buy the dollar on dips.

It's not really brain surgery anymore like it used to be before the internet. I tell everybody else at the shelter, watch CNBC for 10 minutes every week day, doesn't matter what time or show. Over time, you will get an MBA level of education.

Posted by: johnmarshall5446 | February 15, 2011 11:26 AM | Report abuse

Other pieces of legislation adding hundreds of billions of dollars to the deficit:

The Higher Education Act of 1965
The Individuals with Disabilities Education Act of 1975
The Department of Housing and Urban Development Act of 1965

Posted by: krazen1211 | February 15, 2011 11:26 AM | Report abuse

@vision

Revenues during the Bush Jr administration averaged higher than the Nixon, Ford, Johnson, and Kennedy Administrations in terms of GDP.

Oh, and the Obama administration, too.

Posted by: krazen1211 | February 15, 2011 11:32 AM | Report abuse

Lauren ,
I am a proud liberal and I speak out , but I get the feeling that Obama is a behind the scenes dealer, ( and not in a bad way all the time ) , so he is just letting everyone let off steam but the deal is done already ... witness the extension of the tax cuts.
We knew for years about the huge group of aging americans and the baby boomers are right along behind ..... so why are we surprised that Medicare and Medicaid is skyrocketing .
Americans demand everything from their health care , all the end of life care , chemo etc. I am an RN so I see it first hand ... I would like to see more dollars spent on the front end eg. combating childhood obesity and diabetes ,instead of icu care for 85 yr olds BUT this is where US has to have the tough conversations and we are simply not ready yet I think. Health care can be delivered in a better way though , get huge profits out of it , move to more at home services for the elderly and disabled , move to neighborhood clinics staffed with Nurse Practictioners , Nutritionists , Physical Therapists. get the Drug Companies out of the picture ( why are the elderly on average 10-15 meds .. its all a lot of common sense things that would help greatly .

Posted by: sligowoman | February 15, 2011 11:37 AM | Report abuse

@krazen,

yes I'll be glad when Lauren comes back on here and admits he/she are wrong. There's a LOT to blame Bush about but revenues is not one of them. To be fair too the lack of revenues in the Obama administration is not his fault (ie the recession) and if I was as partisan as Lauren claimed me to be earlier I'd conveniently ignore that fact. That being said spending went up way too much and now is being taken back down way too little.

Posted by: visionbrkr | February 15, 2011 11:49 AM | Report abuse

"Summer Pell Grants says oh no, you shouldn't be working for the cost of your education at any time. You should be taking classes year round, and be entirely dependent on loans and handouts."

Nonsense.

Many students who receive financial aid are already working year-round to support their expenses, both in standard off-campus part-time jobs and in on-campus work study programs. Students who enroll in summer quarter studies often do so in order to complete their studies in less than four years, which ultimately gets them a degree at a lower overall cost to the student and to the public subsidies.

It is noticeable that Obama's proposal does not lower the maximum annual Pell Grant awarded to each student, it simply removes the ability to apply the grant toward tuition for summer studies, which REDUCES flexibility for working students. This ensures that students will have reduced opportunites to accelerate the time within which they earn a degree and commence their career.

It is an accounting gimmick, the only effect of which will be to keep some college students in college longer than would otherwise be the case.

Posted by: Patrick_M | February 15, 2011 1:07 PM | Report abuse

Patrick:

Thanks for the reply:

"Students who enroll in summer quarter studies often do so in order to complete their studies in less than four years, which ultimately gets them a degree at a lower overall cost to the student and to the public subsidies"

Ummm no actually. the students who are MOST dependent on the Pell Grant are those who come from the lowest economic rung of society. Virtually all studies show that they are the LEAST likely to complete their education even in a four year time frame, let alone a three year.

So no, you haven't refuted anything I wrote.

Posted by: johnmarshall5446 | February 15, 2011 1:34 PM | Report abuse

You can add up any set of programs and say they equal the deficits

Guess what, you can add up the DoD budgets and costs of wars and Medicare-D and do the same thing.

Deficits are caused by SPENDING too much while decreasing taxes and doing things to hurt the economy which also reduces revenues.

Posted by: lauren2010 | February 15, 2011 3:01 PM | Report abuse

yes vision, revenues fell during the recession, and I attribute that to Bush. See link below. Also, revenues during the mid-aughts were at one point the lowest as a percentage gdp since the great depression. Revenues for the bush years were overall anemic.

http://www.cbo.gov/doc.cfm?index=11705

"As was the case last year, this year's deficit is attributable in large part to a combination of weak revenues and elevated spending associated with the economic downturn and the policies implemented in response to it."

Posted by: lauren2010 | February 15, 2011 3:20 PM | Report abuse

SIgowoman

Thanks for commenting

If you've seen many of my comments you'd know I too want more reform and that I too have problems with many dems, including Obama

We need more strong voices like yours to have any chance of being heard thru the noise

Posted by: lauren2010 | February 15, 2011 4:04 PM | Report abuse

http://www.usgovernmentrevenue.com/downchart_gr.php?year=1900_2010&units=p&title=Revenue%20as%20percent%20of%20GDP

That chart clearly shows two deep revenue dips as a result of bush policies.

Obama did not cause this.

Clinton did not cause this.

The bush tax cuts, the two wars, medicareD, and the recession, which happened even as bush declared a sound economy caused these revenue problems.

Posted by: lauren2010 | February 15, 2011 4:17 PM | Report abuse

http://www.usgovernmentrevenue.com/downchart_gr.php?year=1900_2010&units=p&title=Revenue%20as%20percent%20of%20GDP

That chart clearly shows two deep revenue dips as a result of bush policies.

Obama did not cause this.

Clinton did not cause this.

The bush tax cuts, the two wars, medicareD, and the recession, which happened even as bush declared a sound economy caused these revenue problems.

Posted by: lauren2010 | February 15, 2011 4:18 PM | Report abuse

"...the students who are MOST dependent on the Pell Grant are those who come from the lowest economic rung of society. Virtually all studies show that they are the LEAST likely to complete their education even in a four year time frame, let alone a three year."

Nonsense.

While it is of course true that low income students are less likely to complete their degree than affluent students, the data proves that Pell Grants have dramatically boosted graduation rates among low income students for the obvious reason that they ensure that fewer will abandon their studies due to financial necessity.

Pell Grant recipients come not only from the "lowest economic rung in society." Thanks to the declining ability of states to adequately fund public colleges and universities, tuition rates there make even public schools a very expensive burden for middle class families, and Pell Grants play a critical role in helping all but the wealthiest segment of society obtain opportunity to advance their education.

Conservatives ought to respect Pell Grants, because they are really "school vouchers" for higher education, a grant that a student can apply in free market decision making, at public or private schools, balancing considerations of cost and value. The grants help to ensure that academic achievement in our nation is based upon a true meritocracy, instead of the accident of birth into the upper economic social class.

Posted by: Patrick_M | February 15, 2011 4:22 PM | Report abuse

http://inflationdata.com/inflation/Inflation/AnnualInflation.asp

John

I read your link and did some other checking.

My link (and other reading) suggests inflation was down for 2010 and has no discernable problematic rise in 2011

Your link said inflation was higher for 7 months now, but I was unable to confirm that

Gas is cheaper now than in 2007/8

Houses are cheaper too

Cars, not sure

Grain prices, up

I don't think you've proven krugman is lying

Maybe I am looking at wrong data, and if so, you can correct me please.


Posted by: lauren2010 | February 15, 2011 4:37 PM | Report abuse

Ezra said: "tax expenditures"

Welcome to the world of progressives, where it's considered 'spending' when they take less of the money that YOU earned out of YOUR wallet.

Oh, and actual spending? That's now labeled 'investments'.

Just want to keep everyone up to date on progressive lexicon.

Posted by: dbw1 | February 15, 2011 5:18 PM | Report abuse

DBw

Do you consider any part of the DOD budget as investment?

Do you consider any part of CDC budget investment?

Do you consider food inspections budget investment?

Do you think those budgets could be funded without stealing any if your money?

I just wanna know if you think all gvmt spending is pure waste or if any taxes are ok with you? And if some investment is indeed needed and some taxation is needed, then we all actually have common ground, it's just a matter of degree where we disagree.

Posted by: lauren2010 | February 15, 2011 5:35 PM | Report abuse

Worth noting:

"In the late 1970s, the maximum Pell award covered more than two-thirds of tuition and fees for a public four-year university. In the 1980s, it covered roughly half of such expenses. In the last school year, it covered about a third."

-The Washington Post, October 8, 2009

Pell Grants are an excellent example of government expenditure as "investment" in the strength of our future economy - ensuring that our university system graduates the best and the brightest talent, not just the children of the rich. The Pell Grant program deserves to be protected and strengthened.

Posted by: Patrick_M | February 15, 2011 5:53 PM | Report abuse

I agree Patrick

We should work and invest heavily in education, health care, and keeping our mfg jobs.

Posted by: lauren2010 | February 15, 2011 6:13 PM | Report abuse

patrick:

You have the right statistic, but you're interpreting it backwards. Tuition costs have skyrocketed much much more than inflation, making the Pell Grants smaller in proportion, not the other way around.

I have no problem with keeping the pell grants per se, I was arguing that it is counter productive to give them out to encourage students to go to school in the summer.

Posted by: johnmarshall5446 | February 15, 2011 6:24 PM | Report abuse

"Guess what, you can add up the DoD budgets and costs of wars and Medicare-D and do the same thing"

No, you can't. Especially since Medicare D didn't exist until 2006.


"That chart clearly shows two deep revenue dips as a result of bush policies.

Obama did not cause this.

Clinton did not cause this."


Wrong. Obama did cause this.

Posted by: krazen1211 | February 15, 2011 7:07 PM | Report abuse

"Deficits are caused by SPENDING too much while decreasing taxes and doing things to hurt the economy which also reduces revenues."


This is why Obama revenues are much lower than Bush revenues.

Posted by: krazen1211 | February 15, 2011 7:13 PM | Report abuse

"yes vision, revenues fell during the recession, and I attribute that to Bush. See link below. Also, revenues during the mid-aughts were at one point the lowest as a percentage gdp since the great depression. Revenues for the bush years were overall anemic"


Nope. They were overall in the middle range for post WWII Presidents.

Only political hacks create convienient narratives when the facts don't suit their agenda.

Posted by: krazen1211 | February 15, 2011 7:17 PM | Report abuse

"You have the right statistic, but you're interpreting it backwards. Tuition costs have skyrocketed much much more than inflation, making the Pell Grants smaller in proportion, not the other way around.

I have no problem with keeping the pell grants per se, I was arguing that it is counter productive to give them out to encourage students to go to school in the summer."

1. I am not "interpreting" anything backwards, I am merely noting that Pell grants have not increased at anything approaching the increase in the rate of tuition, thus an ever-growing segment of the population experiences financial need, it is not limited the "lowest rung."

2. It is not counter-productive to fund summer quarter tuition with Pell Grants. As already stated, many students will take courses in the summer in order to graduate more quickly. Others do so in order to get course credit needed to graduate on schedule. Denying options in the summer can only lead to more students staying into a fifth year to complete requirements, or falling out of school because the huge proportion of expense that remains after the Pell money is applied is impossible to maintain over four full years.

The notion that it is somehow "productive" for school facilities to stand empty three months out of every twelve is one of the more glaring absurdities of our educational system. Closing schools at all levels in the summer is a vestige of centuries past, when the children were required to return to the farms to tend the crops.

A credit earned toward a degree during the summer months is no less valid than a credit earned in the fall, winter, or spring, and not allowing eligibility for the grants for summer studies simply reduces options for students and slows down the educational process, at a time when we ought to be promoting flexibility and efficiency by have colleges up and running year-round.

The Obama budgetary gimmick with the summer Pell Grants is a step backward, and the amount saved by keeping financial aid recipients from attending courses during summer months is truly minuscule in relation to the budget deficit. There are much better ways to achieve far more significant savings. It is an extremely ill-conceived proposal.

Posted by: Patrick_M | February 15, 2011 7:29 PM | Report abuse

krazen

ideologues like you are one of the reasons I am no longer a Republican.

You have no capacity for the truth, even when it's provided to you.

Posted by: lauren2010 | February 15, 2011 8:32 PM | Report abuse

krazen to lauren: "It's one thing to lie about the issues. Please do not lie about me. Nowhere have I advocated for the complete eradication of anything of any kind"

http://voices.washingtonpost.com/ezra-klein/2010/09/how_to_balance_the_budget_thro.html

krazen: "END MEDICAID"

I think that qualifies as "anything of any kind".

Krazen has uttered similar things about medicare and the full repeal of ACA without replacing it without anything of any kind, but I assume one instance of proof (above) is sufficient to show that the one claiming I am lying is in fact the liar.

Posted by: lauren2010 | February 15, 2011 8:39 PM | Report abuse

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