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Bush's Red Ink, Obama's Problem

There's some much-needed straight talk about the deficit on the front page of today's New York Times: A reminder that it's mostly George W. Bush's fault -- but that it won't go away until the government raises taxes or cuts spending.

Neither raising taxes nor cutting spending are good medicine in a recession, of course. So the question is: When will it happen? When will President Obama -- and Congress -- summon the political will to do what really needs to be done?

I'm thinking second term.

New York Times business columnist David Leonhardt
writes with admirable succinctness:

There are two basic truths about the enormous deficits that the federal government will run in the coming years.

The first is that President Obama's agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.

Leonhardt crunches the numbers to track exactly how the Clinton-era predictions of surpluses gave way to prophecies of massive deficits. His analysis places 90 percent of the blame on the business cycle, Bush's policies, and policies from the Bush years that are scheduled to expire but that Obama hasn't tried to snuff out. That leaves Obama responsible for 10 percent of the projected deficits: 7 percent from the stimulus bill -- and only 3 percent Obama's agenda on health care, education, energy and other areas.

Nevertheless, Obama now has 100 percent of the responsibility for fixing this mess, and what is he doing about it? Leonhardt writes that his talk about cutting health care costs is not yet entirely convincing -- and that it's not enough, anyway.

The no mystery. It will involve some combination of tax increases and spending cuts. And it won't be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.

That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade.

Indeed, as Leonhardt suggests, Obama's endorsement yesterday of pay-go is really more nice talk to the Blue Dogs than serious medicine.

Lori Montgomery writes in The Washington Post:

President Obama called on Congress yesterday to enact pay-as-you-go budget rules to help tame a deficit forecast to top $1.8 trillion this year. But even as some Democrats applauded the plan, others complained that it would give a free pass to expensive policies that would sink the nation trillions of dollars deeper into the red over the next 10 years....

Obama would exempt an array of expensive policies currently in effect. For example, lawmakers could extend the tax cuts enacted during the Bush administration past their 2010 expiration date, restrain the growth of the alternative-minimum tax and continue to forestall scheduled payment cuts for Medicare physicians without consequence.

Sheryl Gay Stolberg writes in the New York Times that

the announcement — just one day after Mr. Obama lauded the billions of dollars his administration was spending to save or create what the White House estimated as 600,000 new jobs this summer — quickly turned into Round 2 of an escalating war between the White House and Republicans over Mr. Obama's claims of fiscal responsibility.

"President Obama and Congressional Democrats telling Americans they are committed to budget discipline is like Charles Ponzi telling people to trust him with their money," the Republican National Committee said in a statement to reporters.

Yes, it's going to get really nasty. That's because, as Manu Raju writes for Politico:

Republicans on Capitol Hill think they've finally found Barack Obama's Achilles' heel: rising public concern about government spending and the federal deficit.

While Obama's overall job-approval ratings are up over the past month, a Gallup Poll out this week has a 51 percent majority of Americans disapproving of the president's efforts to control federal spending and a slim 48 percent to 46 percent disapproving of his handling of the federal deficit.

Those are the only areas where Obama has negative approval ratings — Americans approve, by double-digit margins, the way Obama is handling his overall job, foreign affairs, terrorism, the Middle East and North Korea. But the GOP will take what it can get.

At yesterday's East Room event for pay-go, however, Obama was typically unflappable, expressing supreme confidence that he is making the right call now, and will make the right calls later.

The reckless fiscal policies of the past have left us in a very deep hole. And digging our way out of it will take time, patience, and some tough choices. I know that in the face of this historic challenge there are many across this country who are skeptical of our collective ability to meet it. They're not wrong to feel that way. They're not wrong to draw this lesson after years in which we've put off difficult decisions; in which we've allowed our politics to grow smaller as our challenges grew ever more daunting.

But I think everybody understands this is an extraordinary moment, one in which we are called upon not just to restore fiscal responsibility, but to once again live up to the broader responsibilities we have to one another. And I know that we can summon that sense of shared obligation; that we have the capacity to change, and to grow, and to solve even our toughest of problems.

By Dan Froomkin  |  June 10, 2009; 1:20 PM ET
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President George W. Obama is just kiddin those Congresspersons along. In his second term he'll call for the necessary tax increases and the Republicans and Conservadems will jump at the chance to balance the budget over the long haul. That will be the day after transparency in government and the day before the repeal of DADT.

Posted by: dickdata | June 10, 2009 2:35 PM | Report abuse

The Democratic party has long been the party of fiscal conservatism. The national debt skyrocketed under Reagan and the first Bush and then went stratospheric under the second Bush. Clinton did his best to rein in the excesses, but even he could only balance the budget, barely making a dent in the accumulated debt.

For the Republicans to complain now about debt is laughable. LIke all good con-men the Republicans preach fiscal conservatism when they are out of office and then implement radical borrow-and-spend policies when in office.

Posted by: fletc3her | June 10, 2009 2:36 PM | Report abuse

Quit fighting these senseless wars and reign in military spending, for heaven's sake. Our government refuses to address the cost of these ridiculous, going-nowhere wars, as if constant killing, drones, contactors, and defense corporations are necessities--like food and water.
If Obama would bring in some decent military leaders instead of Bush leftovers, he'd have a different take on Iraq and Afghanistan. Obama could finally quit breaking all his campaign promises concerning the permanent war machine.

Posted by: iacitizen | June 10, 2009 3:21 PM | Report abuse

While the current budget projections can be calculated to about anything, since we really have two very close together data points and no good way to understand just which function we are graphing. The current path of the budget deficit could graph as anything from a very fast exponential through some kind of logarithmic, to a very small circle.

As next years budget begins do be demarcated next March and April, with both the President and the Congress having time to work on the problem and political capital to work on it with, we will certainly see new taxes somewhere. The most likely such taxes will be some kind of revenue tariff, because it will be the least blatantly visible to the tax payer, and some increase in the top marginal levels of income taxes because, while it will give Grover Norquist something to fulminate about, it will also give Democratic Party demagogues their own ammunition to fulminate with.

Should the economy begin to turn up significantly, some mixture of expiration of Bush tax cuts, top marginal increases and tariffs could look so good in their results that further stimulus deficit spending can be reduced.

ANY projections as to deficits or national debt anytime this year are about as accurate as a shotgun shell tossed in a fire. Once we have a twelve month barrel to colimate the shot pattern, we can figure out just which way to aim the beast.

Posted by: ceflynline | June 10, 2009 3:42 PM | Report abuse

In my humble opinion, a good part of fiscal conservitism is bringing in enough to cover your needs. Then you have a better arguement for living within your means. Make sure your means cover your needs first - then don't exceed that if you can help it. We don't to that anymore. We used to. Once upon a time. Long ago. sigh...

Posted by: geoffreyshannon | June 10, 2009 4:20 PM | Report abuse

President Obama and the U.S. Congress are continuing the policies of the Bush administration, including costly wars, costly military weapons programs, and wasteful domestic spending.

Meet the new boss...same as the old boss.

Posted by: frazeysburger | June 10, 2009 4:56 PM | Report abuse

Gingrich claims the economic stimulus plan to be a failure after 4 and a half months. He uses the unemployment rate to verify the failure. What he neglects to tell every one is that republican policies have devastated the economy for years to come. The national debt has doubled in 8 years and the country is stranded in two useless wars with two of the weakest countries in the world and can only claim that they are making progress with no real proof. I would have to wonder just what position Gingrich and the republican party are really playing. 85 billion dollars every other month going right out the door tax free to the military industrial complex, the whole country in an economic slump with prices raising daily and Gingrich and company cheering on collapse of whats left of the economy. Are republican voters really this stupid? 44 billion of an 800 Billion dollar stimulus has been injected into the economy. This might be what the republicans can't stand,someone being responsible about the stimulus investment. I'm sure they would love to see him dump it all in and watch it be squandered away like the 5 billion dollars they have borrowed from China and squandered tax free into offshore bank accounts. The republican party are nothing but communist infiltrators. They are the real terrorist and lying propagandas.

Posted by: kimkimminni1 | June 10, 2009 7:07 PM | Report abuse

It should of read, 5 trillion dollars that the republicans have borrowed and squandered.

Posted by: kimkimminni1 | June 10, 2009 7:11 PM | Report abuse

You're right, Bush did this and Obama and/or Pelois and Reid are not up to the task of fixing it. The sooner we can get someone if office that can, the better. Thank you Froomkin for bringing this issue to light.

Posted by: mmourges | June 11, 2009 10:36 AM | Report abuse

The issue is the projected Deficit spending in Obama's budget for Next year.

The current Deficit falls on Bush (674 billion) and Bush and Obama collectively (618 billion).

Obama campaigned as a fiscal conservative, yet thats not showing up at all in his budget which proposes to increase the budget deficit more than any single year of Bush. If Obama is going to try and force congress to pay as you go then he is going to have to massively scale back his Budget for next year. He hasn't done anything about this even in the face of serious analysis by the bipartisan OBM showing that he will have giant deficits if his budget passes as is.

So its true Obama can't be blamed for the current Debt, he has only been President for 4 months. But he will and should take responsibility for the next Budget which looks like it will have giant deficits.

Bottom line, Obama needs to live up to his campaign promises and cut spending while pursuing his agenda. If he can't or is unwilling to stand up to congress, then its going to be a rough ride, because next year when we are figuring out who contributed what to the budget Obama's deficits are going to Make Bush's look tiny.

Posted by: DCDave11 | June 11, 2009 11:56 AM | Report abuse

If you adopt the policies of your predecessor, they become your policies. Obama explicitly ran on "change" and now the excuse for the deficit is that he's the same as Bush. If this wasn't such a serious matter, it would be funny. Also with healthcare Obama is now coming close into going into Pappy Bush territory with Obama's campaign pledge not to raise taxes on 95% of Americans to now considering a payroll tax on everyone...Pappy Bush breaking his tax pledge greatly contributed to him being a one term wonder. I hardly see how the defense of "same you can believe in" is a defense at all, but rather an indictment of continued and increased profligate spending from someone who campaigned on fiscal conservatism.

Posted by: SpanishInquisition | June 11, 2009 12:40 PM | Report abuse

Government spending resembles Tsnaumi's in- waiting. You send the money out to sea never knowing when it will come back and what shape it will be in; just that it will be a disaster for whovever is on the shore or in the White House.

Posted by: ci8cb9ls | June 11, 2009 1:27 PM | Report abuse

geoffreyshannon wrote:

In my humble opinion, a good part of fiscal conservitism is bringing in enough to cover your needs. Then you have a better arguement for living within your means. Make sure your means cover your needs first - then don't exceed that if you can help it. We don't to that anymore. We used to. Once upon a time. Long ago. sigh...

Good advice for Obama, but will he take, and will the progressive Dems LET him him take it?? And whether or not he intends it this way, Mr. Shannon offers more than advice for Obama: his words are, I think, a sharp rebuke to the previous administration for spending like drunken sailors (including fighting an ill-advised and off-budget(!) war) while cutting government revenues with voodoo Reaganomics tax cuts for the wealthy. Just plain DUMB!

For the record, I'm a centrist (but not exactly Blue Dog) Democrat who worries about massive federal debt. But I do believe that the GOP's program of doing nothing (except maybe cutting taxes more) to end the crisis likely would have created an irreversible disaster. And when it comes to health care, I'm positively leftist (another argument . . .).

Posted by: post_reader_in_wv | June 11, 2009 2:32 PM | Report abuse

Gee Whiz! According to Drugball, Hannity, O'Reilly, and Sleasy Ann all of the problems just started 5 months ago. I wonder what rock they have been hiding under along with 21% of the country. If you are not already sick to your stomach then just turn on Faux News in the evening and you will be.

Posted by: SWAMPYPD | June 11, 2009 4:26 PM | Report abuse

Eisenhower warned us. He told us where the money and the power were going, and that we better wake up or it would be over: the entrenched financial and instrial interests would own the government. They would soon be dipping deep into your pockets and mine... and those of our kids, our grandkids... as many generations forward as we, in our apathy or confusion, will permit. They have been reaping millions and billions, and every new emergency (including those they created themselves) become an opportunity for them to profit further, at everyone else's expense.

Fear is their best tool. Make people afraid, and they will buy ANYTHING to save themselves from whatever they fear. They will turn a blind eye to violations of their own liberty, and their trust. We had to pour billions into "defense" to protect ourselves against a belligerent Soviet Union... fight wars, subvert foreign governments, and build one new and more expensive weapons system after another to support this "Cold War"... eventually escalating to a point where nuclear weapons were everywhere, on both sides, and the only viable military strategy left to us was a mutual threat, a perverse compact between enemies, to blow up the whole planet.

Now its "terrorists", largely from regions where we would not even be noticed, much less hated, if we had not intervened in the affairs of indigenous societies, time and again, often with violent subversion, for our own alleged interests (often pursuing the aforesaid "Cold War"). Saudi Arabia and the other oil kingdoms, where historic Western collusion with the elites of contrived feudal autocracies is blatant; Iraq and Iran, where subversion of elected governments was clandestine, and the West denied it for a long time. Pakistan, where we cozied up to Musharraf for so many years that anything positive we might say about any contemporary Pakistani leader would be taken as proof to the contrary.

Bechtel and Boeing don't care if the conflict is real or contrived, as long as Americans can be persuaded to let Congress buy expensive stuff from them. Exxon-Mobil doesn't care if "tensions in the Gulf" are real, imagined or inflated, as long as it keeps oil prices high...and better yet for them, if Exxon-Mobil's own primary sources are elsewhere.

Posted by: Observer44 | June 11, 2009 6:50 PM | Report abuse

hmm. Interesting but quite predictable that the NYT blames the deficit on Bush. Bush definitely did not reign in spending as much as I would have liked, but Obama clearly has been spending far more than all previous presidents put together. Just check the facts. Look at the facts. At least with Bush, jobs were increasing rather than contracting at a record pace as they are now. Now Obama thinks socialized medicine will save the government money? That's not how it has worked in Canada or in the UK or anywhere else for that matter. Why wreck the best healthcare in the world? Canadians come here to get good care, because they have such a long wait there. I would like to see some honest reporting rather than biased reporting. It does America a disservice.

Posted by: mollen | June 11, 2009 8:12 PM | Report abuse

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