Editore"s Note
Tilting at Windmills

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May 1, 2011

IDENTIFYING THE CULPRIT.... In recent months, there's been a renewed push among many Republicans to assign blame for the federal budget deficit they claim to be concerned about. The GOP consensus: the hole we're in is the Democrats' fault.

Rep. Michael Grimm (R-N.Y.) recently said, "We're here mopping up their spilled milk, to be honest." Karl Rove insisted two weeks ago, "Republicans are not to be blamed for Mr. Obama's spending."

Lori Montgomery has a worthwhile piece in the Washington Post today, stating the facts.

The nation's unnerving descent into debt began a decade ago with a choice, not a crisis.

In January 2001, with the budget balanced and clear sailing ahead, the Congressional Budget Office forecast ever-larger annual surpluses indefinitely. The outlook was so rosy, the CBO said, that Washington would have enough money by the end of the decade to pay off everything it owed.

Voices of caution were swept aside in the rush to take advantage of the apparent bounty. Political leaders chose to cut taxes, jack up spending and, for the first time in U.S. history, wage two wars solely with borrowed funds.

Now, I'd note that the budget deficit, in the short term, really isn't the crisis Republicans and many in the media make it out to be. We still have the ability to borrow at low interest rates, and I think we should do so, spending more to create jobs and improve the economy.

But for those who consider this a problem -- or worse, a "crisis" -- and want to know how we ended up in this mess, the facts are incontrovertible, even if Republicans find them inconvenient.

Polls show that a large majority of Americans blame wasteful or unnecessary federal programs for the nation's budget problems. But routine increases in defense and domestic spending account for only about 15 percent of the financial deterioration, according to a new analysis of CBO data.

The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3 trillion in anticipated revenue. That's nearly half of the $12.7 trillion swing from projected surpluses to real debt. Federal tax collections now stand at their lowest level as a percentage of the economy in 60 years.

It seems hard to believe that, just a decade ago, the deficit didn't exist and there were surpluses as far as the eye could see. Had it not been for the Republican agenda of the last decade, we'd be on track to eliminate the national debt altogether. (Yes, it is ironic the party that complains most about the mess is the party responsible for having created the mess.)

But as Sen. Orrin Hatch (R-Utah) explained, reflecting on the Bush/GOP decade, it was an era in which "it was standard practice not to pay for things." It was, of course, the Republican Party that came up with this "standard practice."

I suspect some on the right will say the finger-pointing and blame game is unseemly, and that we should all just let bygones be bygones.

Well, no. For one thing, Republicans continue to play their own version of the blame game, except in this case, they're lying. For another, credibility counts -- when those who screwed up demand that we keep taking their judgment seriously, it's wise to do the opposite.

Steve Benen 1:15 PM Permalink | Trackbacks | Comments (27)

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>>credibility counts>>

Do you have any evidence for this? The media rarely report history and most people seem to forget even simple facts about recent history

Posted by: foosion on May 1, 2011 at 1:20 PM | PERMALINK

Yes, and it got that way BY TAXING THE RICH .. so of course the corporate media will never report the truth about how Clinton made all that happen ... that's no what they are PAID to do ......

Posted by: stormskies on May 1, 2011 at 1:30 PM | PERMALINK

Every time that funding for the wars came up for a vote in Congress, the democrats should have pounded on the republicans to rescind the Bush tax cuts to pay for the wars. They could have used the leverage that republicans use so effectively now to bargain for more tax cuts and spending reductions. This especially should have been used by those democrats who greased the way for Bush to invade Iraq and realized their mistake later.

Funny how the "peoples" surpluses turned into "government" debt.

The debt picture is a classic case of the Republican knack to teflonicize their past actions and shift "focus on the future".

"There you go again!"

Posted by: lou on May 1, 2011 at 1:48 PM | PERMALINK

Understanding the true causes of our massive government debt is not the same thing as assigning blame. Adults try to understand the cause of a problem in order to understand the proper course of action. Children refuse to take responsibility for problems they have caused,point fingers at others, and call it a day.

If the cause of the federal debt is deliberately cutting taxes and then waging two simultaneous, deficit-funded wars does the Tea Party's strategy to cut taxes even more make sense?

We need to call this foolishness for what it is. Republicans' Ayn Rand-libertarian-deregulation-Austrian School-inspired fiscal policy led America and the world to the brink of economic disaster. Their policies simply deny reality. Not only don't they work, they cause significant and unnecessary harm to people.

It's time to put an end to conservative utopianism and take practical steps to bring down the debt.

Posted by: pj in jesusland on May 1, 2011 at 2:09 PM | PERMALINK

"the democrats should have pounded on the republicans to rescind the Bush tax cuts to pay for the wars."- iou

Yes, but, they want(ed) to get re-elected, and that trumps everything else in Washington!

Posted by: DAY on May 1, 2011 at 2:18 PM | PERMALINK

Wulp, I know that if I had a surplus I wouldnt need to borrow from Alan with interest.

Posted by: Kill Bill on May 1, 2011 at 2:27 PM | PERMALINK

As I recall, Bush and other Republicans argued for tax cuts by saying that if we didn't give the surplus money back to the people, Washington would just spend it.

There must have been some disagreement, however, because in the end they decided to do both.

Posted by: tamiasmin on May 1, 2011 at 2:28 PM | PERMALINK

I say bill Grover Norquist for our debt. He caused it.

Republicans have sworn allegiance to this fop for far too long. It's time they swore allegiance to the United States of America instead.

Posted by: jjm on May 1, 2011 at 2:31 PM | PERMALINK

Against a short term memory that is increasingly dependent on three jobs , and a longer term game of biographical twister , which has made a hero of Senator McCarthy , and a leave it to Beaver , Mayberry , television style Earthly perfection . The thing to put an end to is the unchallenged simplicity , that striving for these picture perfect Colgate Palmolive smiles , and Lucky Strike health ideals from the people who then sold and now spin (lie , invent) in defending them . This has proven very useful in prosecuting a ju jitsu holocaust denier climate change flim flam . This as well as stalling the day of reckoning for the responsibility of increasingly large oil spills , and a plethora of other corporate dodges aided by a court that sleeps with a corporate pillow . These flat and unhappy periods , as if they were anything to do with reality , are an insult to the people who died in Korea and Vietnam . Why not mention the "useful" view of women as being emotionally unstable , and the fear that they would be unable to resist people of colour leading to many Emmett Till's sacrificed at thirteen .
None of these disconnected things are disconnected at all . They are all a part of the need to lie about things to play the great game , or get things done . The destruction of the Bronx and of the West End in Boston are two peachy little examples what people in power will do and say to reap the pickins' from poor peoples pockets .

Posted by: FRP on May 1, 2011 at 2:39 PM | PERMALINK

I just spent the better part of a half-hour going through the comments posted on the WaPo story.

Realizing there is nothing scientifically valid about the exercise, the comments appear to run at least 6 or 7 to 1 toward recognizing the Republicans' significant (though not sole) responsibility for the debt/deficit mess. (As for the Republicans' defenders, I'm probably being generous - maybe it's more like 20 to 1 - since I found exactly the same post blaming Obama and touting the Rs five times, another, similar duplicate four times, etc. Clearly the Repubs pay their trolls for quantity, not quality!)

But I was heartened. Normally the apologists dominate.

Posted by: blondie on May 1, 2011 at 3:34 PM | PERMALINK

Reagan & Poppy Bush tripled the existing debt and George W doubled the existing debt. He also left a new entitlement of three tax cuts to be paid indefinitely with borrowed money, Medicare Part D, and two off-budget wars. The national debt is a Republican debt. George W one-upped his predecessors by creating a perpetual structural deficit with bad policies.

Posted by: max on May 1, 2011 at 3:58 PM | PERMALINK

FRP, you will have to travel back a bit further. To, say, the Robber Barons. Or use the Wayback Machine, check out the work of the Caesars. Or Og stealing the female formerly belonging to Ug.

What has changed is vast numbers of Americans learning what only the few knew. There are little or no consequences to doing or saying most anything short of leaving body parts in plain sight, and alerting the media with clever messages. (Check out weekend MSNBC for evidence.)

Posted by: DAY on May 1, 2011 at 4:16 PM | PERMALINK

There may have been "surpluses as far as the eye could see" a decade ago but, come on, those "surpluses" were largely illusory, the makings of a bubble economy (Internet 1.0) which was already beginning to deflate catastrophically.

Much of the putative wealth from that era was based upon either bookkeeping finagles, "irrational exuberance," or outright fraud, as the banking crisis got its start with the end of Glass-Steagall (which, of course, happened on Bill Clinton's watch).

I believe those sorts of economic forecasts about as much as I believe in the Tooth Fairy.

Posted by: Steve on May 1, 2011 at 5:06 PM | PERMALINK

Sometimes, I like to post a list of federal agencies by employees. It seems to put some gravitas back into spending arguments.

Yes, I know that entitlements cost a lot. They are paid for by payroll taxes.

You want a cut in income taxes? Then look at this list.

Department of Defense 3,000,000
Veterans Affairs 275,000
Homeland Security 250,000
Treasury 115,000
Justice 112,000
Energy 109,000
USDA 109,000
Interior 71,000

Labor 17,000
HUD 10,000
Education 4,487

Posted by: Benjamin Cole on May 1, 2011 at 5:39 PM | PERMALINK

How soon they conveniently forget: "Reagan taught us deficits don't matter" - Dick Cheney. Of course the villagers aren't very interesting in critiquing this Reagan-inspired trope (not that he himself was as bad as the idiot followers who followed.)

Steve - yeah, it happened on Clinton's watch because Bill wasn't enough of a real Democrat, don't you get that? And the previous decade still made things worse, BTW if all the "putative wealth" was a mirage then all the better reason not to lower taxes, not to give a lower tax rate for capital gains (only possibly justified for start up capital that puts funds into the business v. trading, now even wanky Samuelson gets that cap gains tax break was a fraud), etc.

Posted by: neil b on May 1, 2011 at 5:52 PM | PERMALINK

Republicans: naked greed in search of a justifying philosophy.

Posted by: Jon on May 1, 2011 at 6:11 PM | PERMALINK

Steve,

There may have been ‘surpluses as far as the eye could see’ a decade ago but, come on, those "surpluses" were largely illusory, the makings of a bubble economy (Internet 1.0) which was already beginning to deflate catastrophically.

Both the U.S. Treasury and the independent non-partisan Congressional Budget Office disagree with you.

~

Much of the putative wealth from that era was based upon either bookkeeping finagles, "irrational exuberance," or outright fraud, as the banking crisis got its start with the end of Glass-Steagall (which, of course, happened on Bill Clinton's watch).

You’re chronology is WAY off.

DECLINING FEDERAL BUDGET DEFICITS AND SUBSEQUENT SURPLUSES AFTER THE INCREASE OF TAXES ON THE RICH & CORPORATE IN 1993:

$ -290 > 1992
~
$ -255 > 1993
$ -203 > 1994
$ -164 > 1995
$ -107 > 1996
$ -022 > 1997
$ +069 > 1998
$ +126 > 1999
$ +236 > 2000
$ +128 > 2001

[CBO]


Posted by: Joe Friday on May 1, 2011 at 6:23 PM | PERMALINK

The House of Representatives applied the coup de grace to Glass Steagall by a Republican majority VETO PROOF vote count of 343 Yea - 86 Nay.

I dont know how Clinton personally felt about repealing Glass Steagall or if he lobbied for it and with a veto proof vote with a republican majority in the house and senate he didnt have much choice but to sign it although I recall some fanfare when he did.

Posted by: Kill Bill on May 1, 2011 at 6:58 PM | PERMALINK

Don't forget Alan Greenspan went up to The Hill and testified before Congress(I paraphrase of course) BOO HOO I wouldn't know how to run the Fed if there weren't a deficit.

Posted by: athEIst on May 1, 2011 at 8:39 PM | PERMALINK

Indeed.

Greenie actually told Congress that paying off our entire federal debt would be “dangerous”.


Posted by: Joe Friday on May 1, 2011 at 9:02 PM | PERMALINK

Washington would have enough money by the end of the decade to pay off everything it owed.

I remember at the time that the GOP complained that if there were extra money, Democrats would spend it so we should cut taxes instead.

"Couldn't we do both?" I thought to myself. Pay down debt a little AND cut taxes if you're really worried about it?

They weren't worried. Not one bit.
Why not? There was a REPUBLICAN president who could spend it on junk THEY wanted.

Republican debt buys stuff that goes boom. This is a good thing.

At the time, Greenspan had said it would be okay to cut taxes as long as deficits didn't creep in.
As they did, I kept waiting for the Maestro to pull the plug on the gravy train.

Still waiting.

Now when there's talk of raising taxes, Greenspan says that the threat of rising taxes is creating uncertainty that's undermining the economy.

Was the boom economy under his watch raw luck? It's starting to seem that way.


Posted by: toowearyforoutrage on May 1, 2011 at 9:19 PM | PERMALINK

"Greenie actually told Congress that paying off our entire federal debt would be 'dangerous'."

Republicans and libertarians have told me the same thing-- in 2000.

Posted by: Tom Marney on May 1, 2011 at 9:24 PM | PERMALINK

"For one thing, Republicans continue to play their own version of the blame game, except in this case, they're lying."

As they say, it's not a lie if you believe it. And I think that a lot of Republicans really believe that the deficit is Obama's fault. Of course, if they bothered looking at the facts they'd see that new spending under Obama has been pretty small compared to the Bush tax cuts, the effect of the economic collapse on revenues, the resulting increase in the numbers of people qualifying for Medicaid and unemployment benefits, and so on.

But when you're secure in you ideology, you don't need to bother with facts. It's not as if this is the only field where actual data don't matter (tax cuts create growth, our health care system is the best in the world, and so on).

Posted by: dsimon on May 1, 2011 at 10:43 PM | PERMALINK

Gee, there almost seems to be a method to the Republican madness, in which our nation had a budget surplus going into 2001 when George W. Bush entered the White House, but when he left "public service" in January 2009, Bush, Cheney and Republicans left our nation $5 Trillion poorer and in a Republican-caused recession, a recession that required spending trillions more or we'd now be in our third year of another Great Depression.

And still, Republicans (and some fellow conservative Blue Dog Democrats) are calling for massive spending cuts while at the same time trying to extend revenue-destroying tax cuts for the wealthiest...all to help balance our nation's budget. Riiiiggghhttt.

Posted by: The Oracle on May 1, 2011 at 11:49 PM | PERMALINK

Every discussion of the deficit needs to include Starve the Beast.

Posted by: Kon Kilo on May 2, 2011 at 7:14 AM | PERMALINK

I thought the upshot of the WaPo article had already been proven -- many times.

That the Republicans don't want to believe it doesn't surprise me. What always does surprise me is their talent for ignoring the obvious.

Posted by: Cathy Wilheim on May 2, 2011 at 8:48 AM | PERMALINK

The idea that the government paying off its debt is dangerous seems to be with the right wing fearing that the government will become a big investor in its own right and reduce income to the financiers and banksters.

Recently read about "strict Keynesian" economics which calls for building budget surpluses in good times so you have a rainy day fund in bad times. Of course, if you have extra funds, you invest.

Posted by: Pete on May 2, 2011 at 1:53 PM | PERMALINK
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