When Tax and Spend Liberalism Meets Bankruptcy
Tags: Barack Obama, culture, Democrats, FDR, Government, History, Inflation, Liberalism, President Bush, recession, Social Security, stimulus, Tax and Spend Liberalism, The One, Washington.
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The One has advised us that we’re to have trillion dollar deficits for at least some years. Only one thing wrong with that – we don’t have that much money, and as the rest of the world slides into recession, there will be no one to loan us that much money Additionally, there are practical difficulties of getting Obama’s plan passed:
The forecast Wednesday of a jaw-dropping $1.2 trillion one-year federal budget deficit will make it harder for President-elect Barack Obama to win broad support for a massive stimulus package that would add even more to the red ink.
With his party controlling both the House of Representatives and the Senate, Obama’s still likely to get the OK for spending and tax cuts that cost $1 trillion or more over two years and are designed to jump-start the economy and create or save 3 million jobs.
However, while many economists, business groups and politicians agree on the need for something dramatic, Obama now concedes that he’ll have to wait until February to get a bill to sign. He’ll probably find conservative “blue dog” Democrats as well as Republicans balking at the idea of borrowing another $1 trillion on top of this new annual deficit.
They could deny Obama the kind of broad, bipartisan approval that he hopes will signal not only that he’s changed the political culture of a divided Washington but also that he’s put forward a plan that’s widely popular. Such approval is crucial as he moves to rebuild trust in the government and the economy.
We conservatives will find it endlessly amusing that the liberal Democrat plan to allow people who can’t afford a home to get loans is what triggered the de-facto national bankruptcy which will, in turn, defeat the liberals’ plans to remake America now that they’ve regained full power. Bankruptcy? Yeah – I understand that the total liability of the federal government – including unfunded mandates like Social Security (which you liberals prevented us from fixing and which will now add to our amusement as you stare in slack-jawed disbelief at the result of your own purblind idiocy) – exceeds the total wealth of the American people. Part of this imbalance is caused by the collapse in home values, but the inflated home values were probably just masking reality for a while. Essentially – and make no mistake about it, President Bush and plenty of Republicans share blame on this, including yours, truly who didn’t fight hard enough against spending – we’ve spent ourselves into oblivion. And Obama wants to spend an extra trillion or so per year to fix America!
It is now time for retrenchment and reform – we need to drastically cut spending and completely overhaul the way we do government business. Curiously enough, if Obama would put himself at the head of such a reform movement, he’d probably be able to carry it off – and secure for himself not only re-election in 2012, but a high place in American history, alongside the likes of Lincoln and Reagan. The problem is that Obama has just created the post of “chief performance officer“, as if adding one more bureaucrat to the mix will suddenly get our government working efficiently for the good of the American people. I mean, I do admire the spirit there, Barry, but I’m sorry that I’m suppressing convulsions of laughter…its like someone is writing a comedy script to satirize the Obama Administration…but this is for real. We need bold, new initiatives – we’re getting window dressing. What’s next? Bureau of Hope within the Department of Change?
We can’t tax more money, we can’t borrow more money – we can print money, and I’ll bet that Obama will try a bit of that, thus bringing us into a replay of the 1970’s “stagflation” (for you youngsters, this is the “impossible” situation where you have both a stagnant economy and high inflation). If only the blinders would come off – and I pray they do. After all, FDR ran as a tax-cutting, budget balancer and wound up the big spender…perhaps Obama’s run as a big spender will wind up as a tax-cutting, budget balancing Administration?
We can hope – and that would, indeed, be a change.
Mark Noonan is co-author (with Matt Margolis) of Caucus of Corruption: The Truth About The New Democratic Majority. He also blogs at Nevada News and Views. Follow Mark on Twitter.
33 Responses to “When Tax and Spend Liberalism Meets Bankruptcy”
Caucus of Corruption
The forecast Wednesday of a jaw-dropping $1.2 trillion one-year federal budget deficit
Stuart Varney, veteran economic journalist, predicted on Fox this morning that the 2009 deficit would be closer to $2 trillion. I’m having a serious time wrapping my head around that figure. It would appear that we have either forgotten the lesson of the Great Depression, or we never learned it in the first place.
”Essentially – and make no mistake about it, President Bush and plenty of Republicans share blame on this, including yours, truly who didn’t fight hard enough against spending – we’ve spent ourselves into oblivion…”
Congrats Mark. The first step in fixing a problem is admitting you have a problem!
”… And Obama wants to spend an extra trillion or so per year to fix America!”
So what is the plan? Spend big now to try and stimulate the economy and avoid a much deeper recession and invest that to build towards the future. Or…
Toss a few bucks at the problem to have a 30-day reprieve and end up right back where we were 30 days later only now you owe more money.
”It is now time for retrenchment and reform – we need to drastically cut spending and completely overhaul the way we do government business.”
– Why is NOW the time and none of the last 8 years were time? Why now with the U.S. economy in the crapper do you not want to try and spend to stimulate to avoid a deeper recession?
It is nice to actually have a President that talks intelligently about plans and doesn’t just toss out a “Get ‘er done!”.
Spend now THE RIGHT WAY. I agree that the right way is immediate stimulus PLUS investing in future benefits (green jobs, infrastructure, etc).
We can argue all day about what “the right way” is, but to deny that we need to spend big to fix this is burying your head in the sand.
And remember : historically, the republicain presidents have always increased the debt to GDP ration, while most democrat presidents have reduced it…
If I were americain, I’d be really glad Obama beat McCain right now. If McCain was in power and did what republicains do, he’d dig an even bigger hole…
Ratio not ration… I should be more careful about typos
the federal legislation enabling CREDIT DEFAULT SWAPS must be rescinded.
this legislation included provisions which invalidated state gambling laws so CDS were NOT criminally prosecuted.
CDS in turn enabled lenders to spread the risk of sub-prime mortgages.
Mark,
I hope you’re aiming 90% of your frustrations at the Bush administration and your own party. After all, your guy has been the CEO of America Inc. the last 8 years and the majority of the board members belonged to your own party for 6 out of those 8 years. Reading your post is actually amusing. You are so desperate to shift blame and then you end up saying “If only the blinders would come off – and I pray they do”. Are your referring the blinders you yourself have been wearing the last 8 years while the great decider ran your economy into the ground? No, of cause your are not – that would require actual self reflection.
Obama (or “the one” as you insist on calling him) is taking over a very very difficult situation unlike Bush who took over a healthy economy 8 years ago. Titanic will be 3 feet away from the iceberg by the time Obama becomes captain, and you dear Mark will be there somewhere in the background whining, nagging and pointing fingers at anyone who’s not a republican.
It’s a bit disturbing that you seem rather happy about the gigantic turd sandwich Obama is inheriting from Bush, Mark. You’ve got a strange glee that you can now offload the abject failures of your beloved administration (headed by the “CEO President”–remember that?) onto Obama and then bitch that Obama isn’t fixing the mess that your guys created quickly enough.
And remember : historically, the republican presidents have always increased the debt to GDP ratio.
There are several dynamics involved in the rationale behind your allegation, French, but one that can’t be ignored is where the economy was during the transition from Democrat to Republican and vice-versa in the modern era. Jimmy Carter handed off a tanking economy to Ronald Reagan, Bush 41 handed off an economy to Clinton that was nearly a year into recovery, and Clinton handed off an economic bubble to Bush 43 that had begun to burst almost a year before.
Can’t really say what McCain might have done since I don’t have a functional crystal ball, but, with his announced policies, Obama is almost certain to increase the debt in both inflation-adjusted dollars and as a percentage of GDP to levels never seen before. It’s difficult to see how this will end well. One only has to look at the FDR model that Obama appears to be following in spades. Following massive federal government intervention into the economy for 6 years, the unemployment rate was still around 20% in 1938.
Spook: Following massive federal government intervention into the economy for 6 years, the unemployment rate was still around 20% in 1938.
Perhaps so, but FDR was faced with not only the fiscal collapse in the late 20’s, but also the Dust Bowl in the early to mid 30s. That was as significant an event as the stock market crash. It uprooted hundreds of thousands of families from their homes and farms and caused the largest internal migration in American history.
Anyway, in Tuesday’s presser (which I presume is the one Mark considered insubstantial) Obama said: “But we’re not going to be able to expect the American people to support this critical effort unless we take extraordinary steps to ensure that the investments are made wisely and managed well. And that’s why my recovery and reinvestment plan will have – will set a new higher standard of accountability, transparency, and oversight.
We are going to ban all earmarks, the process by which individual members insert pet projects without review. We will create an economic recovery oversight board made up of key administration officials and independent advisers to identify problems early and make sure we’re doing all that we can to solve it. We will put information about where money is being spent online so that the American people know exactly where their precious tax dollars are going and whether we are hitting our marks.
But we’re not going to be able to stop there. We’re going to have to bring significant reform not just to our recovery and reinvestment plan, but to the overall budget process, to address both the deficit of dollars and the deficit of trust. We’ll have to make tough choices, and we’re going to have to break old habits. We’re going to have to eliminate outmoded programs and make the ones that we do need work better.
Now, that may turn out to be all talk. But it’s an ambitious agenda. And heaven knows the federal govt is too big a battleship to turn around on a dime, and Obama certainly can’t do it alone. But I especially like the idea of transparency. Above all else, I hope he succeeds substantially in that regard.
Are your (sic) referring [to] the blinders you yourself have been wearing the last 8 years while the great decider ran your economy into the ground?
Talk about selective memory, rasmus. Thanks to Bush’s economic and tax policies, we came out of the Dot.Com bubble in less than 3 years, and experienced consistently solid economic growth from 2003 to 2007, a time that saw the DOW go from 8,000 to 14,000. During that time the Bush Administration made repeated attempts to get Congress to address the growing problems with Freddie and Fannie’s massive underwriting of sub-prime mortgages, which ended up being the straw that finally broke the economic camel’s back; attempts, BTW, that were thwarted at every turn by the likes of Maxine Waters, Barney Frank and Chris Dodd.
Now, if this economic collapse were just a U.S. phenomenon, you might have half a leg to stand on, but it’s a global problem, and it actually hit much of the rest of the world (like Denmark) several months before it manifested itself in the U.S.
unlike Bush who took over a healthy economy 8 years ago.
You’re joking, right? From March of 2000 until January, 2001 when Bush took office, the NASDAQ dropped 50%. Clinton handed Bush anything but a healthy economy, and then 9 months later, on 9/11/01, the economy took a massive blow to the solar plexis. Now, in all fairness, I would note that very little of what happened to the U.S. economy at the end of the 90’s was Clinton’s fault. In fact, signing GOP legislation that dropped the capital gains tax from 28% to 20% in 1997 probably bought Clinton an extra year or two of good times.
Spook: During that time the Bush Administration made repeated attempts to get Congress to address the growing problems with Freddie and Fannie’s massive underwriting of sub-prime mortgages, which ended up being the straw that finally broke the economic camel’s back
Now, if this economic collapse were just a U.S. phenomenon, you might have half a leg to stand on, but it’s a global problem, and it actually hit much of the rest of the world (like Denmark) several months before it manifested itself in the U.S. Lol!
Seriously though, I’m not inclined to blame all of the problems on Fannie and Freddie. They were contributing factors, to be sure. But the problems went deeper than that. And one of the tipping points was the rapidly increasing oil prices. That slowed the economy, precipitated a food crisis, and caused the first wave of insolvencies — both here in the US and internationally. Those, in turn, exposed the Ponzi scheme that was credit default swaps (another international phenomenon), and then the whole edifice started to crumble.
Fiscal Conservative Ronald Reagan, $200 Billion+ deficit; Fiscal Conservative H W Bush, $300 Billion deficit; Tax and Spend Liberal Bill Clinton, 200+ Billion Surplus; George W. Bush, Fiscal Conservative – deficit larger than all the presidents prior to him combined. And no one ever address the debt for the war in Iraq. $10-$12 billion a month – not even included in the budget. All the conservatives seem to be in favor of continuing that monthly expense.
The reason that Bush’s TWO attempts at solving this haven’t worked are not actually down to the man himself, but simply what he wasn’t allowed to do by his neoconservative handlers, and it’s the very same reason why, if not sabotaged, Obama’s plan stands a very good chance of working.
Neoconservatives don’t mind the government handing out lots of money, they’ve always got consultancy firms and friends lining up to take it – their big sticking point is that they believe government shouldn’t decide where the money is to be spent, or regulate it. That they class as interference.
The result was, that when money was sent out in a rebate check to people, unregulated, uncontrolled, we were told by the neocons this would fix everything. But they didn’t factor in the major problem that has always plagued business – corruption – and the fact that banks, medical insurance companies and credit card companies have been robbing the American public for years. So instead of the bulk of the checks coming back into the economy, as Neoconservative think believes it always will, that money ended up being paid to mortgage companies, or credit card companies, or banks, or medical insurance companies. Very little of it actually ended up as disposable leisure income.
Now we have a corruption bubble (as #5 so rightly points out) of the credit default swaps – another thing where neocons took away the governments ability to regulate – bursting, and suddenly the banks can’t afford the massive defaults they have.
So we come to Bush’s bailout #2. That failed because it didn’t address the core problem, which is twofold. First, if there’s no job security, people don’t spend, so the economy suffers. Second, if companies are under pressure, they sack people, which not only exacerbates the first problem but leads to less employed people who pay taxes, and more welfare people who drain the system. Now that money too is gone, to an endless line of corporations, with the regulation stripped away by the neoconservatives. And now it has gone, it’s gone, and it won’t be coming back.
So now we move to Obama’s plan. This involves tackling it from the opposite direction. Cutting spending on corporations, cutting spending on needless wars, and routing what money there is left into a twofold plan. First, get people back into employment. If people are in employment, they’re not claiming welfare, they are paying taxes (unless they’re Joe the Plumber) and with job safety they’re willing to spend more on luxury purchases which stimulates the economy. Secondly, if you’re going to get a lot of people back into employment, and the country has a seriously neglected infrastructure, it makes perfect sense to create those jobs and spend the money repairing the domestic infrastructure. No more paying some defense contractor in Iraq $80 for a 10 cent rubber washer, instead pay a worker the $80 for hours worth of work actually repairing the domestic infrastructure.
This is why Obama’s plan is the best hope for the future. It’s still abhorrent to Neoconservatives, but that’s a given – it always will be. But it’s a long shot from this “tax and spend” idea whereby suddenly Obama summons up billions in taxes from an out of work population and spends it recklessly on rubbish.
Are we really going to sit here and argue which government party made a bigger mess out of their boss’ business?
Trying to pin the financial collapse on the government is like trying to pin the fall of Enron on the receptionist.
It’s gotten so loony, I swear I actually read some neoconservatives talking about how CEO pay has grown all out of proportion. Where’d they get that idea? Mother Jones Magazine in 1982???
Spend now and we will do better later.
Okay, might I ask the neocons – and I do want to hear this answered – what would YOU do if you were in Obama’s shoes?
what would YOU do if you were in Obama’s shoes?
Speaking for myself, the first thing I’d do is stuff a basketball. I’ve always wanted to do that.
I’d want to make that shot from beyond half court that he made in Iraq.
But, seriously, let’s assume Mark is the President (shudder). What programs would you cut and by what percentage?
what would YOU do if you were in Obama’s shoes?
That’s easy – resign, for lack of experience.
Obama was supposed to bring “change” to Washington. But, he is nothing more than a big government liberal. He stated in his speech today that government is the solution to everything. Government will be the solution and we are going to spend our way to prosperity.
Liberals soon forget how they bitched that Bush was spending too much. They complained of defecits and the debt, tax cuts, etc. etc. Obama is giving us more of the same and they praise him.
I don’t know if they are lemmings or just useful idiots, but the so-called change is more of the same that we have seen time and again from the Democratic Party.
2 trillion in two years?!? And they were so concerned about saddling our children and grandchildren with debt. Now, since the Chosen One said that we will be prosperous, they all begin the chanting again.
Typical and pathetic.
kmg1, how about fixing the biggest Ponzi schemes in this country – Social Security and Medicare.
Maddow paid dividends using incoming payments from investors and not from investments, trust funds or other investment vehicles. How is that different than Social Security. Today’s recipients get paid from the incoming tax payments of working Americans and corporations and not from trust funds or investments of any kind. How is that different?
But I guess since the government does it, it must be OK. The government is the answer to all our problems and not the cause of them.
So rather than just bitch about social security and medicare, how would you fix them?
kmg,
Well, here’s something I recently came across:
It seems that Medicare will pay 5k per month to have a geezer in a nursing home. Guess how much Medicare will pay for that same geezer being taken care of by family members at home? A big, fat zero.
This is probably the result of lobbying by nursing home owners – but the fact of the matter is that with a bit of assistence (say, 1 or 2 k per month) a very large number of older Americans could stay home…but without this assistance, the families can’t keep the oldsters at all…so, off to the nursing home they go to become a five grand burden, per month, on the taxpayers. Seems to me that if we could spend 24k rather than 60k then we’re 36k to the good – and I’ll bet that such a reform of Medicare will result in large savings, which can then be applied to providing health care to non-insured people.
The main thing is to take a look at it – I found this out by accident (ill mother in law with a concern that she might need a nursing home – thank God it didn’t work out that way, but it was a massive eye-opener in just how asinine we manage elder care in the United States). A full review of Medicare – with a clear eye towards not helping the medical industry or favored political groups – would likely yield many reforms and many efficiencies which would, at the least, give us far more bang for the buck and might even allow us to provide better services for less money.
The key, in this, is to allow decisions to be made at the lowest level possible – when its a government bureaucrat in DC deciding, its much easier to decide in favor of the two or three nursing home operators in an area. When its a health care professional living down the street from said geezers, we’re more likely to decide on the best course of action for the individuals involved.
And this is what is so sadly missing in Obama’s plan – this willingness to allow people other than Obama and minions decide what to do.
rasmus,
For the sake of argument, lets say that President Bush with malice aforethought set out to destroy America. Fine. Having that thought in your mind, where does it get you?
Nowhere, of course – so, you can cling to your nasty Bush-hatred, or you can let it go and realize that our problem is what to do, now, with the issues we have at hand.
Mark,
I know you would love it if we all “forgot” how big a catastrophe the Bush administration has been, but there is a certain value in understanding how you arrived at the point you’re at now. otherwise, how are you going to learn from history?
I don’t hate Bush. I think hes useless as a leader (like many others would be) but I don’t hate him.
Rasmus
Mark,
What you cited may be a sensible change to Medicare, but the resulting savings would be miniscule. We are facing a trillion dollar deficit, which is likely to increase greatly over the next couple of years. You say we should cut spending. Where and by how much that won’t adversely impact working families?
Actually, KMG, medicare is a huge govt. spender. The savings could be huge. But still, those are savings for the government, and we’d still be deep in a deficit. So what about the people? Tax-breaks? We wouldn’t have the money for that. Put the government in debt to help the people.
kmg, it doesn’t matter how I would fix SS and Medicare. Liberals will stop any attempt at changing their darling programs, no matter how much they bankrupt it through their changes to get people on these programs.
If I took my SS taxes and put it in the most conservative, low risk funds out there. The returns would still be more than the pittence the government Ponzi scheme pays.
Liberals have added so many people to these programs because of their “needs” and most of them have never paid into the system. The supporters of the system are growing fewer and fewer, while the payees are growing more and more. The system cannot sustain itself, but liberals are refusing to change it. Because that would mean giving up control. All efforts of true necessary reform have been thwarted by these “keep the people dependent” liberals.
But meanwhile, jail one Ponzi schemer and let 200+ others go free.
Again, typical and pathetic, “the government is the solution for everything” liberals are the biggest hypocrites on the planet.
What is amazing to me is that people like you want to trust the government to fix the economy, when is was government that made the problems to begin with. Presidents may change, but the government as a whole remains pretty much the same.
I know Medicare is a huge part of the federal budget, but is Mark’s idea the level of detail he expects to see in Obama’s plan? Not gonna happen. Personally, I am in favor of universal health care to take care of not only the problems of spiralling costs, but also the problem of too many uninsured people.
I am not one of those that believes social security is on the brink of collapse and must be fixed immediately. We can take the time to come up with rational ideas for reform. I believe every previous attempt to reform social security failed because the reform was pushed too fast and it was an attempt by one side to ram their plan down the throat of the other side.
I, and liberals as a whole, do not believe the government is the solution to everything. I also don’t believe that government is the solution to nothing and should be shrunk to the size where it can gleefully be drowned in a bathtub, as some conservatives believe. Government is the only way we have a chance of avoiding the financial catastrophe that is looming on the horizon, but it has to be in conjunction with the market. Neither one can do it alone.
kmg101
. Government is the only way we have a chance of avoiding the financial catastrophe that is looming on the horizon, but it has to be in conjunction with the market. Neither one can do it alone.
UTTER STUPIDITY………It is govt. that got us in this financial collapse.
Welfare = billions a year.
Medical for illegals,”poor” = billions a year.
Busing for “racial balance” = billions a year.
Govt waste = billions a year.
Pork spending = billions a year.
Govt mandated loans to those who did not deserve them = billions.
Education which produces “graduates” who cant read = billions a year.
I could go on and on. We have reached the end of he season of FREEBIES.
It will collapse and it will be every man for himself.
Those who have generational sucking off the labor of others will he hit the hardest…….OH WELL!
you reap what you sow!
I feel sorry for the guy who reaped you, Fmr.
fmrmarine,
You are right. I have now seen the error of my ways. I think we should all stop paying taxes, because we are just enabling the evil government. Next, I will stock up on guns, ammunition, dry food stuffs, and firewood so I am prepared for the impending collapse. I didn’t think I needed to worry about water since I’m on a well, but when the electricity goes out I won’t have a way to draw the water. Guess I better stock up on that too. BTW, just so I know how much to stock up on, how long can I expect the collapse to last?
Mark,
Your man Bush just finished throwing 350 billion at the economy and what do we have the show for it. The big banks have consolidated even further, none of those facing foreclosure have been helped and the taxpayer has been left holding the bag.
Looks like the taxpayer has been punked one more time.
Thanks Bush. It’ll be nice when he’s gone and the adults can start working seriously about a real fix not just more welfare for those who caused this disaster and continue to benefit from the bail out.
Perhaps, when the majority of people realize what is happening the end of this crime spree will be near.
mule,
I feel sorry for the guy who reaped you, Fmr.
“Sow to the wind and reap the WHIRLWIND”………you bet im the whirlwind!