How the U.S. Surplus Became a Deficit
August 13, 2009
Posted by AzBlueMeanie:
David Leonhardt of the New York Times takes an in-depth look into the federal budget deficit today in Economic Scene – How the U.S. Surplus Became a Deficit (excerpt):
The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.
You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush's policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.
The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.
About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.
Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.
About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.
If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.
* * *
Peter Orszag, the White House budget director, says the president is committed to a deficit equal to no more than 3 percent of gross domestic product within five to 10 years. The Congressional Budget Office projects a deficit of at least 4 percent for most of the next decade. Even that may turn out to be optimistic, since the government usually ends up spending more than it says it will. So Mr. Obama isn’t on course to meet his target.
But Congressional Republicans aren’t, either. Judd Gregg recently held up a chart on the Senate floor showing that Mr. Obama would increase the deficit — but failed to mention that much of the increase stemmed from extending Bush policies. In fact, unlike Mr. Obama, Republicans favor extending all the Bush tax cuts, which will send the deficit higher.
Republican leaders in the House, meanwhile, announced a plan last week to cut spending by $75 billion a year. But they made specific suggestions adding up to meager $5 billion. The remaining $70 billion was left vague. “The G.O.P. is not serious about cutting down spending,” the conservative Cato Institute concluded.
* * *
The solution, though, is 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.
Matthew Iglesias has converted Mr. Leonhardt's numbers into a handy pie chart. Matthew Yglesias » What Caused the Budget Deficit?
— “The first category — the business cycle — accounts for 37 percent of the $2 trillion swing.”
— Second, Bush-era legislation “like his tax cuts and the Medicare prescription drug benefit, [that] not only continue to cost the government but have also increased interest payments on the national debt.”
— Third, “Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000 […] 20 percent of the swing.”
— Fourth, “About 7 percent comes from the stimulus bill that Mr. Obama signed in February.”
— Fifth, “only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.”
The myth that the federal budget deficit somehow began on January 20, 2009 is just that, a myth. It was years in the making under a Republican president and a Republican controled Congress that squandered the budget surplus they inherited.
UPDATE: President Obama to address VFW Convention in Phoenix on Monday
August 13, 2009
Posted by AzBlueMeanie: I previously reported that President Obama will visit Arizona on August 16: The Obamas will visit the Grand Canyon and Phoenix, said Adam Abrams, western regional press spokesman for the White House. Details of the president's public appearances were not immediately available. Obama's visit to Arizona will coincide with the national convention of
Hostile takeover at North Star Charter School
August 13, 2009
by David SafierI've held off on telling this story for awhile because some of the details are sketchy. Also, I usually like to be able to say, "The moral of the story is . . ." but in this case, I'm not quite sure what that moral is. The story itself is so compelling, though,
Special Session Update: After six weeks, it’s back to the “fatally flawed” July 1 budget
August 13, 2009
Posted by AzBlueMeanie: It appears that the "Sham-Wow!" budget deal from last Friday is now officially dead, taking with it Sen. Jack Harper's four amendments (one of which would have screwed Tucson out of its Rio Nuevo funding). The Senate has killed the decoupled sales tax referral measure and the linked personal and corporate income
Special Session Breaking Update: Sales tax referral defeated, Senate advancing rest of “Sham-Wow!” budget to the House
August 12, 2009
Posted by AzBlueMeanie: The Arizona Senate defeated a bill Wednesday that would have put Gov. Jan Brewer's proposed sales tax hike on the ballot for voters to decide. Arizona Senate defeats bill with sales tax hike The GOP can't find more than 15 votes even with a special dispensation from their lord and master of
Former Sen. Rick Santorum exploring presidential bid in 2012
August 12, 2009
Posted by AzBlueMeanie: Former Pennsylvania Republican Senator "Man On Dog", Rick Santorum, is exploring running for president in 2012. No, seriously (stop laughing). From Politico: Add former Sen. Rick Santorum to the list of potential 2012 Republican presidential candidates. POLITICO has learned Santorum will visit first-in-the-nation Iowa this fall for a series of appearances before
Melvin on Melvin’s No New Taxes Pledge
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by David SafierAl Melvin didn't sign Grover Norquist's No New Taxes Pledge in 2008, that's certain. He's not listed among those who signed on Norquist's site. However, he did sign it in 2006. Does that make him a fair weather No Tax Pledger? "I solemnly swear, I will not vote for any new taxes, except
Harriet Miers tried to intervene with DOJ in Rick Renzi Case
August 12, 2009
Posted by AzBlue Meanie:
The House Judiciary Committee has released the transcripts of interviews under oath of former White House Counsel Harriet Miers and former White House chief of staff Karl Rove. Congress Releases Rove And Miers Interviews On U.S. Attorney Firings | TPMMuckraker:
The House Judiciary committee has posted the transcripts of its interviews with Karl Rove and Harriet Miers, about the U.S. attorney firings.
The Rove transcripts are here. The Miers transcripts are here.
The House Judiciary Committee has also released thousands of pages of e-mails related to the U.S. Attorney firings. U.S. Attorney Firings: White House And RNC Docs Released | TPMMuckraker:
On the U.S. attorney firings, Congress has also released thousands of pages of White House and RNC emails and other documents pertaining to the firings.
Here are the White House documents. Here are the RNC documents.
Talking Points Memo is credited with first exposing the U.S. Attorneys firing scandal. In this post by Justin Elliot, he reports that E-Mails: On Election Eve, Miers Tried To Intervene With DOJ About Sensitive Renzi Case:
It's just days before the mid-term elections, and you're sitting in the White House watching a close Congressional race when it bubbles up that the the Republican incumbent, long dogged by corruption rumors, is under federal investigation.
That's the situation the Bush White House found itself in when it was reported in late October 2006, first on blogs, that U.S. Attorney Paul Charlton was investigating Rep. Rick Renzi (R-AZ).
And that's when the damage control machine kicked into gear.
Scott Jennings, deputy to Karl Rove, and White House Counsel Harriet Miers intervened to try to get the Justice Department to throw cold water on the reports of an investigation, despite the DOJ's policy not to confirm or deny the existence of ongoing probes, according to e-mails released by the House Judiciary Committee today. (Read them here.)
In the two days following Miers and Jennings' emails, articles appeared in the press quoting DOJ officials saying the investigation was in "preliminary stage" — which it was not.
One piece in the Arizona Republic, speculating that the news about the investigation was politically-motivated, quoted a DOJ official: "I want to caution you not to chop this guy's (Renzi's) head off." That's the type of statement that surely helped Renzi in the heated days before the election.
Renzi went on to win reelection, but was indicted on wide-ranging corruption charges in April 2008. The case is still pending.
The Jennings/Miers e-mails make for rich reading. On October 24, Jennings wrote, under the subect "re: our call":
"The person I called you about [Renzi] said the USATTY in his area, as well as the local FBI office, said they were unaware of any investigation."
Miers replied, describing how she intervened to pressure the DOJ on its public stance:
Scott, I just finished speaking with [Deputy AG] Paul McNulty. He said what we suspected he would. He has been contacted by a number of frustrated members of the Congress asking why people can't be vindicated in the event nothing is going on. He acknowledged that the situation is frustrating, but reiterated their position that they cannot confirm or deny the existence of an investigation. He said the AG did an interview last week to put things in as good as a perspective as possible by explaining that no one should be talking and that a refusal to deny should be given no meaning beyond that Justice does not admit or deny the existence of an investigation. I observed that at some point, immediately preceding an election, unattributed statements about the existence of an investigation was rankly unfair. He is continuing to think about the situation, but I did not get a lot of encouragement that they will deviate from normal course.
In other words: despite being told it was DOJ policy not to confirm or deny the existence of an investigation, Miers asked Paul McNulty, the deputy attorney general, to knock down the reports of a probe. But she "did not get a lot of encouragement that they will deviate from normal course."
In the next two days, the articles citing anonymous DOJ officials appeared, falsely reporting the probe was in early stages. It's still not known who made those leaks and whether anyone directed them to do it.
Asked about the emails in her House Judiciary interview, Miers had — surprise — a hard time recalling specifics.
In a lengthy exchange, the lead House interviewer, Rep. Adam Schiff, attempts to pins down Miers on the Renzi episode — and gets nothing but denials and claims of ignorance. Asked how she hoped the DOJ would "deviate" from its standard practice, Miers says "I didn't hope one way or the other."
That claim, of course, is belied by her email to Jennings.
