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Tag Archives: deficits

More on Hillary Clinton’s approach to federal spending and debt

05 Monday Sep 2016

Posted by willykay in Uncategorized

≈ 1 Comment

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Chuck Raasch, deficits, economic policy, federal debt, Hillary Clinton

Friday I wrote a piece taking St. Louis Post-Dispatch columnist Chuck Raasch to task for reviving the deficit doom and gloom BS that has crippled economic growth over the past several years. The post referenced only Raasch’s criticisms of the 2016 presidential candidates’ economic positions and did not elaborate on their positions beyond that level of description. It strikes me that it might be useful, in case my earlier post left anyone feeling confused, to enlarge on the points I tried to make about potential impact of Clinton’s economic proposals on the the federal debt

In (very) short, Clinton’s response to the deficit is to create an environment for economic growth which should, over the long-term, increase tax revenues and lower debt. In the short-term, she aims for a neutral equilibrium between revenue and spending that does not generate deficits. She does not address these issues under the rubric of debt reduction since that goal is implicit in developing a strong economy. Brookings Institute economist Henry Aaron has said that when it come to reducing the federal debt, “how we achieve that goal is at least as important as whether we achieve it.” This concern for addressing debt in a way that does not destroy but rather enhances social support systems is evident in Clinton’s proposed policies:

Clinton has taken a two-pronged approach to economic growth:

(1) Clinton proposes several progressive tax reforms that will generate more revenue (see this factsheet for details).

(2) Clinton is also proposing to invest in growth by using the new revenue generated by her tax reforms to pay for a suite of initiatives involving physical infrastructure renewal, small business supports, health care, education and research (see her position papers).

Neil Erwin at The New York Times summarizes Clinton’s proposals, and notes that her tax plan would generate $1.1 trillion dollars in additional revenue over the decade and, when combined with her new spending, would be revenue neutral. His evaluation does not address the viability of the spending proposals to promote growth. However, the steps outlined by Clinton to promote growth and short and long-term fiscal stability have earned high marks from many financial analysts (see here, here and here (pdf)) .

Clinton did not satisfy Chuck Raasch’s preconception that politicians who engage in “serious” discussion of federal debt must serve up the bitter medicine that, because of our supposed past profligacy, we now require . She instead outlined an approach to debt that utilizes growth rather than retrenchment. Her plan involves promoting greater fairness in the tax code, less income inequality – a major growth inhibitor – along with spending initiatives that are, based on reliable research, designed to spur growth. Given the caveat that economic prediction is a mug’s game, her plan does not necessarily entail deficit spending and, arguably, will lower the long-term debt burden.

This approach can be criticized – and reputable analysts have done so – but, unlike Raasch’s casual dismissal, the criticism should be based on the merits of the proposal itself rather than a narrowly preconceived, popular idea of what it “should” propose to do. It should also include a fair assessment of the severity of the debt problem rather than the “the end is coming” hysteria that Raasch seems to endorse. As I noted in my earlier post referenced above, many economists do not consider our current and projected national debt to be the looming horror that is portrayed by deficit alarmists. And many of those economists and financial experts agree that the Clinton proposals, unlike those of Donald Trump , if they were to be enacted, would have a good chance to insure that our long-term debt does not mushroom into just that type of problem.

About budget hawks and that family budget trope .

11 Wednesday Sep 2013

Posted by Michael Bersin in Uncategorized

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Claire McCaskill, deficits, family budgets, federal spending, missouri

I’m sure you’ve all heard Democratic Senator Claire McCaskill practicing her budget hawkery; like many politicians, she’s fond of comparing the federal government’s budgetary practices to that of the Smiths down the street. A favorite McCaskill line: “Missouri families make tough budget choices every day and the federal government should do the same.” we shouldn’t just pick on McCaskill, though, since the family budget gambit is the tried and true fall-back of every aw-shucks politician in America who wants to score some easy points misrepresenting a complex issue.

Brad Plummer of the Washington Post’s Wonkblog, however, is here to point out the real nature of the resemblance :

Anyway, it’s a good analogy. The U.S. federal government really does resemble your typical money-printing family that owns lots of tanks, operates a giant insurance conglomerate, can borrow money at extremely low rates, and is assumed to be immortal.

See, Claire was right all along and Plummer article is worth reading since it clarifies the points of similarity between the federal government and everyday regular families. One aspect of the hypothetical federal family that struck me as particulary significant is that that they have special ways of raising cash:

The parents could also tap into the kids’ lucrative lemonade-stand income if they wanted to whittle down the debt, although this would come up for a family vote and the kids aren’t keen on this.

In other words, brothers Romney, Trump and Icahn want to keep all their profits as pocket money to spend on themselves – no matter how much help they got from mom and pop and their other brothers and sisters when they were building their lemonade stands. They’re entitled to that help, don’t you know – they’re family after all.

ADDENDUM: And those lemonade stands? They’re thriving:

The top ten percent of earners in the United States took home more than 50 percent of all income in 2012, the highest amount ever recorded since data was first collected in 1917, according to an updated report from economists Emmanuel Saez and Thomas Piketty.

How Claire McCaskill tries to please everybody

10 Wednesday Aug 2011

Posted by Michael Bersin in Uncategorized

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Claire McCaskill, deficits, Jobs creation, missouri, spending cuts

Wanna see how Senator McCaskill’s doing as she tries to dance the red state/blue state tango?  If so, take a look at Joan McCarter’s reportage on DailyKos. Hint: it has to do with spending and jobs creation, specifically why McCaskill thinks we have to worry about the former and don’t dare discuss the latter, and it involves statements like:

Setting realistic expectations is one thing. Shooting your own party in the foot is quite another, and it sure seems like in trying to do the former, Sen. Claire McCaskill achieves the latter.

After you read McCarter’s piece, also consider the fact that McCaskill is touting her co-sponsorship of a “Democratic” Balanced Budget Amendment (BBA) – or, as I call it, BBA Lite, since it is a little milder than the drop-dead dumb BBA proposals put forward by the GOP:

The amendment supported by McCaskill requires balanced budgets to begin in five years, aims to protect entitlements, and  allows congress to opt-out in times of war.

Additionally, the Democrat’s version prevents congress from passing tax cuts for individuals earning more than $1 million a year unless the country maintains a surplus, a provision that could face opposition from Republicans.

McCaskill may attempt to cut out the really ugly parts, but a BBA is still a very bad idea all by itself, as commentators from the left, along with a few honest, half-way intelligent folks from the right, agree. It’s not just a bad idea, though, it’s the lazy politician’s way to build rigidity into a system that requires flexibility, all just so that they can avoid having to do what we elect them to do – govern.

But the worst of it is the rhetorical trope McCaskill uses to justify this particular walk on the red side. She dredges up the incessant and dishonest GOP metaphor that misleadingly compares family and government finances, and declares “Congress ought to do what families in Missouri do every day: live within their means.” Actually, even though governments are very different types of entities than families, families themselves do take out mortgages to buy houses, and secure loans to send their children to college and make large purchases. Even in Missouri. Responsibly managed debt gives us greater flexibility and the option is absolutely essential for the government as well.

I am sure that McCaskill thinks that she is cleverly stealing GOP thunder, cutting the rug out from under the other guys by calling for a BBA that doesn’t exactly go after the same targets and then calling them out when they object. I am sure she thinks that using their own language makes it all just that much more insidious.

Unfortunately, all McCaskill’s really doing, besides trying to save her backside in a conservative state, is helping to legitimate right wing positions. If even Democrats talk the GOP talk and refuse to question the basis of GOP claims about the need to cut spending, even as we are potentially sliding into another recession, the dialogue will go no further. We will continue to talk about spending when we should be talking about jobs. It would take courage to try to change the terms of discourse, to go on the offensive in order to throw the GOP steam-roller off-track and, sadly, courage so often seems to fall victim to a misguided, purely political pragmatism.

I do believe that the best way to insure that we eventually arrive in progressive Nirvana is to vote as left as you can given your options, and in Missouri right now, the only option, the putative “left” political establishment, is staking out territory on the center-right side of the room. Since I don’t foresee a primary challenge to Senator McCaskill, I’ll continue to support her, but I do wish she wouldn’t go out of her way to make it so hard, especially since I’m not sure it’s going to do her much good in the long run. She won’t win the Tea Partiers, and, in the meanwhile, she sure has pissed off lots of progressives. I  hope those legendary independents the “moderate” Democrats all claim to be courting are worth it.

Addendum: Guess who else thinks that a balanced budget amendment is a bad idea?  As per Steve Benen, none other than Standard & Poors. Hear that Claire?

* Edited slight for clarity.

Todd Akin on the federal debt: the same ol' same ol'

14 Thursday Apr 2011

Posted by Michael Bersin in Uncategorized

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Tags

2012 budget, deficits, federal debt, missouri, Todd Akin

In his most recent tweet about the President’s debt reduction plan, Rep. Todd Akin (R-2) seems to be trying for a little gravitas – as befits a senatorial candidate, perhaps?:

Glad to see the President finally entering the conversation on our federal debt. He should remember it is a spending – not revenue – problem

Surprising comment on two points:  

One – Akin has never impressed anyone who watches him closely as a person who enjoys give and take on the issues – witness his treatment of folks who try to ask challenging questions at his town halls. So now he wants us to believe that he welcomes presidential involvement? Particularly when that involvement contrasts so vividly with the fact-challenged GOP budget plan put forward by Rep. Ryan?*

Two – where’d Akin get the idea that that the deficit is a spending problem rather than a revenue problem? Lots of Republicans like to say this, but it clearly doesn’t stand up to even cursory examination. Do they really think anyone with half a brain believes it? Do they really believe it themselves?

We decrease revenue, presto-bingo, we increase the federal debt. Remember – we had a budget surplus until Bush enacted his tax cuts – cuts that, incidentally, contrary to the related tenet that Akin pushes, didn’t seem to have much positive effect on the economy during the Bush years. Instead, economic growth was consistently anemic, ultimately culminating in the massive Bush Recession.

Math-challenged Rep. Akin also seems to be ignoring the incontrovertible truth that if we do nothing about spending, but just let the the Bush tax cuts die a natural death, we would halve the deficit by 2021.

As Eliot Spitzer pointed out in Slate Magazine last January, our budget is out of balance: we spend in the neighborhood of $3.8 trillion, we take in about $2.5 trillion in revenue, leaving a deficit of about $1.3 trillion. Think about it. And then consider that Rep. Akin believes revenue absolutely, positively isn’t part of the problem. Do you think it might be due the fact that his ideological blinders are welded on just a little bit too tightly?

Just goes to show that you can’t teach an old dog new tricks and, no matter how he gussies himself up, Senator Akin would probably be just as fact-challenged and hide-bound as Representative Akin has shown himself to be on so many memorable – and often genuinely amusing – occasions.

* But wait – was this just Rep. Akin trying to be snarky? If so, he needs to try a little harder.    

Real chutzpah

24 Thursday Jun 2010

Posted by Michael Bersin in Uncategorized

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Tags

budget, Claire McCaskill, deficits, GOP propaganda, missouri, Todd Akin

Giggle inducing title of a new press release from the ever-clueless Todd Akin (R-2nd): “Congressman Akin Condemns Democrats Refusal to Govern.” Pretty rich coming from a charter member of the Party of No, No way, Never, Unh-uh.

What Akin is talking about is the House leadership’s decision not to pass a budget blueprint this year.  According to House Majority Leader Steny Hoyer:

It isn’t possible to debate and pass a realistic, long-term budget until we’ve considered the bipartisan commission’s deficit-reduction plan, which is expected in December …

Instead:

The House will put forth a “budget enforcement resolution” rather than a budget blueprint that looks beyond next year and calculates five or 10 years’ worth of deficit figures.

The House’s “enforcement” – or deeming – resolution will endorse the goals of the president’s fiscal commission and reiterate the commitment to vote on its recommendations after the midterm elections. And it will also set limits on discretionary spending “that require further cuts below the president’s budget, …

Not too unreasonable given all the deficit Sturm und Drang Republicans are drumming up and the resulting stampede of ConservaDems. It certainly doesn’t sound like refusing to govern. That’s what occurs when all members of a political party move in lock-step, for purely political reasons, to obstruct vital legislation and hold-up even minor government appointments – and we all know who’s been doing just these things, Rep. Akin.

Actually, insofar as Hoyer seems to be taking a rational approach to the issue of deficits, it might even be heartening news. Hoyer, unlike Missouri’s would be deficit mavin, Claire McCaskill, seems to be able to distinguish between short-term, stimulus related spending and long-term, structural budget deficits, cautioning against  “overreacting to short-term deficits while we’re still feeling the effects of recession.”

All well and good, I say – taken at face value, it sounds like responsible leaders taking into account the circumstances on the ground, and at the very least, it’s no big deal. But, of course, Rep. Akin doesn’t see it that way:

This decision sends a clear message to American families that Democrats in Washington still don’t understand the seriousness of our fiscal crisis and they still view working Americans as the ‘cash cow’ to fund their excesses.

What excesses? Massive tax cuts for the wealthy? Invading Iraq on trumped up reasons? Giveaways to the energy, banking, you-name-it industry? But wait – didn’t that happen while Akin and his pals were running the show?  

Maybe Republicans in Washington just like to throw temper tantrums to pass the time – it must get pretty boring doing pretty much nothing that really amounts to anything. To bad they’re doing it on our dime.

McCaskill votes against more stimulus spending

17 Thursday Jun 2010

Posted by Michael Bersin in Uncategorized

≈ 2 Comments

Tags

Claire McCaskill, cobra benefits, deficits, Extenders bill of 2010, missouri, sort-term debt, unemployment

Today the tax extenders bill of 2010,  which would have, among other important provisions, extended cobra subsidies and unemployment benefits for those hardest hit by the Bush recession, was defeated in the Senate 52-47. And Claire “I see Deficits” McCaskill was one of the 52 senators voting against the bill. She did this in spite of President Obama’s insistence that the spending is necessary  “to boost the economy as signs grow of the recovery’s fragility.”

Why is this so terribly wrong? Ezra Klein puts it succinctly:

Unemployment is at 9.7 percent right now. It’s extraordinarily high. And it’s extraordinarily high because not enough jobs are being created to absorb all the workers who got laid off during the recession. Killing their unemployment benefits wouldn’t magically make more jobs appear. It would just make those people poorer, and because they’d be poorer, they’d have less to spend, and because unemployment is geographically concentrated, that would mean the economy in areas with lots of unemployed workers would tank further and thus it would take longer for it to create jobs.

Even a middle of the road economist like White House Economic Advisor Lawrence Summers understands that there is a difference between short term stimulus debt and long-term deficits:

He said the government’s stimulus measures helped revive economic growth …

“It would be an act of fiscal shortsightedness to break from the longstanding practice of extending these provisions at a moment when sustained economic recovery is so crucial to our medium-term fiscal prospects,” he said. …

Summers said much of that deficit will be reduced over the next five years as economic stimulus measures are phased out. ..

So what’s wrong with Claire McCaskill?  Why can’t she understand the distinction between short-term and long term spending? And how can she do something that will hurt so many in Missouri where those who have been hit the hardest by the recession have already been raked over the coals by a state legislature that wants to balance the budget entirely on their backs?  

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