Bacon's Rebellion

Democracy Thrives in Sunlight

Obama’s Big Fat Nothing

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by

James A. Bacon
in

Hoo-ah! My first column in the online op-ed section of the Washington Times:

The financial media put a positive spin on a joint statement Sunday by the wealthiest members of the Group of 20 countries that they would halve their deficits by 2013 and stabilize their debt burdens by 2016.

In the words of the Wall Street Journal’s lead story, the announcement was “a signal to international markets and domestic political audiences” that the G-20 countries “are taking seriously the need to wean themselves from stimulus spending.” Wrote the New York Times: “The action … signaled the determination of many of the wealthiest countries … to now emphasize debt reduction. And it underscored the conviction of European nations in particular that deficits represented the biggest threat to their economic stability.”

What both newspapers neglected to mention is that the goals require virtually no change in U.S. fiscal policy in the near term and only modest changes by the second half of the decade – at least if you believe the 10-year budget forecast prepared by the Obama administration. For all practical purposes, President Obama could have announced, “The Europeans can do whatever they want. We’re not budging from the status quo.” More.

Hopefully, there will be more columns to come — addressing less arcane topics than G-20 summit announcements.

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13 responses to “Obama’s Big Fat Nothing”

  1. Anonymous Avatar
    Anonymous

    Great piece and great points, Jim! Congrats~

  2. Larry G Avatar
    Larry G

    Congrats Jim Bacon… pontificating for cash has to be more fun than blathering for Butkus.

    Obama said in Toronto that he was getting ready to call the bluffs of those anguishing over financial Armageddon.

    Somewhere I read that right now, the Federal tax burden is the lowest in a decade or more.

    How about this.

    Mr. Obama sallies forth and says "folks – we are fighting two wars on a credit card" and I think each of you should start paying that bill instead of passing that 'crushing debt' on to your kids.

    Further, ya'll are consuming more Social Security and Medicare than you are paying for and I think in those cases, you should also pay your fair share of that debt so therefore I'm moving the retirement age to 70 – in phases over 5 years and I'm cutting all treatments like Viagra and passing those bills on to you.

    While I am at it – I'm getting rid of the more blatant unjustifiable tax credits such as home mortgage credits and child credits.

    Pay up folks – we are going to balance the budget – an all good men (and women) are going to come to the aid of their country even if they are to be drug kicking and screaming to financial righteousness.

    You get the drift.

    Obama is going to come to us and he's going to call the bluff of the "sky is fallling" blatherbutts.

    Let the wailing and gnashing of teeth begin.

    I fully expect those who proudly wear the mantle of "fiscal conservatives" to be the top whiners…

  3. Larry G Avatar
    Larry G

    .

  4. James A. Bacon Avatar
    James A. Bacon

    Larry, Rhetorical flourishes aside, you'll be surprised to see how similar your deficit-cutting ideas are to my humble proposals in "Boomergeddon" to cut the deficit by $800 billion. Maybe we should join forces — I sell the budget cuts/tax hikes to conservatives, you sell them to liberals.

    For the record, I'm not pontificating for cash at the Times. Wish I were.

  5. Larry G Avatar
    Larry G

    Hey Jim – so.. if Obama comes forth with proposals along these lines, – the response of those who are beating the fiscal conservative drums right now is going to be:

    A. – hell no, we won't pay

    B. – It's about time, we take back every bad thing we said about you

    C. – No matter what you say or do , we know that deep in your heart you're still a slimy Marxist liberal

    D.- all of the above

  6. James A. Bacon Avatar
    James A. Bacon

    Larry, ,I suspect that many fiscal conservatives would refuse to compromise along the grounds you lay out because they would never, ever accept a major tax increase.

    As you well know, I am a bitter foe of higher taxes. However, after writing "Boomergeddon," I have concluded that the greatest and most imminent threat to our way of life is looming default by the federal government, and our No. 1 public policy priority needs to be averting Boomergeddon.

    I also regard Dems and liberals as intransigent on the issue of taxes. They gotta have 'em. Moreover, there's just no way to cut the $800 billion or $1 trillion we need to cut. The only way to come close to balancing the budget is transform health care (mere "reform" is insufficient), cut programs and raise taxes. Dems won't play along unless you raise taxes. That has to be part of the equation. I don't like it, but that's the way it is.

    We can offset some of the damage of higher taxes by instituting the right kind of tax reform. Details to come in "Boomergeddon."

  7. Larry G Avatar
    Larry G

    I'm looking forward to reading it.

    Most everything I read says that the two big elephants in the room are entitlements and the military.

    I find it hard to believe that even among those who think of themselves as fiscal conservatives – that this country can have one of the lowest tax bites of most any modern economy country in the the world – and STILL BELIEVE that we have enough "left over" to fight two wars.

    Why not put the two wars on paygo and if you can't come up with the cuts necessary to pay for the wars then you tax.

    Either of those would be more fiscal responsible than passing the debt on to the younger generation – right?

    This is the problem that I have with those who claim to be fiscally responsible – in a word – they are not.

    If they had been – the two wars would have been paid for with a "war tax" and the deficit held at least where Clinton left it.

    Those who were in Congress the last 8 years and claimed to be fiscal conservatives did absolutely nothing to advance the cause of fiscal conservatism but instead, betrayed the concept – got voted out.. and now have spent the last two years whining about Obama an how they are going to fix his wagon at the next election.

    What a bunch of wart hogs.

    We already know about the tax&spenders. They have not changed. They will always want to tax and spend.

    The folks who stabbed us in the back (my view) were those who claimed that they were needed as a check and balance to tax & spending.

    Those guys even killed the RINOs claiming that they were basically tax&spenders in Republican clothing.

    So.. now all that is left is the hard right … bellowing about the deficit … and casting about for blame…

    Do I believe returning Tom Delay and Newt Gingrich wannabies will return us to fiscal responsibility?

    not by the hair on your chinny chinny chin… for sure.

  8. Gooze Views Avatar
    Gooze Views

    Jim,
    You may be getting ahead of your argument here.
    What is interesting about the G-20 is that a bunch of big advanced industrialized nations is recognizing the problems with deficit spending and are pledging to do somethng about it. We are not talking about what the Obama Administration. The news media is simply reporting what the G20 says it will do. Period.
    There have been commentators (maybe you haven't read them) who have taken Obama to task for not going along with theG20 because he believes that in the short term, more stimulus, Keynesian spending is need to sustain the weak recovery and preventing a double dip recession. This is at odds with the G20.
    So, you seem to be setting up a straw man in the form of hapless and dim-witted media "spnning" the story in some way. Are you saying they are spinning it to somehow make Obama look good? Not so sure.
    Lastly, you bring up 10-year T-bills and you try to make the point that interest rates will go up as the risk of U.S. government paper grows. Was it 5 percent, you are talking about?
    If you, you ought to look at history. Back in the early 1980s when Reagan was in power and was trying to get a handle on inflation before he blew out his budget on defense spending, 10 year T bills brought something like 14 percent — or a lot more than the catastrophic sum you are talking about. Can you expl;ain this?
    With "Boomergeddon" you may be painting the future more darkly than it needs to be without the benefit of historical perspective. Plus, there seems to be some hype in your argument about the G20.

    Peter Galuszka

  9. James A. Bacon Avatar
    James A. Bacon

    Peter, No, despite the impression I might have conveyed, I wasn't bashing the MSM for its coverage of the G-20 announcement. I was simply trying to position my column as providing perspective that was missing (not from any devious or ulterior motives) from the WSJ and NYT stories.

    Regarding your notes about interest rates… If I wanted to really scare readers, I would have mentioned the 14% rates of the Reagan era. If you combined our $13 trillion+ national debt with 14% interest rates, we could hang it up — we'd be broke in short order. In "Boomergeddon," I analyze what would happen if we experienced 10% interest rates, a more conservative (as in cautious) number, by the end of the decade. 10% would be double the rate in the Obama projections. The results are very, very scary.

    By the way, one reason I did not cite the Reagan-era 14% rates in "Boomergeddon" is because when I posted a long passage from the book on this blog with a chart showing interest rates all the way back to the late 1970s, you took me to task for trying to over-dramatize the situation. By using a 10% interest rate scenario, I was trying to avoid the appearance of stacking the argument in my favor!

  10. Gooze Views Avatar
    Gooze Views

    Jim,
    DiD I say that earlier? What a slimeball I am!
    HOwever, economies can be remarkably resilient. Countries such as Russia and Israel, for instance, have had inflation rates of 2,000 percent per annum but they did better later.
    Peter Galuszka

  11. Anonymous Avatar
    Anonymous

    "Fool me once, shame on you; fool me twice, shame on me." And the fact of the matter is Congress has fooled the public many, many times. "We'll raise taxes and cut spending." The tax increases stick, but the spending cuts don't.

    Maybe we need a constitutional amendment to require a 2/3 majority for any spending in excess of inflation plus one percent. We could also send two-thirds of the Washington lobbyists packing.

    TMT

  12. Hydra Avatar
    Hydra

    Congratulations, you are now main stream media.

    RH

  13. Hydra Avatar
    Hydra

    instead of passing that 'crushing debt' on to your kids.

    Wait a minute. Assuming we are successful, won't our kids be the ones to benefit from world peace?

    Let them pay their share.

    Paying your full locational costs means paying your locational costs in the space-time continuum.

    RH

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