How We Got Here

[heckofajobbrownie]

A great bit of analysis from one of Reagan and Bush the 1st's economic policy men:

 

The Fiscal Legacy of George W. Bush

By BRUCE BARTLETT

 

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

 

 

 

Republicans assert that Barack Obama assumed sole responsibility for the budget on Jan. 20, 2009. From that date, all increases in the debt or deficit are his responsibility and no one else’s, they say.

 

The American people are right; Mr. Bush is more responsible, as a new report from the Congressional Budget Office documents.

 

In January 2001, the office projected that the federal government would run a total budget surplus of $3.5 trillion through 2008 if policy was unchanged and the economy continued according to forecast. In fact, there was a deficit of $5.5 trillion.

 

The projected surplus was primarily the result of two factors. First was a big tax increase in 1993 that every Republican in Congress voted against, saying that it would tank the economy. This belief was wrong. The economy boomed in 1994, growing 4.1 percent that year and strongly throughout the Clinton administration.

The second major contributor to budget surpluses that emerged in 1998 was tough budget controls that were part of the 1990 and 1993 budget deals. The main one was a requirement that spending could not be increased or taxes cut unless offset by spending cuts or tax increases. This was known as Paygo, for pay as you go.

 

During the 2000 campaign, Mr. Bush warned that budget surpluses were dangerous because Congress might spend them, even though Paygo rules prevented this from happening. His Feb. 28, 2001, budget message reiterated this point and asserted that future surpluses were likely to be even larger than projected due principally to anticipated strong revenue growth.

 

This was the primary justification for a big tax cut. Subsequently, as it became clear that the economy was slowing – a recession began in March 2001 – that became a further justification.

 

The 2001 tax cut did nothing to stimulate the economy, yet Republicans pushed for additional tax cuts in 2002, 2003, 2004, 2006 and 2008. The economy continued to languish even as the Treasury hemorrhaged revenue, which fell to 17.5 percent of the gross domestic product in 2008 from 20.6 percent in 2000. Republicans abolished Paygo in 2002, and spending rose to 20.7 percent of G.D.P. in 2008 from 18.2 percent in 2001.

 

According to the C.B.O., by the end of the Bush administration, legislated tax cuts reduced revenues and increased the national debt by $1.6 trillion. Slower-than-expected growth further reduced revenues by $1.4 trillion.

 

However, the Bush tax cuts continued through 2010, well into the Obama administration. These reduced revenues by another $369 billion, adding that much to the debt. Legislated tax cuts enacted by President Obama and Democrats in Congress reduced revenues by an additional $407 billion in 2009 and 2010. Slower growth reduced revenues by a further $1.3 trillion. Contrary to Republican assertions, there were no additional revenues from legislated tax increases.

 

In late 2010, Mr. Obama agreed to extend all the Bush tax cuts for another two years. In 2011, this reduced revenues by $105 billion.

On the spending side, legislated increases during the Bush administration added $2.4 trillion to deficits and the debt through 2008. This includes $121 billion for Medicare Part D, a new entitlement program enacted by Republicans in 2003.

 

Economic factors added almost nothing to increased spending – just $27 billion in total. This is mainly because interest rates were much lower than C.B.O. had anticipated, leading to lower spending for interest on the debt.

 

After 2008, it becomes harder to separate spending that was initiated under Mr. Bush from that under Mr. Obama. We do know that spending for Part D has risen rapidly – Republicans phased in the program to disguise its budgetary cost – adding $150 billion to the debt during 2009-11.

 

According to a recent report from the Center for Strategic and International Studies, the unfunded wars in Iraq and Afghanistan increased the debt by $795 billion through the end of fiscal 2008. The continuation of these wars by Mr. Obama added another $488 billion through the end of 2011.

 

Putting all the numbers in the C.B.O. report together, we see that continuation of tax and budget policies and economic conditions in place at the end of the Clinton administration would have led to a cumulative budget surplus of $5.6 trillion through 2011 – enough to pay off the $5.6 trillion national debt at the end of 2000.

Tax cuts and slower-than-expected growth reduced revenues by $6.1 trillion and spending was $5.6 trillion higher, a turnaround of $11.7 trillion. Of this total, the C.B.O. attributes 72 percent to legislated tax cuts and spending increases, 27 percent to economic and technical factors. Of the latter, 56 percent occurred from 2009 to 2011.

 

Republicans would have us believe that somehow we could have avoided the recession and balanced the budget since 2009 if only they had been in charge. This would be a neat trick considering that the recession began in December 2007, according to the National Bureau of Economic Research.

 

They would also have us believe that all of the increase in debt resulted solely from higher spending, nothing from lower revenues caused by tax cuts. And they continually imply that one of the least popular spending increases of recent years, the Troubled Asset Relief Program, was an Obama administration program, when in fact it was a Bush administration initiative proposed by the Treasury Department that was signed into law by Mr. Bush on Oct. 3, 2008.

 

Lastly, Republicans continue to insist that tax cuts are highly stimulative, often saying that they add nothing to the debt, when this is obviously ridiculous.

 

Conversely, they are adamant that tax increases must not be part of any deficit-reduction package because they never reduce deficits and instead are spent. This is also ridiculous, as the experience of the Clinton administration clearly shows. The new C.B.O. data confirm these facts.

[heckofajobbrownie]

Kevin Drum adds:

 

Even if we absolve George W. Bush of responsibility for those "economic and technical factors" — mainly the Great Recession — his policies are still responsible for a turnaround of about $8.4 trillion in the deficit projections. In other words, if we had merely hung onto the policies of the Clinton administration, paid for things like Medicare Part D, and avoided the disastrous war in Iraq, we would have entered the Great Recession with one of the lowest debt levels in the advanced world. That in turn would probably have kept the housing bubble a bit smaller than it was, making the Great Recession a little less catastrophic, and would have given us more headroom for fiscal stimulus in 2008 and 2009, which also would have reduced both the length and depth of the recession.

 

But none of that happened thanks to Republican economic policies. This year, they swear they've learned their lesson and will never do this again. Do you believe them?

[calfoxwc]

But Bush was pres for eight years and we had 9/11.

 

Obamao has only had 3.5 years, and on pace, is a far worse disaster

 

in terms of the fed deficit.

 

It's a false equivalency.

 

And once pres, Reagan was bashed all over the place for the economy...

 

despite Carter's screwing it up and cutting the military retirements and funding etc.....

 

back then, Dems said "the buck rests and stops at the current pres's desk"

[heckofajobbrownie]

Anyhoo...

 

The point being that the "Obama is spending us into oblivion" outcry is simply not accurate. It's not about Obama's big government ways, or his out of control spending. It's about the effects of the tax cuts, the wars, the health care, the entitlement spending, and the effects of the recession. That's the deficit. That's the debt. If you want to ding Obama for anything, it's re-upping a lot of what Bush did. But that's a little hard to do when you're lining up to vote for a guy who wants to cut taxes even more than Bush, and spend even more on defense.

[calfoxwc]

Anyways...

 

that goes back to the debate that lowering taxes works well for the economy.

 

vs

 

raising taxes out the wazoo to spend more..... hurts the economy.

 

still doesn't solve the spending problem

 

 

But throwing red ink in terms of billions and billions... into solyndra and brazil oil drilling.....

 

and Egypt...and on "shovel ready jobs" that busted, and the money to GM that Ford didn't need....

 

and mortgage bailouts that really didn't fix the problem either...

 

Obamao throws money at problems right out of a leftist hs students fancy.

 

It's all blown up in Obamao's face. Including corrupt holder and the "Fast and Furious" anti 2nd Amendment scandal...

 

and the Obamao wh grave national security scandals. both which are blowing up more and more every day...

 

that's how we got HERE.

 

And most of America wants to go THERE. With another pres that at least, knows the value of large fortunes of money that the

 

U.S. does get in terms of taxes.

 

Just once - I want to see a flat tax. Everybody pays the same. Make more, pay more - same rate. And scarew the IRS.

 

 

[heckofajobbrownie]

Cal, normally I don't like to engage you, and for obvious reasons, but you say that lower taxes are good for the economy, and Obama raised them and spent the money on nonsense and that's what hurt the economy.

 

Except that Obama didn't raise everyone's taxes. He lowered everyone's taxes. He kept Bush's tax cuts. He added additional cuts to payroll taxes and for small businesses. A third of the stimulus bill - that you hate - was made up of tax cuts. Clearly, if lower taxes were the key to economic success we'd be having lots of success right now. because that's what Obama did in reality, as opposed to the version in your fantasy world.

 

Just letting you know. That is all.

[VaporTrail]

Cal, normally I don't like to engage you, and for obvious reasons, but you say that lower taxes are good for the economy, and Obama raised them and spent the money on nonsense and that's what hurt the economy.

 

Except that Obama didn't raise everyone's taxes. He lowered everyone's taxes. He kept Bush's tax cuts. He added additional cuts to payroll taxes and for small businesses. A third of the stimulus bill - that you hate - was made up of tax cuts. Clearly, if lower taxes were the key to economic success we'd be having lots of success right now. because that's what Obama did in reality, as opposed to the version in your fantasy world.

 

Just letting you know. That is all.

 

But, but, but Obamao is a commu-fascismist!

[calfoxwc]

Except that Obama didn't raise everyone's taxes. He lowered everyone's taxes. He kept Bush's tax cuts. He added additional cuts to payroll taxes and for small businesses. A third of the stimulus bill - that you hate - was made up of tax cuts. Clearly, if lower taxes were the key to economic success we'd be having lots of success right now. because that's what Obama did in reality, as opposed to the version in your fantasy world.

 

Heck

***************************

Some points to educate you, if you are receptive to learning anything:

 

1. I never talked about Obamao having raised taxes. He wants to, he is planning to. Of course he kept Bush's tax cuts, he's cha - he knows better than to hammer down the Bush tax cuts - the economy would freak in a bad way. He knows it - but after he thinks he'll win the pres again (fat chance now)... he will hammer down. Everybody but you libs know it.

 

2. Obamao has railed against the well to do companies - and the companies will not stick their necks out until he is gone. They are playing investment in R&D, and capital expenses

close to the vest - and Obamao just won't shut the hell up about them. That's a built in failure of his presidency. The call for higher taxes on the wealthy? Dream on, Heck, if you really

think the rich don't pay much of our income tax in the U.S.

 

3. The money to solyndra - nice aversion as usual. that was what, a half BILLION in WASTE? for what? His re-election. Big mistake, big waste. He throws money - our taxes -

around in the most stupid ass directions. You know he does. How does that help the economy?

"shovel ready jobs" ??? That was a huge, huge waste, and and a huge disaster for Obamao.

 

4. You don't "engage" me because you don't make enough serious, honest sense, to ever have a chance of getting a dem vote out of me.

In that, you are right - it won't happen. I had a lot of trouble wanting to vote for McCain - why the hell would you think I'd vote for your not very brilliant Obamao?

 

Seriously.

 

5. You can't lower taxes, and turn right around and blow mega billions, even trillions, in lofty but phony advances. The advances aren't advances.

It's just a fraudulent bragging right. Give money to GM, etc, and WE SAVED THE AUTO INDUSTRY? Odd. Ford didn't need saved.

 

The Dems had total control of both Houses of Congress during Obamao's first two years. Couldn't even mangage a freakin BUDGET.

 

Hows that hopey changie phony thing workin for ya, Heck?

 

6. Your old whines of others of us being partisan? Then you were just as, or more than we were, partisan? Come on, now.

 

7. Obamao is a disaster. Scandals, AG is a disgrace to our country - Fast and Furious, national security leaks that are seriously damaging our

security, and the safety of people in other countries, including our own troops, our effectiveness in the WAR on Terror.

 

8. Honestly, Heck. Seriously. Do you think it's a Obamao win when they simply change the name of the War on Terror to something else?

 

I don't think so.

 

9. You have long since ran cheap shots at me, and others, when we weren't even in a thread. You think that is going to convince others to be

fearful of disagreeinig with you?

 

10. Read the first nine, darn it.

[MLD Woody]

Really Heck, you know responding is pointless.

[We need Tom Tupa]

I have a hard time responding to these types of articles because they tend to lack affirmative claims other than "Bush sucked." What target am I shooting at here? Obama wants to raise taxes and has proposed tax hikes. That hits the economy in a very similar manner to currently raising taxes, so pointing out that he signed tax cuts during a recession doesnt really tell us much. He passed a health care bill the cost of which, just like Part D, was disguised and will kick in much later. Much of the cost of his idea of good government is further disguised behind mandates and new regulations - things that require taxpayers to spend money in specific ways but dont show up as part of the federal budget.

 

So yes, Bush sucked. Yes, many of Obama's critics are misstating and overstating their case. But also, Obama wants to raise taxes, Obama wants to spend more and has mandated new spending, and Obama wants to increase the cost of government imposed on the private sector. Hopefully some of that was responsive, but like I said, I'm never quite sure what the claims are worth targeting in these articles.

[heckofajobbrownie]

The articles get posted because at this point, in order to have any chance of getting through the layers of protective casing Republicans have encircled themselves in, you have to post something written by a Republican, preferably one who worked for Reagan. Otherwise, it's just the "librul media, blah, blah." Like Steve said the other day, based on nothing in particular, he just doesn't trust us to be honest. Okay. Well, then here's Bruce Bartlett, one of the few conservatives who hasn't lost his marbles, and who doesn't think tax cuts solve every problem from deficits to herpes. Here he is laying out the numbers on what cost what, and who is responsible for what costs. This is all we're trying to do. Like with those graphs from before, we're just trying to see if anyone can get on board with something other than "Obama's out-of-control spending ruined us" and to see what actually is driving the deficits.

 

And this? "Obama wants to raise taxes and has proposed tax hikes. That hits the economy in a very similar manner to currently raising taxes." Really? I know what your point is, but this is overstated. First of all, you'd have to specify which hikes you're talking about. And if you're talking about the top rate hike, then you're really overstating things.

 

Also, what regulations, other than the ones in the health care bill, do you find so onerous?

[heckofajobbrownie]

And get in the global warming thread. Let's play.

[We need Tom Tupa]

The articles get posted because at this point, in order to have any chance of getting through the layers of protective casing Republicans have encircled themselves in, you have to post something written by a Republican, preferably one who worked for Reagan. Otherwise, it's just the "librul media, blah, blah." Like Steve said the other day, based on nothing in particular, he just doesn't trust us to be honest. Okay. Well, then here's Bruce Bartlett, one of the few conservatives who hasn't lost his marbles, and who doesn't think tax cuts solve every problem from deficits to herpes. Here he is laying out the numbers on what cost what, and who is responsible for what costs. This is all we're trying to do. Like with those graphs from before, we're just trying to see if anyone can get on board with something other than "Obama's out-of-control spending ruined us" and to see what actually is driving the deficits.

 

And this? "Obama wants to raise taxes and has proposed tax hikes. That hits the economy in a very similar manner to currently raising taxes." Really? I know what your point is, but this is overstated. First of all, you'd have to specify which hikes you're talking about. And if you're talking about the top rate hike, then you're really overstating things.

 

Also, what regulations, other than the ones in the health care bill, do you find so onerous?

You mightve heard of Dodd-Frank. Put that and ACA together and you've got thousands of pages of unintelligible regulatory mandates. It's a problem. And it is costing an incredible amount of money already.

 

Closing corporate loopholes without lowering rates, raising taxes on cap gains and carried interest, raising the top rate (and applying it to a varying group of earners), uncapping payroll taxes, Medicare bonus tax, removing tax deductibility of state taxes... just off the top of my head. And then we end up in the gray area of what he says he wants to do v. what he would do if he had a Democratic Congress. Though I suppose the latter is off the table for the time being.

[heckofajobbrownie]

Yes, Dodd-Frank has new regulations in it, and yes sometimes those regulations cost money. That tells us nothing about whether they're good regulations or needlessly expensive. And if you're the banking industry, unintelligible is what you want. You can drive a truck through unintelligible. Complexity is your friend.

 

I'm not suggesting that we wade through Dodd-Frank and decide whether we need, say, resolution authority and stronger capital requirements and more transparency (sound like good ideas to me) and then discuss what that entails on paper, but saying that a bill designed to address (supposedly) the ways in which we would avert another meltdown of the financial system has regulations in it... well, of course it does.

 

As for the taxes you listed, I'm just not nearly as convinced - nor do I think the business community is convinced - that these are all just around the corner, or even large enough to hit the economy well before they're even enacted, even if you assumed they would be enacted. Of all the problems with the economy right now, tax hike uncertainty seems pretty far down the list, especially when we're talking about raising top rates on high earners or capital gains bumps. Uncapping payroll taxes isn't happening, and carried interest probably isn't either. These specters aren't what's holding us back. If there's any sense that future taxes are going to have to go up I'd say it comes from the understanding of our fiscal situation, and the knowledge that at some point taxes are going to have to go up. They can do the math just like anyone else can.

 

My big complaint is that the Democrats don't have their own version of tax reform beyond campaign stunts and Volcker rules, and they really just end up defending the status quo, or adding to it. They're just out of ideas. It's just a party that does interest group politics, and campaign season has only stripped away whatever veneer they'd slapped on that sad reality. There's no vision there. And if Obama doesn't come up with something his supporters can circle around soon I think he may very well lose. I don't think "Republicans want to go back to Bush" and Romney's loathsome personality are going to be enough.

 

I mean, hire more firefighters and cops and teachers? This is the new big idea? Jesus...

[calfoxwc]

One small example:

 

when Obamao spoke plain out that his plan would make energy prices skyrocket.....

the affect on corps - was concern - and long term apprehension.

 

That was counter-productive to the goal of getting America back on track.

But all sorts of companies sat back and had to wonder - they would be

seriously hit hugely if that happened. When Obamao spoke of "spreading the wealth"

 

by going after the wealthy - corporations heard that. That's another example

of Obamao pandering to leftist interests, while making the wrong moves to help the economy.

 

That's party how we got here. That's on Obamao, because of his own words.

 

But Heck posted this, and it is excellent stuff:

 

"My big complaint is that the Democrats don't have their own version of tax reform beyond campaign stunts and Volcker rules, and they really just end up defending the status quo, or adding to it. They're just out of ideas. It's just a party that does interest group politics, and campaign season has only stripped away whatever veneer they'd slapped on that sad reality. There's no vision there. And if Obama doesn't come up with something his supporters can circle around soon I think he may very well lose. I don't think "Republicans want to go back to Bush" and Romney's loathsome personality are going to be enough.

 

I mean, hire more firefighters and cops and teachers? This is the new big idea? Jesus..."

[Westside Steve]

Serious question:

Who among you actually wants to raise cap gains to match the top income tax brackets?

WSS

[heckofajobbrownie]

I think capital gains rates should be raised. I don't know what you mean by "to match the top income bracket." I don't know who is proposing that.

[Westside Steve]

Isn'the buffet rule exactly that?

to make cap gains equal to your income bracket?

WSS

[heckofajobbrownie]

No, it's not.

[Westside Steve]

No, it's not.

So explain to me what is behind the empty suit honking about buffets secretary?

I'll give you time to look up some left wing websites.

 

WSS

[heckofajobbrownie]

It's a 30% tax floor.

[Westside Steve]

It's a 30% tax floor.

Pretty much what I said.

Basically doubling cap games to approximate the higher tax brackets.

 

Gosh hard to see what would be anti investment about that.

WSS