Same Bad Policy, Different President

4/30/2009

I pulled this quote from a yahoo article that my friend Matt posted yesterday:

"President Barack Obama is counting on his $787 billion stimulus of tax cuts and increased government spending on big public works projects to help bolster economic activity later this year."

* * *

One of my major complaints about the Bush Administration was that it held an economically unsustainable model of CUTTING TAXES and INCREASING SPENDING. Anyone who's ever done basic arithmetic should realize that continually cutting income while expenses continue to grow is the sort of thing that inevitably leads to debt.

And considering that our own national debt is in the trillions (and climbing), I firmly believe we've passed that threshold long ago and are now dabbling in financial risk that surpasses anything the world has ever seen.

I'm sure you'll recall that I'm no democrat, but I have argued somewhat favorably toward them in the past on the mere basis that they seem to know how to do basic math. They seemed to understand that when you increase spending you must increase taxes, too. Well, imagine my disappointment when I find out that this is apparently not President Obama's plan any longer. He has instead decided to follow the same lousy Bushinomic Principles by spending more and collecting less.

Man, I really hope someone reminds him that he's going to ruin us if he continues.

Now don't get me wrong- I wasn't looking forward to paying more taxes! I abhor the thought. I'd prefer the Libertarian model that cuts taxes AND government spending. But I still had this small bit of faith (and hope) that a change in the administration would bring about some sort of sensible financial policy that would balance our federal budget and begin reducing the national debt- even if it meant more taxes in the short term.

Well, I guess we can cross that dream out and throw it in the reality check file. And with this in mind, I'm going to continue to encourage my countrymen to look to a third parties in the future. Cause the "big two" just don't get it.

Jamie link

4/30/2009 01:37:58 am

Nate, while I appreciate your frustration and see where you're coming from, your argument doesn't account for the whole picture.

[1] Tax cuts for 95% of working families will be accompanied by a tax increase for the top 5% and other various tax increases. Spending increases are accompanied by (albeit much smaller) spending cuts and efficiencies.

[2] The spending package will indeed bankrupt our children's generation *if* it does nothing to decrease unemployment, cut healthcare costs, and lead us toward energy independence. It relies on our economic situation improving to pay for itself, and banks on the idea that if people don't have jobs, they don't pay taxes (but do consume far more taxpayer dollars than working people). If you want to argue for the elimination of public services and unemployment benefits, that's one thing, but it doesn't seem like you're doing that here.

[3] Public safety nets, tax tables, public education, public health, energy independence, and responsible action in the face of crisis is not "basic math." That's a myopic view of our current economic situation (and you know it).

Love and peace,
j-me

your friend Tom link

4/30/2009 03:39:18 am

Nathan, Nathan, Nathan,

Take a deep breath and remember that Obama has been in office for three months. Also keep in mind that he appears willing to step up to some extremely difficult issues about which the Bush administration did virtually nothing for eight years (healthcare, renewable energy, climate change). Let's not forget how Bush & Co were preoccupied with invading Afghanistan and Iraq, justifying torture and trashing American credibility, undoing environmental regulations, pandering to the interests of Big Oil, and looking the other way while the financial sector threw caution to the wind and followed the lead of its greediest, seediest own.

The solutions to these problems will not be cheap. They are even more expensive because of the extent to which poorly managed enterprises were allowed to run wild. There are very good reasons for our system of checks and balances. Government is not the only thing that needs to be restrained. The current economic meltdown is just one more painful (and expensive!) reminder that businesses are no more trustworthy than governments. We need regulation and enforcement of industry as much as we need local law enforcement.

I appreciate Obama's willingness to take dramatic steps like letting Chrysler go bankrupt, firing the CEO of General Motors, pulling our military out of Iraq, putting the Iraq war on the budget, shining light on some of the dark secrets of the Bush administration, etc. Let's hope that his courage remains strong as he tries to solve some of the other enormous issues that his predecessors didn't have the guts to tackle.

John Lewis

4/30/2009 04:43:47 am

Just a quick response to the above poster:

"about which the Bush administration did virtually nothing for eight years (healthcare, renewable energy, climate change)"

How are any of these things items that the government should do anything about? Why shouldn't these be handled by the private sector?

"letting Chrysler go bankrupt, firing the CEO of General Motors, pulling our military out of Iraq, putting the Iraq war on the budget, shining light on some of the dark secrets of the Bush administration"

These are not courageous in any way, these are political moves. The simple fact that they made an ultimatum to force a private company to fire their figurehead for nothing more than to "keep their political face", so to speak, is abhorrent and is a step towards fascism.

We are in for a terrible future for ourselves if we continue to overtax the creators of capital (that top 5% the first poster mentioned.) That capital will go to other countries, instead of ours, thus making the economy go into a deeper spiral.

Nate:

I take it you don't buy into the Laffer curve? (Though it did work in the real world, see the Reagan administation.)

Cheers! Sorry so brief. :P

Jamie link

4/30/2009 05:20:55 am

An even briefer response to John Lewis:

[1] The poorest countries in the world have governments that do nothing about these issues (healthcare, renewable energy, climate change). The most prosperous countries have governments that take action.

[2] Please look up Fascism.

[3] Your argument about ending the Bush tax cuts for the top 5% is not historically accurate; it is pure speculation.

// j-me

Nathan link

4/30/2009 11:27:10 am

Good comments, all. I've been applying for a mortgage all day so I didn't have time to respond until now.

@ Jamie & Tom- I'm half joking when I ask this, but half not: how would you have reacted to this post 8 months ago had it merely been about Bush? Perhaps you would have defended Bush the same way you're defending Obama? I doubt it, since all three of us hated him- but I'm just curious if you're jumping to defend Obama because you like him rather than because you agree with him. This may not apply beyond this particular issue- but the questions still stands.

I won't ask you to do this without taking the lead myself- so here it goes:

I absolutely ADORE Ronald Reagan, but I absolutely HATE that he ran up the sort of national debt that he did. It was completely irresponsible and laid the groundwork for the damage Bush I & II did to our economy. I absolutely HATED most of the Clinton policies, but I totally LOVE that under his terms he and Congress worked together to balance the budget and pay down some of the debt that we owe.

So, please take a moment to think about whether you actually agree with Obama on this or if you're merely agree with him in spirit and so you're going along with it because you think he can do no wrong...

@ Jamie- Good arguments all around. I'm very glad you were nice enough to add the note about "bankrupting our children." I hope that doesn't happen- but I suppose that's my biggest fear. All empires usually come to an end when the overextend themselves financially, so I'm very nervous about this policy of debt building...

If Obama were leading the way in this area (rather than adding on to decades of financially irresponsible spending), I might feel a bit different about it (probably not, but I might be willing to give him a shot), but there's no end to the crisis that have given our Federal Government justification to continually overspend (and undertax so that they get re-elected). It's gotta come to an end. And when it does, it's going to be tremendously unpopular. But it's needed if we're to survive as a financially viable country.

I also want to address the fact that we probably have very different ideas on what the role of government should be. You mentioned healthcare, renewable energy, and climate change in your response to John- those things might be well and good but without a change to our US Constitution the Federal Government has absolutely NO authority in those areas. It's been common practice to ignore the Constitution for quite some time now, I understand, but it doesn't mean that those things can suddenly be shoved in under the table without some real trouble. By real trouble I mean that governments that ignore the restraints placed on them in one area of the law (even for the "good of all") are very likely to ignore any and all other restraints that they find convenient.

If you truly want the Federal Government involved in those areas, work towards a change in the Constitution. Don't merely suggest that they are statistically relevant to healthy nations because I'm pretty sure that a government that ignores it's Constitution is an unhealthy one.

@ Tom I think we both tend to see what we want in almost every policy. You see corporate irresponsibility and a need for restraint and I always see too much government intervention and manipulation of the market. It's one of the things I love about you- you're just like me only at the other end of the political spectrum. That said, I think I'll spare the Libertarian rant and merely suggest that the truth is probably somewhere between the two of us- or possibly so apolitical that we'd miss the truth because we're too wrapped up in the politics.

@ John I do buy into the Laffer curve. But I think it only applies to the upper 5% who are smart enough to hide their money when taxes get too high! (Which is why, as you pointed out, raising taxes on the rich doesn't matter because they'll send their money to another country in order to avoid losing it).

Jamie link

5/1/2009 08:28:31 am

@Nate - If you knew me better, I might be offended by your half-joke. But since you've met me all of a two or three times, I'll let this one slide. You'll notice that I didn't mention Barack Obama once in my comments; they weren't designed to be a defense of Obama's policies but rather a nudge at you to not simply join in the chorus of other [true] conservatives (who are also lamenting the past eight years of fiscal irresponsibility) by just throwing out a statement about "basic math" and pretending that we could just quit spending money [and collecting taxes] and our country would be magically righted.

I would be on your side (who enjoys paying taxes??) if the alternative made sense to me. But I think about my personal experience with healthcare and something in me wants somebody to _do_ something. And I think about food and baby toys and household cleaners and I take a little comfort knowing that there are regulations around these things. And when it comes to the environment I want something bigger than me out there advocating for Creation. And I want a public education system that encourages innovation and gives every new generation a chance to excel. And I want someone watching the banks and the markets, holding them accountable for the actions they take with millions of Americans' dollars.

Because with what I know about markets (my company operates a few online "markets" which I helped develop) people will always cut corners. People will always cheat to get out in front of the people who are doing the right thing. And eventually the people who are doing the right thing realize that they're getting suckered and join the cheaters to make an extra buck. And there will always be someone to come along and do it cheaper if it costs extra to do the right thing and how is that for a sustainable business model?

All that said, I really am open to understanding what you mean when you say you want less taxes and less spending. And I'm open to incorporating those ideas into my own framework for approaching the world. I left the comment I did because your post didn't give me anything to work with in that area; it was probably written quickly in a moment of frustration over what seems like a simple math problem. But saying it's simple math doesn't help me to understand what you really mean because I get stuck on the fact that it isn't simple at all. There are real, human lives that are affected by every line item in the federal budget and that it matters whether we decide that health care and energy and the environment should be legislated.

That's all. ;)

// j-me

Nathan link

5/1/2009 11:21:45 am

@Jamie, thanks for taking the time to respond. You're right that I may have jumped the gun to respond to you in terms of Obama, but I can remember how spirited you were over him during the primary season and I may have been reading something into your comment.

I suppose my real problem is that we have too much debt in this country. It's seriously out of control, and I'm not only talking about the federal government- I'm speaking of individual households all over this country.

In order to get back on track, it's going to be rather painful. You're right to say that people's lives are on the line- because they really are. I know this. And I also know that both President Obama and President Bush before him could do math.

But what what's happening is we're fixing a debt problem by adding more debt. That sort of policy may (or may not) pay off in the next few years, but when you stack debt you only delay the inevitable.

I would much rather go through some really hard times now to reconcile the bad dollars and bad debt than delay our problems further and end up with total world market failure. That's a recipe for disaster.

I don't know, maybe Obama and Bush know something I don't know. Maybe we're already passed the point of world market failure and they're just trying to keep the whole thing from falling apart.

But I have hope that we're not.

I have hope that even if it ends up being as bad (or worse) than the Great Depression that the result of reconciling debt is better financial security and prosperity in the future.

We probably need to continue this conversation in person because I don't want to risk offending you again. Sometimes, tone of voice makes all the difference...

Nathan

5/8/2009 02:54:57 am

During the Bush years, more taxes were collected, not less. Tax rates were cut, yet more tax money came in than ever before. That doesn't mean the Bush administration should have spent more. It just means that lower taxes, if done right, can boost the economy in the private sector, creating more taxpayers and pushing existing payers to higher brackets. There's the arithmetic.

However, the basic arithmetic and common sense does say don't spend more than you take in, and in spite of more tax revenue, the Bush administration and Congress still overspent and still overspend. The idea that lasting economic value will be created by trillions of dollars in pork-barrel projects funded by debt is crazy.

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Same Bad Policy, Different President

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