And so the mobs that have swarmed Athens, Greece, Madison, Wisconsin and other points in time and space where the reality that there is no Santa Claus has come to the fore has now come to the streets of Tel Aviv. Signs and shouts demanding "affordable housing" and "social justice." And - this is rich - a reduction in the sales tax.
I'm not encouraged about the prospects of sufficient collective will to make sense to stave off a general train wreck of the West.
Wonks can continue to find little signs of light in yield curves or corporate profits, but it's clear, from reading news items like the above as well as absolutely nonsensical Facebook posts or even remarks I hear in conversation, that there is probably no longer a critical mass of real adults in the overall West that understands that the money has to come from somewhere.
So, presumably you're a grown up, if it has to come from somewhere can you tell us where it went? I mean the 1.3 Trillion that vanished from collective accounts last week. It is probably immature of me to wonder who profited from so many others' losses. I am probably not a grown up in your book but I saw this coming as not enough had changed since the last meltdown back in '08. Predictably, you want to make it a political statement and of course we know where your finger points. Of course grown ups recognize opportunity when they see it.
ReplyDeleteIt is probably childish to blame one person, such as Bush though, for the debt crisis.
ReplyDeletehttp://mobile.theweek.com/article/index/217524/what-caused-the-national-debt-6-culprits
1. The Bush tax cuts
The biggest culprit? The 2001 and 2003 tax cuts under then-president George W. Bush, says the Associated Press. They have added an estimated $1.6 trillion to the national debt. It's pretty clear, says Brian Beutler at Talking Points Memo, that Bush-era policies, "particularly debt-financed tax cuts," make up "the lion's share of the problem." And they're ongoing, so the tab for them builds every year.
2. Health care entitlements
Democrats "constantly harp" about the Bush tax cuts, says Peter Morici at Seeking Alpha, but those rates were in place in 2007, and the deficit that year was one-tenth this year's budget shortfall of $1.6 trillion. So what has changed since then? Added "federal regulation, bureaucracy, and new Medicaid and other entitlements have pushed up federal spending by $1.1 trillion — $900 billion more than required by inflation." And down the road, says Yuval Levin at National Review, our "health-entitlement explosion" will account for "basically 100 percent" of our debt problem.
3. Medicare prescription drug benefit
Another piece of the pie: George W. Bush's addition of Medicare's prescription drug benefit. That has added $300 billion to the debt, according to the AP. Expanding entitlements like Medicare, or last year's health-care reform package, is a particularly tempting way for Congress to run up debt, says Jagadeesh Gokhale at The Daily Caller. Since lawmakers don't typically map out a revenue strategy to fund those benefits, they are "shielded from the political costs of actually paying for the new programs."
4. The wars in Iraq and Afghanistan
The tab for the wars in Iraq and Afghanistan comes to $1.3 trillion, another major chunk of new, unexpected spending over the last decade. "These wars cost us plenty," says Nake M. Kamrany at The Huffington Post, and they "have to be financed with borrowing, which adds up to national debt."
5. Obama's economic stimulus
The 2009 stimulus package enacted by President Obama cost $800 billion. And the 2010 tax-cut compromise between Obama and Republicans, which
extended jobless benefits and reduced payroll taxes, added another $400 billion to the debt. Add another $200 billion for the 2008 bailout of the financial industry, and the government's efforts to soften the blow of the Great Recession amount to one of the largest chunks of the debt build-up. The "federal budget was one good year away from balancing" after 2007, says Tom Blumer at News Busters. But in the years since, Obama and Democrats in Congress put that goal out of reach.
6. The Great Recession
Some of the spending gap came from factors outside the control of Congress and the White House. As the government spent heavily to boost the economy, says the AP, it took in hundreds of billions less in tax revenue than expected, because the Great Recession eroded Americans' income and spending.
Tax cuts are never a cause of problematic deficits. There is no baseline of revenue that is the starting point from which taxes are raised or cut.
ReplyDeleteAs far as the wars go, I'll let Peter Wilson's American Thinker article of Aug 7 have the floor for a moment:
Any government expenditure could potentially add to the national debt, but the idea that you can point to one "policy" and claim that 100% of the cost should be added to our debt is absurd. It would be like claiming that you gained ten pounds because last month you ate six pounds of chicken and four pounds of rice. Similarly, it is erroneous to claim that that the national debt increased by $1.4 trillion because Bush spent that amount over five years on Iraq and Afghanistan. Much, or part, of the cost of war was funded by tax revenue.
Also, let us remember (this is LITD-man again now) that the government can never predict when threats to our security will arise and what it will cost to eliminate them.
Now, the author of your six-culprits article is exactly right that the drug-prescription expansion of Medicare was indeed a bad, bad idea. As I have always maintained, W was no conservative.
And as for who profited in the big market slide, why do you care? Whoever they were, they were sharp enough to get the hell out before things really deteriorated. Is there something bad about that?
Oh no, me and the wife got out too. Yessiree, bobbie. But I don't call that profiting. The Bush tax cuts for the wealthy you claim all us poor folk envy has been fingered as a major factor in our present deficit. They were cuts, and they were to be temporary. Be a grown up now and try to recognize there were many causes, many of which certainly predated the individual you despise so much who is now the freely elected president of this land.
ReplyDeleteAs for why we are here again looking worse for the wear less than 3 years following the Bush meltdown, I post these links from others because you simply won't believe it, coming from me. This is from a WSJ writer here:
ReplyDeletehttp://www.marketwatch.com/story/the-next-worse-financial-crisis-2011-07-06
The next, worse financial crisis
Commentary: Ten reasons we are doomed to repeat 2008
6&7 from the above link are particulary illustrative. Can't wait until tomorrow, might be the Great Crash of 2011. Of course fingers will continue to point and blame will flow forth like a gash in a soldier's aorta.
ReplyDelete6. The derivatives time bomb is bigger than ever — and ticking away. Just before Lehman collapsed, at what we now call the height of the last bubble, Wall Street firms were carrying risky financial derivatives on their books with a value of an astonishing $183 trillion. That was 13 times the size of the U.S. economy. If it sounds insane, it was. Since then we’ve had four years of panic, alleged reform and a return to financial sobriety. So what’s the figure now? Try $248 trillion. No kidding. Ah, good times.
7. The ancient regime is in the saddle. I have to laugh whenever I hear Republicans ranting that Barack Obama is a “liberal” or a “socialist” or a communist. Are you kidding me? Obama is Bush 44. He’s a bit more like the old man than the younger one. But look at who’s still running the economy: Bernanke. Geithner. Summers. Goldman Sachs. J.P. Morgan Chase. We’ve had the same establishment in charge since at least 1987, when Paul Volcker stood down as Fed chairman. Change? What “change”? (And even the little we had was too much for Wall Street, which bought itself a new, more compliant Congress in 2010.)
Re: W-era tax cuts: meant to be temporary by whom?
ReplyDeleteThe MEC has surrounded himself with Wall Street figure of the particular type that go in for that east coast, willing-to-mix-the-public-and-private-sector way of operating that, yes, leads to bailouts and subsidies and the like.
But the MEC himself? It's proven exhaustively and conclusively that he is a revolutionary socialist who associates with these people because they are useful tools toward his strategic vision of fundamentally transforming America.
New blog? Same as the old blog. And here we go round and round.
ReplyDeletehttp://www.washingtonpost.com/business/economy/the-gops-tax-delusion/2011/07/11/gIQAtIga9H_story.html
The Bush tax cuts were scheduled to expire after 10 years. Congress extended them for two years in 2010, as you don’t want a massive tax increase in the middle of a deep recession. But as we look toward our future deficits, it seems we’ll need to let at least some of the tax cuts expire. Indeed, Greenspan now says we should let all of the Bush tax cuts expire.
But the Republican Party refuses to let any of them expire. And forget admitting that tax cuts meant for surpluses don’t make sense during deficits; they refuse to admit that tax cuts have anything to do with deficits at all.