Obama's bestowal of the Presidential Medal of Freedom upon his political benefactor, Ted Kennedy, brings to mind the wonderfully cynical and astute quote from the 1974 cinematic classic, "Chinatown."
"Politicians, ugly buildings, and whores all become respectable if they last long enough."
"If you believe the doctors, nothing is wholesome; if you believe the theologians, nothing is innocent; if you believe the soldiers, nothing is safe."
-Lord Salisbury
Two months ago, The New York Times had a superb article on the origins of the explosion in our national debt and the ocean of red ink engulfing the U.S. economy. New York Times reporter David Leonhardt began his eminently comprehensible and chilling analysis with this paragraph...
"There are two basic truths about the enormous deficits that the federal government will run in the coming years. The first is that President Obama's agenda ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit..."
Leonhardt took the reader back to Clinton's departure from the Oval Office in January 2001, when the U.S. government boasted a $127 billion surplus, and the Congressional Budget Office estimated that the federal government would run $800 billion SURPLUSES a year from 2009 to 2012. Leonhardt dryly observed that now the forecast from the CBO is $1.2 trillion DEFICITS for those years, a swing of about $2 trillion.
Where did this gaping $2 trillion hole in the federal balance sheet come from?
Most of it comes from the business cycle. The recession/dawning of economic reality accounts for 37% or approximately $740 billion in tax revenue lost to the U.S. Treasury.
Leonhardt goes on to lay approximately one-third of the deficit problem at the feet of Dubya. According to Leonhardt, $667 billion of the deficits can be attributed to Bush tax cuts, the Iraq war, the Afghanistan war, the Medicare prescription drug benefit, et.al. So 33% of the current fiscal mess can be directly blamed on Chief Executive #43.
Extending Dubya's policies on Iraq, taxes, and the various corporate bailouts, Obama is responsible for approximately one-fifth of the deficit chasm at $400 billion. Then Leonhardt tacks on Obama's stimulus bill from February for another seven percent of the deficit. He says that Obama's agenda on health care, education, energy, etc. is responsible for about 3 percent of the problem.
So if you're keeping a tally thus far, a mere ten percent of the Fiscal Red Sea is solely of Obama's doing. If you're especially stringent, you could blame him for 30% of a $2 trillion mess, but that seems unfair. Most of that was inherited.
Where Obama comes in for severe criticism from economists is the lack of a plan to address the swelling tide of red ink. Berkeley economist Alan Auerbach is memorably quoted as saying, "Bush behaved incredibly irresponsibly for eight years. On one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he's not fixing it. Not fixing it is...making it worse."
The libertarian Cato Institute was also quoted in the article with this tart assessment of Obama's loyal opposition in Congress: "The G.O.P. is not serious about cutting down spending."
But when are they ever?
Professor Auerbach has two dire predictions if the debt drift persists for much longer (as in 12-18 months). "Things will get worse gradually, unless they get worse quickly." He and other economists envision foreign lenders abruptly declining to prop up the dollar, which would force a precipitous spike in interest rates and nasty stagflation.
As Leonhardt says at the close of the article, "The solution...is no mystery. It will involve some combination of tax increases and spending cuts...Your taxes will probably go up, and some government programs will become less generous."
His closing sentences have the virtue of stark profundity..."That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade."
I think it's worth remembering that when Bill Clinton shoved a substantial tax increase through Congress sixteen years ago it was followed by the greatest period of prosperity in U.S. history.
"The only difference between being a 'chump' and being a 'champ' is U!!!"
-Alexis Ercoli
