10.27.09
Recent tax cuts increased the 2009 deficit
Bruce Bartlett was a domestic policy adviser to President Ronald Reagan, and conservative supply sider. He did a little simple math and uncovered that the cause of the deficit increase is revenue-related.
The increase cannot be blamed on spending – the Obama administration’s spending has been more conservative than was forecast – $28 billion less than was predicted. This math strongly suggests that more tax cuts, as some in the GOP are advocating, would actually further increase the deficit; tax cuts were unambiguously a major factor in the problematic revenue decline that underlies the deficit growth.
Mr. Bartlett, in a column dated October 24th, was responding to the theory that tax cuts were the best way to solve the deficit, as was advanced by Mort Zuckerman recently in a New York Daily News opinion piece.
Here’s an excerpt:
According to the Congressional Budget Office’s January 2009 estimate for fiscal year 2009, outlays were projected to be $3,543 billion and revenues were projected to be $2,357 billion, leaving a deficit of $1,186 billion. Keep in mind that these estimates were made before Obama took office, based on existing law and policy, and did not take into account any actions that Obama might implement.
Therefore, unless one thinks that McCain would have somehow or other raised taxes and cut spending (with a Democratic Congress), rather than enacting a stimulus of his own, then a deficit of $1.2 trillion was baked in the cake the day Obama took office. Any suggestion that McCain would have brought in a lower deficit is simply fanciful.
Now let’s fast forward to the end of fiscal year 2009, which ended on September 30. According to CBO, it ended with spending at $3,515 billion and revenues of $2,106 billion for a deficit of $1,409 billion.
To recap, the deficit came in $223 billion higher than projected, but spending was $28 billion [less] and revenues were $251 billion less than expected. Thus we can conclude that more than 100 percent of the increase in the deficit since January is accounted for by lower revenues. Not one penny is due to higher spending.
It turns out you have to go back to 1950 to find a year when federal revenues were lower as a share of GDP. So Bartlett, who is happy to say there is some basis for criticism of the Obama administration’s anti-recession tactics, points out that excessive spending isn’t the problem.
In fact, with much of the revenue that was not collected due to the tax cuts sitting more-or-less idle in savings accounts, and certainly not trickling down to stimulate job growth, or bank lending, etc., Bruce Bartlett concludes that:
The idea that Reagan-style tax cuts would have done anything is just nuts.
Bartlett’s article is a must-read for anybody involved in the U.S. economy – which should include every voter and pundit, not just those elected to Congress.
05.25.09
Texans won’t be seceding from the union
Oh I know, there’s a lot of talk about states’ rights, and they’ve got a governor making noises to insure he’s getting lots of PR, but at the end of the day? Texans don’t want to secede, they’re proud to be Americans – in fact, many Texans look on themselves as iconic of Americans.
Will they threaten? Absolutely they will. Collectively these are very shrewd, savvy folks when it comes to negotiating, so if Governor Rick Perry has made anti-D.C. rhetoric the theme of the month by deliberately raising secession at a tea-bag event they will talk the talk – but they’re too smart to walk out. Do you realize how much federal money flows into Texas each year? Do you think they want to give up the U.S. military bases, or NASA? Do you think most Texans want to deal with the drugs and violence spilling across the border from Mexico without federal dollars and agents to bolster that fight?
I’m not certain Governor Perry is manipulating the Texas voters or the national media for personal political gain, but consider this: Do you think the governor and his advisers don’t realize the benefit of federal funding for the wall at the border has for local construction jobs, for instance? Would the good folks of Dallas surrender the slogan of their NFL Cowboys as “America’s Team”?
Of course not.
Nor do they want to work out the price of buying back the federally owned land or start paying for the maintenance of interstate highways – and believe me, the highways matter a lot more in Texas than they do in your smaller states. But they will loyally back their governor, and they are an independent lot, so anybody doing a survey is bound to find a fair amount of pro-secession sentiment expressed -well, maybe less so over Memorial Day weekend, or the 4th of July, but few people watching veterans on parade, or fireworks while the national anthem plays, really want to secede.
And there’s no day of the year your survey in Texas would show greater support there for extending Bush’s tax cuts for the rich than in some other state after his spending priorities shorted armor for troops on the ground in Iraq. So actually, just how much pro-seccesion sentiment you found would probably have a whole lot to do with exactly how you framed the question.
So what’s Perry up to?
I hope he’s just trying to attract national press coverage, in the tried and true manner of politicians almost everywhere. Perhaps he senses the chaos in the GOP leadership as a vacuum, and wants to position himself for a Presidential bid (although in the wake of G. W. Bush that hasn’t been a smooth path for GOP governors.) The alternative, though, if this isn’t about boosting his “federal cred” by raising the issue of federalism as he suggested last week, is dark indeed for those of us old enough to recall what the rallying cry of “states’ rights” has meant in politics in this country.
The reality is that “states’ rights” hasn’t been about the federal government, or taxes, it’s been a call to white bigots. By raising it, and then backing away and saying it’s just a discussion about a legal principle, has Perry sent his signal to those who hear it another way? Some of us recall George
Wallace flanked by Alabama State Troopers, exerting states’ rights to exclude black children from “white” schools. There’s been a lot of progress in the country since that era, and most Texans aren’t bigots, but that doesn’t change what that phrase has signalled for most of the time since the civil war.
States’ Rights has consistently been the politically correct way of saying we’ve got to keep minorities from attaining power, wealth, or influence. I’m not saying there’s no bigotry left in Texas, or that President Barack Obama’s campaign and election stopped nay-sayers on all sides of the racism issue dead in their tracks. In Texas, though, there’s precious little tolerance for slippery politically correct double-speak .
You might argue that Reagan got away with a covert shout-out to white racists in a speech in Mississippi in 1980, but this isn’t the same electorate, or the same mood, that dominated the country then – and Perry may be shooting his political career in the foot. He’s arguably signaled the most extreme members of the GOP at a tea-party despite quickly back-walking from the rhetoric for the national press. Would his leadership further distance the Republicans from the values of moderate Americans?
The state that’s famous for knowing when a politician is, “all hat - no cattle,” is surely gathering around the grills and picnic tables this summer wondering just where their Governor’s going with this.
