In light of the continuing horrendous jobs report regarding our nation’s unemployment rate and the severely anemic economic growth, this tact seems particularly imprudent. President Obama appeared to have understood the danger of such tax increases during a recession once upon a time. Indeed, in August of 2009, during a trip to Indiana to shore up support for his stimulus plan, President Obama told NBC’s Chuck Todd in an interview that exact message. An Elkhart, Indiana resident by the name of Scott Ferguson asked a question of the President via Mr. Todd. His question was, “Explain how raising taxes on anyone during a deep recession is going to help with the economy.”
President Obama agreed with Mr. Ferguson’s premise in his response. “First of all, he’s right. Normally, you don’t raise taxes in a recession, which is why we haven’t and why we’ve instead cut taxes. So I guess what I’d say to Scott is – his economics are right. You don’t raise taxes in a recession. We haven’t raised taxes in a recession.”
One wonders what has changed between then and now as far as President Obama’s understanding goes? Indeed, if anything, unemployment and the economic crisis are in an even more dire situation that would suffer more greatly from the effects of such tax increases now.
Of course the whole debate on raising the debt ceiling so that the federal government can continue its unabated spending seems preposterous in the extreme too. Once again, this is a fact that Senator Obama seemed to once understand. While sitting as Illinois’ Senator during the Bush administration, Obama said, “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here’. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”
Senator Obama was absolutely right- back then. Why the change of thinking on this now that he is president? Indeed President Obama’s economic advisor Austin Goolsbee argued at that same meeting Sunday night that a congressional refusal to increase the government’s debt ceiling, which currently sits at $14.3 TRILLION, would be “catastrophic” and a sign of “insanity”. Oh, how the times have changed now that Senator Obama is President Obama.
Of course, that was another topic on which Barack Obama’s wisdom on the subject seemed to devolve also. Indeed, back in 2004 after just having won his U.S. Senate seat, he was asked if he would consider running on a national ticket. His wise response back then was, “I am a believer in knowing what you are doing when you apply for a job, and I think that if I were to seriously consider running on a national ticket, I would essentially have to start now before having served a day in the senate. Now there’s some people that might be comfortable doing that, but I am not one of those people.”
Despite Obama’s record as one of the most liberal members of the senate in his very brief career there, he did at least show some signs of wisdom back then in his words, if not always with his deeds. One wonders why the huge difference now and the diametrically opposed shifts in his points of view on these major issues since then? Is the imbibing of the elixir of power so intoxicating that what once seemed like wisdom in defense and representation of the people of the United States can now be abandoned in order to satisfy certain constituencies and powerful special interest groups to thereby hold on to that political capital and power that has been obtained? For President Obama trading that wisdom for power seems to be acceptable.
11 comments:
When I read McConnell's proposal which essentially lets Obama raise the ceiling while allowing the Republicans to vote vote against it - subject to presidential veto - it occurred to me that this is about as open example of the kabuki dance between the parties as you're gonna see.
I hold both parties in contempt, may God help us.
Thanks for stopping by earlier!
Of course the whole debate on raising the debt ceiling so that the federal government can continue its unabated spending seems preposterous in the extreme too.
Why was it OK when republicans were in the White House?
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. I believe this answers your former question. Some of the lost tax revenues must be restored if the income to debt ratio is going to decline, as it usually does in democratic administrations instead of going up, as it usually does in Republican Administrations. We are in a dire situation, where republicans say we must default on our loans or default on our social commitments. Neither of these options is better than restoring lost tax revenues to the percentages they were in the past. When Senator Obama spoke, he could not have anticipated a group of thugs in Congress threatening to tear America down to the ground if he did not bow to their commands. Had he had this data, I am quite certain his tone would have been different.
Why the change of thinking on this now that he is president? Seems pretty obvious why he should have changed it. I hope the obvious explanation is the right one.
By the way, I think Oso’s comment is one of the few truly wise comments on this topic. I am very disappointed in quite a few Obama decisions and he has seemed inconsistent, wimpy and political. I am not a fan of his performance. However, he would be insane to take a “rational” approach to fiscal responsibility when the things happening around him are unprecedentedly irrational. To act as if nothing is amiss and we should conduct business as usual, would be nutty. Oh, and by the way, raising the debt ceiling is actually business as usual.
Our income to debt ratio is very bad and is not business as usual. It always suffers when republicans are in the White House, as I said before, but this president is currently impotent until the next election. If the democrats could retake the House, Obama would regain an opportunity to fix things, unimpeded by the fiscal wisdom of the Republican Party. Hopefully this time, he would not worry so much about what people are going to think and would worry more about what the country needs. It would appear that Reagan’s tax cuts stopped working as soon as Clinton left office.
By the way, a very wise man once said:
"War involves in its progress such a train of unforeseen circumstances that no human wisdom can calculate the end; it has but one thing certain, and that is to increase taxes."
We started multiple wars and cut taxes, as if we assumed the wars were free.
I guess for Bush, they were, but they are in Obama's budget.
Can you guess who the wise main is, Mr. Paine?
John, it was NOT okay for this same nonsense to happen when Bush was in the Whitehouse. Indeed the excesses of the Republicans and their spending during his tenure is what gave rise to the Tea Party accordingly. If we conservatives were happy with how the G.O.P. handled things fiscally, we would have not seen the need to steer them back to their roots and clean some house to do so.
As I implied in my posting, Senator Obama was correct that the constant raising of that debt ceiling was indeed a failure of leadership on Bush’s behalf. The difference is that Obama has since changed his mind upon being elected to the presidency. His reckless spending has damn near finished the job that previous presidents started and thus bankrupted our nation. That is an egregious failure of leadership on his behalf.
I think that we must reform our current tax code so that giant corporations like GE don’t end up paying precisely 0$ in taxes like they did last year while Mom & Pop Hardware paid 35% to the government. Closing such loop-holes as that will help some; however, the class warfare crap that the Democrats insist on playing is counter-productive. You can tax 99% of the income of those “evil” wealthy Americans and still not add up to even 1% of our national debt.
Those Republican thugs are the only ones saving our country from careening over the edge into the abyss right now. The Democrats seemingly have no desire to make any meaningful cuts anywhere with the possible exception of at the Department of Defense. The exceptional dangerous and asinine Ben Bernake at the Federal Reserve is talking about a third round of “quantitative easing.” In other words he wants to print more currency that is backed by nothing in value. This is how the Weimar Republic began its demise. If we continue down this path, our money will be literally useless and go the way of the Soviet Ruble.
The ONLY way we will be able to climb out of this hole that both parties have dug over the decades is to cease all but our most necessary CONSTITUTIONALLY authorized spending by our government. Raising taxes in a bad economy will only take more money out of the hands of people in that economy. How do you think this helps our situation, particularly when that money essentially does nothing to lessen our debt burden?
If I don’t have the money in my bank account to by that new Ferrari when I need a car, then I end up buying the Ford. I live within my means or I end up bankrupt. Why the government thinks those same rules do not apply to it astounds me.
By the way, I think we should indeed pull back our troops from Iraq and definitely from Libya. Further, we should not send them into combat ever again unless congress accepts its constitutional duty and votes to declare a justified war in the future.
Lastly, I don’t disagree with the wisdom in the quotation you provided by the namesake of my pseudonym. Sometimes war is indeed necessary though. I am curious if you think there is justification for Obama’s war with Libya? Frankly, his violation of the war powers act and the G.O.P’s acceptance of that is a gross violation of the Constitution and worthy of impeachment for the lot of them. Perhaps that is how we do get out of this. We impeach everyone in the executive and legislative branches and replace them with common sense people that actually have to live in the real world. I suspect that things would finally get done well and with alacrity.
Part I:
You can tax 99% of the income of those “evil” wealthy Americans and still not add up to even 1% of our national debt.
Wealthy Americans are not evil and you should not say they are. They are just like you and me, only with more money.
As I know you are already aware, paying off the debt in single year is not a realistic goal. That statement was utterly pointless. The most important thing is to handle the deficit. Paying off the debt is very secondary. We have always borrowed money, in times of famine and in times of prosperity.
Those Republican thugs are the only ones saving our country from careening over the edge into the abyss right now. The Democrats seemingly have no desire to make any meaningful cuts anywhere with the possible exception of at the Department of Defense.
Very narrow-minded assessment, sir. Cutting entitlements is one method of handling things. Another is raising taxes and still another is cutting the military. To assume that any rational person would handle the real cause of the problem, entitlements, is absurd. The argument is not honest, but I addressed it anyway out of kindness. Entitlements have existed in times of famine and in times of prosperity. We used to tax to pay for them.
This is how the Weimar Republic began its demise. If we continue down this path, our money will be literally useless and go the way of the Soviet Ruble.
Some rubles have increased in value. I wish I could remember where I saw that, so I could document my source. In this case, I ask that you take it on faith. If you believe a Human walked on water, surely you can believe this also.
The ONLY way we will be able to climb out of this hole that both parties have dug over the decades is to cease all but our most necessary CONSTITUTIONALLY authorized spending by our government.
I am sure you have faith that this is the case, as your super-heroes have declared it so. The term constitutionally means without the welfare clause to you, I know this. Your faith is misplaced, and just wrong. We have had entitlements for 80 years or something (refuse to do math right now), and we can have them and still survive.
Read This and learn from it
The only potentially critical situation is the deficit. We should handle this by raising taxes, as Reagan did, as Bush did, and as every sane president did. Taxes are at record lows. We did not cut our social programs, but we cut our funding for them, and at the same time engaged in expensive wars with no increase in taxes to pay for them. A rash reaction that slashes everything that makes America what it is, is not called for. The debt is not the deal-breaker. The deficit is. Taking food from the mouths of the helpless, or more pointedly, medicine from the sick and helpless, is the Republican solution, but not only will it not solve the problem, it would not be necessary if it would. We could simply restore the revenue steam that funded America in the past.
[To Be Continued ...]
Part II:
Raising taxes in a bad economy will only take more money out of the hands of people in that economy. How do you think this helps our situation, particularly when that money essentially does nothing to lessen our debt burden?
No wonder the conservative-leaning Economist now says the GOP is currently Economically Illiterate And Disgracefully Cynical The problem is not the debt. It is the DEFICIT! Handle that, and the debt can be handled after. The debt cannot be handled before the deficit is handled. Do you understand the difference between the two?
If I don’t have the money in my bank account to by that new Ferrari when I need a car, then I end up buying the Ford. I live within my means or I end up bankrupt. Why the government thinks those same rules do not apply to it astounds me.
Borrowing money is the way money is both made and the way wealth is created. The borrowed money ultimately has to give a larger return than interest on the loan, and that is not happening right now. We should not have given everyone tax cuts, especially not those who banked them. We should have built bridges and hired people with those funds. If that is your position, then I agree. If that is not your position, then I understand why the conservative-leaning, Bush supporting Economist says the current Republican Party is economically illiterate.
I am curious if you think there is justification for Obama’s war with Libya?
Yes, I am curious about that also. I understand why he did it. He was afraid we were going to have another Rwanda or another Bosnia, and I suspect he did not want the political ramifications of that. Perhaps he also has a conscience, I don’t know. I would not have involved America in the Libyan situation and if it turned into a genocide, I would have felt bad for the Libyans, but not responsible.
We impeach everyone in the executive and legislative branches and replace them with common sense people that actually have to live in the real world.
I would like to see this happen, though it is not really practical. It would be awesome to see both houses of congress and the White House all lead by democrats.
[The End]
John, I would argue the that primary issue is indeed our national debt. The reason we have $14.5 trillion is debt is because both parties have thought is okay to spend more money than they take in revenue-wise for decades now, with the exception of a year during the Clinton administration.
That is our budget deficit. If we cut spending on things we cannot afford and which we should not be spending money on anyways, as well as closing the gaping tax loop-holes to improve our revenues, we can balance our budget and erase the deficit spending.
Unfortunately, just balancing the budget and erasing the deficit will not be enough though. If we were to somehow miraculously balance the budget from 2012 forward, we would not add any more to our national debt by subsequent spending. Nor would we start to erase that national debt which we will continue to have to fund and pay interest on, especially after these lower rate bonds expire and we end up having to finance that debt at much higher rates.
Regardless, the only way to begin to chip away at this behemoth is to spend LESS than what we take in revenue-wise and place the excess towards reducing that debt.
This means painful cuts need to be made across the board. The departments of education, energy, and housing and urban development all need to be completely defunded and their functions rolled back to the states. The rest of the federal government needs to be reviewed and those agencies which are inefficient, duplicating work of other agencies, or not a constitutionally authorized functions of the federal government must be defunded over the course of the next four to eight years.
No we cannot, nor should we eliminate social security or Medicare now that we have so many people dependent upon them. That is the problem with creating entitlements. Once done, they are exceptionally hard to undo, even if they are not a function of what the federal government should be doing. We do need to do some serious reform of social security and Medicare though in order to maintain their solvency. Simply ignoring the problem will not make it go away, just like ignoring our debt only exacerbated the problem to the point where we are now debating how to prevent defaulting on the full faith and credit of the United States Government.
I fully understand the difference between the debt and deficit. Your implication that we keep entitlements as per the status quo and simply increase taxes suggests that you may not understand economics in the real world my friend, even if you can give me the definitions of debt and deficit.
Next, I reject your defense of Obama’s excursion into Libya. If he was truly concerned about another Rwanda-type genocide, then why the hell did he not also provide support against Bashir and his continued killing of protestors in Syria also?
Frankly, as to your final comment, what we have as a problem with our economy now is exactly the result of having nothing but Democrats in both houses of congress and in the White House. Sure some of them might have called themselves Republicans, but they were unworthy of the title as they continuously voted to expand government beyond its lawful scope and definitely beyond its financial means. The truth of the matter is that a few Republicans souls, either through principle or fear of the people and the Tea Party, are returning to their roots to set things right once again.
The Republicans are the only ones that have presented a plan on paper to handle our deficit. They are the only ones that have presented a plan on paper to handle the solvency of Medicare. The Democrats, like our president, have been aloof or missing in action on these matters. The Democrats whine that they have a plan, but the CBO even said they cannot score a speech. They need a concrete written plan with specificity. The Democrats either cannot or will not provide one, but they will demagogue the Republicans for their plans to do so. They are the problem; not the solution, sir.
It is funny, I wrote a post, that was inspired by this one, and then decided that it was too political and did not post it. It argued that the debt is not a source of crisis and that the deficit is, which is the reality. As you said about me, if you don't know this. you don't understand economics. The debt should be phased down, but what could destroy us is the deficit. The republicans have taken part of the solution, and the largest ration part that has historically sustained us, off the table. I may post the post yet, but I hate to. It is damn political.
Most of the debate is about how to handle the fictitious debt crisis. That debate is almost purely political by anyone who has examined data and history over parroting what others are telling them.
As for Libya, I gave you Obama's justification. His decisions were probably political.
The fictitious debt crisis? I am nearly speechless, if that is truly your take on the situation, sir.
That said, PLEASE post your article. If nothing else, you are welcome to do a guest posting of it on my blog... that way nobody will see it and make you have to defend it. (except me, of course!)
We have a deficit crisis. We have always had debt, and if the deficit crisis is solved, we can solve the debt "problem" gradually.
The think that stops me from posting the post is the maintenance requirement. It would be debated heavily and would require tons of time I don't have defending it. If I were not so busy at work, I would post it and then say: "bring it on." I am very confident in my ability to defend it, but again, it is time-consuming and I don't have time right now.
Tom Paine, you are articulate and knowledgeable as always. I agree that this mess must be solved by a revision of the tax code or the entire system of taxation which has to catch up to 21st century practices. GE, the company used as example, sends a huge chunk of its labor force overseas now and fired American workers to do that. I know people want to blame this on our unions (and maybe so); still, we should be "charging" higher taxes to companies who exchange American workers for cheaper overseas labor. Given the chance, Americans are the most productive and will make the best quality products. Immelt, GE's leader, is tight with Obama and a huge contributor to him, so O says nothing about his hiring practices. That rips me. Taxation cannot be changed quickly enough to solve this problem but it must be addressed after the next election. As for now, yes, raise the debt ceiling, but make it a temporary "fix."
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