# Are Obama's Financial Policies Prolonging This Recession? **URL:** \ **Category:** Great Debates\ **Created:** [December 4, 2009, 1:09am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928 "2009-12-04T01:09:36Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [December 5, 2009, 7:08pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/41 "2009-12-05T19:08:29Z")
Our stimulus money is being spent in Canada? I think I see the problem here… ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [December 5, 2009, 7:19pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/42 "2009-12-05T19:19:05Z")
> [@elucidator](#): > > Our stimulus money is being spent in Canada? I think I see the problem here… I work for a multinational. These are American projects. One of the things that I didn’t bring up, because it wasn’t relevant to American job creation, is that a number of people in my office were laid off, including friends of mine, because we don’t meet the ‘buy American’ clause in the stimulus bill, and therefore they could no longer work on their own projects that they helped create, because projects were accepting stimulus money for new development. So you can save your snark. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [December 5, 2009, 7:23pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/43 "2009-12-05T19:23:05Z")
> [@Sam\_Stone](#): > > The biggest flaw with the ‘jobs created’ number is that it counts only one side of the equation. We have no way of knowing how many of those jobs ‘created’ actually displaced other jobs. We have no way of knowing how many jobs were lost elsewhere because the jobs created made the other ones irrelevant. There’s no place for a company to report, “I had to lay off five guys because the job they were going to be contracted to do instead went to some guys being paid with stimulus money.” > > There’s also no way to count the jobs lost because firms didn’t hire because of uncertainty about the competitive environment due to the distortion of the stimulus money. > > In my own case, my company ‘created jobs’ with stimulus money by getting some contracts to do energy work. However, the focus on this work made them decide to lay off a bunch of people on other projects that suddenly went down in priority, because they needed their managers and other high-value resources on the stimulus projects where the big, easy bucks are. Those layoffs will never be counted against ‘jobs created by the stimulus’. It’s entirely possible that we reported job creation and yet the stimulus caused us to lay off more people than we otherwise would have. > > So the numbers the government is promoting are misleading even if they are completely accurate as reported. Obviously you should have hired more management and kept the projects going. It was not the fault of stimulus but your corporate lack of planning. ---
**Author:** ![Happy\_Fun\_Ball](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/happy_fun_ball/32/17664_2.png) [@Happy\_Fun\_Ball](https://boards.straightdope.com/u/Happy_Fun_Ball)\ **Post date:** [December 5, 2009, 8:34pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/44 "2009-12-05T20:34:12Z")
> [@Sam\_Stone](#): > > Speaking of knee-jerk partisanship… You might notice that I didn’t blame Obama. > > Speaking of assumptions about ‘people of my stripe’, it might interest you to know that I was one of the most vociferous opponents of Bush’s medicare plan and all the rest of his big spending ways. I’m no Bush fan - especially on domestic policy. > > Then stop with the partisanship. You took a partisan stance, used it to put words in my mouth, then accused me of partisanship. Nice. You might like to know that I have been saying for years that Clinton was a good President. A better president than Bush, for sure. \ OK, OK, mea culpa. That was the wine talking last night and I agree that you do not regularly take partisan stances. I am pretty fed up with the claims of socialism, death panels, and the like from people like **ralph124C** and decided to take it out on you. I apologize. > [@Sam\_Stone](#): > > But the notion that Obama is ANY kind of conservative is laughable. I didn’t say that President Obama was a conservative (at least I didn’t mean to), what I was trying to say is these claims that he is a socialist and the most liberal senator evah are full of shit. The guy is pretty centrist. His policies, IMO, are pretty middle of the road; he is not caving to the extreme left in his party but many people on the right claim that he is. You only need to turn on Fox News or go to [FoxNation.com](http://FoxNation.com) to see it. > [@Sam\_Stone](#): > > Look, I’m fully aware that Bush helped create this mess. Actually Presidents all the way back to LBJ helped create this mess. Medicare and Social Security have been ticking bombs for decades, and no one did a damned thing. The explosion in entitlement spending has been going on since the 60’s, and the writing has been on the wall ever since. But the spending kept going up, because the economy kept holding together allowing the debt to be pushed down the road. An asset bubble helped it along further - then the whole house of cards came down. Longer than the sixties. If you look [here](http://www.whitehouse.gov/omb/budget/fy2009/pdf/hist.pdf) (warning PDF - specifically look at table 3.1, outlays by superfunction and function), government outlays really increased in 1950s, to about 20% of GDP (wow, I never knew it was that high!) and has stayed there ever since (+/-3%). If you look at the outlays for Human Services (includes social security, Medicare, education, veterans benefits, etc…) you had the biggest gains under President Nixon. It looks like it was around 3-5% of GDP until Johnson kicked it up to ~6%, Nixon up to 9%, Ford up to 11%, where it has pretty much stayed until Clinton increased it to 12-13%. Meanwhile, Federal Outlays in total seem to be actually pretty stable as a percentage of GDP. They were at a high in the 80s under President Reagan at about 23% of GDP and seem to have gone down to 18% under President Clinton and back up to 20% under President Bush. > [@Sam\_Stone](#): > > But the fact is, Obama is contributing greatly to the debt. That 1.3 trillion dollar health care bill is going to be a hell of a lot more expensive, because that number relies on finding $500 billion in unspecified cuts to medicare at some time in the future. This is exactly the kind of kick-the-can-down-the-road fiscal irresponsibility that got the U.S. into this mess. Obama has ratcheted up the budgets of numerous federal departments. The FY2010 budget is 600 billion dollars higher than the FY2008 budget. It’s only lower than the FY2009 budget because of all the stimulus money spent this year. Hmmm. After some searching it looks like you are getting these numbers from the CBO. My numbers were coming from the OMB which show a 160 billion increase in 2010 over 2008. Their numbers also show that the outlays as a percentage of GDP will go back down to ~18.5% by 2012 while the CBO shows it going to 23% and staying there. Fair enough, pretty bleak, but why the discrepancy between the CBO and the OMB (my link above)? Who should I believe and why? > [@Sam\_Stone](#): > > So let’s forget about the stimulus for a minute, and just look at the long-term budget of the U.S., without any bailouts, stimulus money, or whatever. These budgets go out to FY2019, and so are planned for long after the recession should be over. Government spending is slated to increase from 3.6 trillion in FY2010 to 5.2 trillion in 2019. As a percentage of GDP, it is going to climb from 21% in Bush’s last budget to 22.8%. The deficit in 2019 is projected to still be almost 800 billion dollars. OK, but I still am not sure I should be worried. If I believe the OMB numbers its actually going to be more like 19%. \ time passes, searching ensues, reading and analyzing happen…\ Hmmm, it seems that the PDF I linked to earlier is out of date. When you go to the [OMB website](http://www.whitehouse.gov/omb/budget/Historicals/) and look at the excel data, they are much more in line with the CBO. Still though, these numbers are comparable to those under President Reagan, I am still not sure how worried I should be. I don’t like these numbers and I would love to see receipts and outlays drop to 12-15% of GDP and see a balanced budget, but the graphs I have made ([see this](http://i726.photobucket.com/albums/ww267/Prof_Butts/Bees/GovOutlaysandReciepts.jpg)) don’t really inspire fear. If you integrate under the curve, Obama’s first term will be almost as bad as Reagan’s two terms as far as generation of debt. I agree this is pretty bad, but I hope he can bring it down and I expect to see effects with a crisis of the magnitude of the global economic meltdown of the last 18 months. > [@Sam\_Stone](#): > > None of this includes the health care bill, or any additional stimuli or bailouts. It also assumes economic growth that is probably too high, and assumes that military spending can be reduced between now and then as a percentage of GDP, which seems unlikely to me. > > In this atmosphere, Obama has increased funding for foreign aid by 2.9 billion. He’s about to propose 10 billion a year to fight global warming in Africa. He’s added 10 billion a year for ‘green’ technology. He’s put another 5 billion a year into ‘community development’ programs. He’s added 100 billion dollars to the _discretionary_ budget for FY2010 over FY2009. It does not include a ‘placeholder’ for additional stimulus like this year’s budget had, even though some additional spending seems likely. > > Of course, not everything is Obama’s fault. The real budget-breaker is Social Security. It will go from 675 billion this year to 1.1 trillion by 2019. And many presidents are guilty of deferring the pain of that (although Bush tried, and got shot down by Congress post-haste). I agree with all your numbers, but I am still not worried. Social Security increased from 118 Billion to 250 Billion between 1980 and 1990. Yet it still remained a roughly constant percentage of GDP. As far as President Bush goes, I am 90% convinced that he was just trying to inject hundreds of billions of dollars into Wall Street to try to stop the impending meltdown. I don’t truly think he was trying to fix anything with regards to the government budget. > [@Sam\_Stone](#): > > Nonetheless, these are the cards he was dealt, and with that crappy hand he has decided to ramp up domestic spending even more. This is not the action of a fiscal conservative. Obama may not be worse than the others, fiscally speaking, but he’s damned sure not any better. And the problem is that the problem can’t be deferred any longer. The cost of medicare after 2019 will make you weep for your budget. This is all coming to a head on his watch. And so far, he’s not up to the challenge. I’m not sure any president could be, given the dysfunctional political system in Washington, so I’m not laying all the blame at his feet, but he sure doesn’t seem to be trying very hard to stop it. Pretty much in agreement with everything you said here. > [@Sam\_Stone](#): > > I wish the Democrats that hate corporations would wise up and realize that these regulations wind up getting perverted to their benefit. I strongly agree. > [@Sam\_Stone](#): > > Take Sarbanes-Oxley. Big corporations don’t fight it, because they are better capable of handling it than are the smaller companies gunning for them. Sarbanes-Oxley acts as a barrier against taking a private company public, and thus keeps the small businesses down and keeps venture capital from flowing to them. This benefits corporate America, but depresses small businesses and entrepreneurship. > > Big government and big corporations go hand in hand, and they wind up colluding against the public good. If you’re really for the ‘little guy’, you should be for ‘little government’. Centralized power is bad for the common person, whether it’s held by corporations or government. Again, I strongly agree. The health care bill and cap and trade are just going to be another example of this. > [@Sam\_Stone](#): > > I have this rep of going easy on Bush because I supported the Iraq war, and that was the dominant conversation on this board for years. But on almost everything else the Bush administration did, I was a critic. I thought the steel tariffs were terrible. I thought the Schiavo circus was an embarassment. I thought Bush’s huge increases in the budgets of several federal departments like the Dept. of Education were wasteful and imprudent. I thought his handling of the Iraq war was poor after about 2 years in, until the surge. > > I did defend the guy when I thought the attacks were unfair, as they often are on this board. So I guess I get put in the ‘Bush apologist’ corner here. But trust me, if I were posting on Free Republic they’d run me off as a crazy pinko. Yes, my view of you as a partisan is directly tied to your support of the Iraq war. It;s good to know that we agree on the other stuff. Gotta go now, but I’ll be back… ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [December 5, 2009, 9:10pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/45 "2009-12-05T21:10:18Z")
> [@ralph124c](#): > > I say yes, here is why: > -the decision to keep GM and Chrysler alive (and out of bankruptcy) is like keeping a corpse on life support-instead of allowing the companies to break the ruinous labor contracts they are shackled with, they continue on, paying labor rates that will keep them losing market share and money > -allowing the crooks on Wall Street to profit hugely, while paying for their mistakes-this means that while the Goldman-Sachs VPs get huge bonuses, they will continue misinvestments (the latest thing is stock market hypertrading) > -the enormous deficits and huge balance of payments deficits will weaken the dollar and drive up the cost of energy > -China will now dictate much US policy; our masters in Beijing will continue the dismantling of US manufacturing -meanwhile, jobs move to China > -we are staying in all of these stupid post WWII alliances, which means we are keeping bases (that we cannot afford) around the world > -Obama’s health care “reforms” are not reforms at all-there is no reform of the medical torts issues which are driving up the cost of care. Meanwhile, the staggering cost of universal health care will suck more investment capital out of the economy. > In sum Obama is counteracting the forces that would normally move the economy out of recession. He’s our FDR (and FDR’s depression lasted more than 11 years (1929-1941)::rolleyes:: As a counterpoint, a weaker dollar will improve US export markets and driving up the cost of oil will be bad, but it’ll add incentives for investments in domestic energy production. Also, how much do our post WW2 bases costs in billions per year? I would assume the number is fairly low (overall). How do you know medical torts are driving up the costs of health care? According to the CBO we’d save $11 billion a year with tort reform. Not a small amount, but health spending in the US is 2.5 trillion, that is half of one percent. [http://hotair.com/archives/2009/10/10/cbo-tort-reform-would-save-54-billion-to-the-deficit/](http://hotair.com/archives/2009/10/10/cbo-tort-reform-would-save-54-billion-to-the-deficit/) Also according to the commonwealth fund (whose ideas Obama’s health policies are based on: an insurance exchange with a public option, no pre-existing exclusions, etc) proper health reform will save 3 trillion in lower medical spending from 2010-2020. So proper health reform will save far more than it will cost (it’ll take about 500 billion in new taxes to fund it, the rest comes from savings in other areas). Investing 500 billion to save 3 trillion is a good deal. How do you know GM and Chrysler went down due to labor and not other factors? ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [December 5, 2009, 10:27pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/46 "2009-12-05T22:27:58Z")
> [@L. G. Butts](#): > > Hmmm, it seems that the PDF I linked to earlier is out of date. When you go to the [OMB website](http://www.whitehouse.gov/omb/budget/Historicals/) and look at the excel data, they are much more in line with the CBO. Still though, these numbers are comparable to those under President Reagan, I am still not sure how worried I should be. I don’t like these numbers and I would love to see receipts and outlays drop to 12-15% of GDP and see a balanced budget, but the graphs I have made ([see this](http://i726.photobucket.com/albums/ww267/Prof_Butts/Bees/GovOutlaysandReciepts.jpg)) don’t really inspire fear. If you integrate under the curve, Obama’s first term will be almost as bad as Reagan’s two terms as far as generation of debt. I agree this is pretty bad, but I hope he can bring it down and I expect to see effects with a crisis of the magnitude of the global economic meltdown of the last 18 months. The problem isn’t so much the magnitude of the deficit, but the structure of it. Krugman et al make lots of noise about how the U.S. had high deficits in WWII and came out of it just fine, and how it had high debt under Reagan and came out of it just fine. The difference between now and then is that back then, the deficits were temporary and directly caused by war spending. Once the war was over, the deficits came down rapidly. The core size of government was still relatively small. Under Reagan, there was a similar dynamic. The deficits were the result of a tight money policy to bring inflation down, the loss of ‘bracket creep’ income due to busting the back of inflation, a recession, and a large increase in military spending directly due to the cold war. You could look at those deficits and see the light at the end of the tunnel - win the cold war, and you get a ‘peace dividend’. Get inflation under control, and you can loosen up the money supply and grow the economy. And that’s exactly what happened. Reagan’s deficits helped set the stage for Bill Clinton’s surpluses when the iron curtain fell. The problem with today’s deficits is that they are the result of permanent, rapidly increasing entitlement spending. You could completely eliminate the department of defense and tax everyone making over a million dollars at 100% of their income, and you still couldn’t balance the budget. In addition, we have a recession even though the money supply has been very loose for a long time, and interest rates and inflation are low. That means there’s no easy mechanism for boosting the economy through interest rate cuts as Reagan was able to do. In fact, it works the other way around this time - as the economy starts to recover, the large amount of money injected into the system will have to be removed, requiring interest rates to be increased, which will limit the size and speed of the possible recovery. If you look at what’s happening with Medicare and Medicaid, it’s frightening. Today, Medicare and Medicaid together make up somewhere around 4% of U.S. GDP. By 2019, it will be about 5%. But it gets real ugly after that, due to the rapid increases in cost of Medicare and Medicaid and the baby boomers retiring. By the end of the decade after 2019, Medicare and Medicaid will be consuming about 7% of GDP, and by 2050 it will be over 10%. This will be close to half the entire U.S. federal budget. And since each year its growth makes it impossible to balance the budget without cutting other programs or raising taxes (which would again limit growth), the deficit is projected to continue growing at an accelerating rate. At some point within the next 20-30 years, the cost of medicare, medicaid, and service on the debt will consume the entire federal budget. It’s a very bleak, very ugly picture. The problems can be solved, but I have no faith that the U.S. government is capable of doing so. I see them more like the California legislature writ large - even while they’re writing IOUs for tax refunds and forcibly borrowing money from the citizenry through extra tax witholdings, they are STILL increasing their spending. There’s simply no political ability to deal with fiscal imbalance when the money that would have to be cut comes straight out of the pockets of the constituents of the politicians. Yesterday I was watching O’Reilly, and he had Glenn Beck on. Amazingly, they were talking sense. Beck’s plan is for a 2% value added tax, coupled with a constitutional balanced budget amendment. The VAT has to go directly to debt service, and other programs can not be increased in size. As the debt is paid down, the savings in debt service also have to be applied to the debt. By amendment, the size of the government will be held to X, and the deficit must be reduced by a certain amount each year, that amount being the total money collected by the VAT. I was surprised to hear two ‘conservatives’ seriously talking about tax increases. I’d go one further. I think 2% is too low. I’d make the VAT 5%, and put half of it towards the deficit and use the other half to reduce corporate taxation to make America exports more competitive. The U.S. is at a structural disadvantage because of its high corporate tax rates, when most of its trading partners move more taxes to a VAT of one kind or another and lower corporate tax rates. The U.S. has to transition back to an export economy, and that means American corporations need to be more competitive. That also goes to the need for deregulation. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [December 6, 2009, 2:30am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/47 "2009-12-06T02:30:46Z")
[http://www.alternet.org/workplace/94985/the\_great\_corporate\_tax\_heist/](http://www.alternet.org/workplace/94985/the_great_corporate_tax_heist/) Corporate taxes in America are lower than the rest of industrialized countries. We start with a daunting base, but nobody pays it. We are low in corporate taxes and then toss in the tax scams and offshore fake headquartering and you get to the truth. We have tax dodging incorporated. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [December 6, 2009, 3:15am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/48 "2009-12-06T03:15:40Z")
> [@gonzomax](#): > > [http://www.alternet.org/workplace/94985/the\_great\_corporate\_tax\_heist/](http://www.alternet.org/workplace/94985/the_great_corporate_tax_heist/) Corporate taxes in America are lower than the rest of industrialized countries. We start with a daunting base, but nobody pays it. We are low in corporate taxes and then toss in the tax scams and offshore fake headquartering and you get to the truth. We have tax dodging incorporated. Again, that helps the largest corporations who can afford the lobbyists and the tax lawyers and can afford to move head offices around and such. It totally screws over small and medium businesses which have little influence and don’t have the resources to play that kind of game. Just another way in which government is captured by large corporations to their benefit. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 6, 2009, 5:10am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/49 "2009-12-06T05:10:55Z")
> [@Saint\_Cad](#): > > So if the data is wrong it must be right because if it were right, that’s a sure sign it’s wrong. Wonderful logic there. Well, I see you have never dealt with real data. Whole chapters in books on data analysis and data mining deal with this. If they had time, and resources, they could have run checks on the input data to test for the district being real. If it wasn’t, they could kick it back for revision. But then we’d all be complaining about spending too much on the central bureaucracy and not enough in the field to create jobs. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 6, 2009, 5:17am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/50 "2009-12-06T05:17:57Z")
> [@gonzomax](#): > > Obviously you should have hired more management and kept the projects going. It was not the fault of stimulus but your corporate lack of planning. I wonder what they are telling the people who funded the projects that got dropped. If they were funded internally, perhaps the people working on them would have been laid off in any case, to improve the bottom line. You’d think if the RoI on the projects was there, it would still be there after the stimulus money came in. Or maybe Sam’s company is finding it difficult to hire in this environment. :dubious: ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [December 6, 2009, 8:51pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/51 "2009-12-06T20:51:36Z")
It was absurd. he was trying to bend the story to suit his ultra conservative leanings and failed miserably. What he actually said was the money came in and they abandoned a working project to go after the stimulus money. Who would be poorly managed enough to do that? Why is that a problem? They could have subcontracted it out and made more money. That is some lousy decision making there. ---
**Author:** ![Honesty](https://avatars.discourse-cdn.com/v4/letter/h/f04885/32.png) [@Honesty](https://boards.straightdope.com/u/Honesty)\ **Post date:** [December 6, 2009, 10:46pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/52 "2009-12-06T22:46:55Z")
\*Non-economist peeking in. \* I know this is a stupid question but if the U.S generates 15 trillion dollars a year and its deficit is only 1.4 trillion, what’s the big deal? I probably am not looking at this right but it seems to me that if you bring in over 10x your debt in income a year, paying back 1.4 should be easy. Right? I also don’t get the outrage about our debt to China. Is anyone forcing them to purchase U.S bonds? And if them purchasing U.S bonds is a bad thing, why not advocate preventing or reducing the sale of those bonds to China? I guess who is supposedly at fault? Is it the U.S for selling bonds? Or is China’s fault for purchasing them? And what are the realistic options to deal with this ‘problem’? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 7, 2009, 12:56am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/53 "2009-12-07T00:56:11Z")
> [@gonzomax](#): > > It was absurd. he was trying to bend the story to suit his ultra conservative leanings and failed miserably. What he actually said was the money came in and they abandoned a working project to go after the stimulus money. Who would be poorly managed enough to do that? Who could be poorly managed enough to be leveraged up the wazoo on the assumption that the housing market could never go down? Anyone defining public policy based on an assumption of the competence of management is cruisin’ for a bruisin’. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 7, 2009, 1:00am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/54 "2009-12-07T01:00:52Z")
> [@Honesty](#): > > \*Non-economist peeking in. \* > > I know this is a stupid question but if the U.S generates 15 trillion dollars a year and its deficit is only 1.4 trillion, what’s the big deal? I probably am not looking at this right but it seems to me that if you bring in over 10x your debt in income a year, paying back 1.4 should be easy. Right? Not if it is politically impossible to raise taxes. The US paid off a much bigger debt load from WW II during the '50s thanks in part to a good economy and higher taxes (yes, they can go together.) One of our problems is that during the reasonably good economy before the crash we still had increased debt, due in part to Iraq and in part to the Bush tax cuts. Contrast this to the end of the Clinton years, where a good economy and the slightly higher tax structure helped us to run a surplus. > [@](#): > > I also don’t get the outrage about our debt to China. Is anyone forcing them to purchase U.S bonds? And if them purchasing U.S bonds is a bad thing, why not advocate preventing or reducing the sale of those bonds to China? I guess who is supposedly at fault? Is it the U.S for selling bonds? Or is China’s fault for purchasing them? And what are the realistic options to deal with this ‘problem’? It is not a matter of blame, it is the political hold the Chinese now supposedly have on us, since if they stop buying bonds the interest rates will have to soar and the debt will get bigger. On the other hand, as it has been said, owe a bit to someone they control you, owe a whole lot and you control them. ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [December 8, 2009, 12:35am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/55 "2009-12-08T00:35:50Z")
> [@Sam\_Stone](#): > > But the fact is, Obama is contributing greatly to the debt. That 1.3 trillion dollar health care bill is going to be a hell of a lot more expensive, because that number relies on finding $500 billion in unspecified cuts to medicare at some time in the future. This is exactly the kind of kick-the-can-down-the-road fiscal irresponsibility that got the U.S. into this mess. Obama has ratcheted up the budgets of numerous federal departments. The FY2010 budget is 600 billion dollars higher than the FY2008 budget. It’s only lower than the FY2009 budget because of all the stimulus money spent this year. > > So let’s forget about the stimulus for a minute, and just look at the long-term budget of the U.S., without any bailouts, stimulus money, or whatever. These budgets go out to FY2019, and so are planned for long after the recession should be over. Government spending is slated to increase from 3.6 trillion in FY2010 to 5.2 trillion in 2019. As a percentage of GDP, it is going to climb from 21% in Bush’s last budget to 22.8%. The deficit in 2019 is projected to still be almost 800 billion dollars. > > None of this includes the health care bill, or any additional stimuli or bailouts. It also assumes economic growth that is probably too high, and assumes that military spending can be reduced between now and then as a percentage of GDP, which seems unlikely to me. > > In this atmosphere, Obama has increased funding for foreign aid by 2.9 billion. He’s about to propose 10 billion a year to fight global warming in Africa. He’s added 10 billion a year for ‘green’ technology. He’s put another 5 billion a year into ‘community development’ programs. He’s added 100 billion dollars to the _discretionary_ budget for FY2010 over FY2009. It does not include a ‘placeholder’ for additional stimulus like this year’s budget had, even though some additional spending seems likely. > > Of course, not everything is Obama’s fault. The real budget-breaker is Social Security. It will go from 675 billion this year to 1.1 trillion by 2019. And many presidents are guilty of deferring the pain of that (although Bush tried, and got shot down by Congress post-haste). > > Nonetheless, these are the cards he was dealt, and with that crappy hand he has decided to ramp up domestic spending even more. This is not the action of a fiscal conservative. Obama may not be worse than the others, fiscally speaking, but he’s damned sure not any better. And the problem is that the problem can’t be deferred any longer. The cost of medicare after 2019 will make you weep for your budget. This is all coming to a head on his watch. And so far, he’s not up to the challenge. I’m not sure any president could be, given the dysfunctional political system in Washington, so I’m not laying all the blame at his feet, but he sure doesn’t seem to be trying very hard to stop it. It’d be great to see conservatives so energised over the deficits Bush rang up over the last eight years. Obama’s deficit numbers include for the first time all the Iraq/Afghanistan spending and various other military spending that wasn’t all in the official Bush budget numbers and was funded via supplementals. There’s also quarter of a trillion in there for future financial bailouts IIRC which doesn’t look like it’ll be used now. Another big rise is caused by Bush’s 2003 Medicare bill, which was passed in 2003 but was only implemented the year after he left office. But the biggest drop is caused by the collapse in revenues due to the economic collapse engineered by the pro-growth policies of the previous eight years. This chart shows Obama’s $850 billion deficit spending as $145 billion, maybe for budgeting purposes it’s spread oversix or so years, but it shows an accurate picture of how we ended up in the present mess after Clinton left the country with a budget surplus nine short years ago : [![](https://farm3.static.flickr.com/2595/3694968160_07e0b3919f_o.gif) ](https://farm3.static.flickr.com/2595/3694968160_07e0b3919f_o.gif) As far as social security goes, it’ll cost another 1% of GDP gradually over the next decade or so but then level out and stay at that rate for the forseeable future. When you look at the stability and viability of public and private pension funds especially since 2008 and no great effort being made to re-regulate the financial industry, inviting future huge losses for these funds, SS is something America just can’t do without and it’s definitely affordable in the long term. [http://seniorjournal.com/NEWS/Medicare/2009/20090512-MedicareHospitalTrust\_files/image002.gif](http://seniorjournal.com/NEWS/Medicare/2009/20090512-MedicareHospitalTrust_files/image002.gif) SS is the blue line, medicare is the pink one. While SS is affordable in the future and may never need a single dollar in extra funding that in currently gets obviously medicare needs fixing. That’s definitely the main point you’re making here as a deficit hawk and I agree with you. Everything else is affordable within the context of a growing economy, but healthcare in general, public and private, isn’t. Here’s a CBO chart which shows the situation : [![](https://farm3.static.flickr.com/2679/4166964353_26cd3d7ac6_o.png) ](https://farm3.static.flickr.com/2679/4166964353_26cd3d7ac6_o.png) So it’s getting healthcare excess cost growth under control – bending the curve – which is the way we can stop our long term deficits becoming an unmanageable crisis, potential national bankrupcy etc. Now the CBO has said that Obama’s healthcare plan will actually reduce the budget deficit over time, unlike, say, Bush’s 2003 Medicare bill which will add $15 trillion with a “t” to the long-term national debt, so the current healthcare plan isn’t a problem budget-wise. But it also, according to various healthcare economists\*, tackles every area of excess cost growth and does the best it can to bend the curve on healthcare costs, so it’s doing exactly what you, as a deficit hawk, would like to see happen. And this is the first serious attempt to control healthcare spending since the Clintons tried. If it fails it’ll probably be another 20 years or impending bankrupcy before we get another attempt. And this attempt may fail even if it passes, lobbyists and “centrist” Democrats managing to water down anything effective that cuts into industry profits. But let’s face it, the party doing the bidding of the healthcare industry, the party entirely bought and paid for by the healthcare lobby is the GOP. The Democrats are almost as bad, but they don’t exclusively desrve the blame for the current mess. As somebody worried about the deficits I’m sure you’re disgusted with the GOP over healthcare and supportive of the more progressive parts of the Democratic party as they struggle against the odds to fix America’s biggest problem. - Admittedly this may just be Democratic spin and it may do bugger all to reduce costs, or the current bill may indeed attempt to reduce costs but all the cost-reducing bits may be scrubbed out by lobbyists, centrist Dems etc. at a later date. Here’s the post that says how well the bill will cut costs : > **[What President Obama Is Reading On Health Care](https://www.huffpost.com/entry/what-president-obama-is-r_n_368921)** > > What President Obama Is Reading On Health Care ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [December 18, 2009, 2:23am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/56 "2009-12-18T02:23:59Z")
1000 words : [http://www.cbpp.org/images/cms//12-16-09bud-f11.jpg](http://www.cbpp.org/images/cms//12-16-09bud-f11.jpg) ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [December 18, 2009, 6:33am UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/57 "2009-12-18T06:33:57Z")
> [@Dick\_Dastardly](#): > > Now the CBO has said that Obama’s healthcare plan will actually reduce the budget deficit over time, How much of that deficit reduction is because they will collect taxes for 3 years before anyone gets health care? ---
**Author:** ![Jimmy\_Joe\_Meager](https://avatars.discourse-cdn.com/v4/letter/j/bb73d2/32.png) [@Jimmy\_Joe\_Meager](https://boards.straightdope.com/u/Jimmy_Joe_Meager)\ **Post date:** [December 18, 2009, 2:17pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/58 "2009-12-18T14:17:37Z")
> [@Dick\_Dastardly](#): > > 1000 words : > > [http://www.cbpp.org/images/cms//12-16-09bud-f11.jpg](http://www.cbpp.org/images/cms//12-16-09bud-f11.jpg) Which are easily distilled to four: “It’s all Bush’s fault.” ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [December 18, 2009, 5:30pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/59 "2009-12-18T17:30:17Z")
> [@Saint\_Cad](#): > > How much of that deficit reduction is because they will collect taxes for 3 years before anyone gets health care? If I made any claims that the healthcare bill will save money I think I qualified them by pointing out that anything that might cost healthcare corporations may be watered down or scrubbed entirely from the bill by lobbyists. It’s looking like a good bet that that’s what’ll happen and that the bill will just end up mandating people to buy expensive shytty insurance, basically a win win for the healthcare people. And it looks like even the one supposed socialist\* in Washington will eventually vote for it. 🙂 I think that shows us in just what a socialist direction the country is going in since the Kenyan Arab got elected. 🙂 🙂 EDIT \*I’m talking about Bernie Sanders here, not Barak W Obama. ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [December 18, 2009, 5:32pm UTC](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928/60 "2009-12-18T17:32:53Z")
> [@Jimmy\_Joe\_Meager](#): > > Which are easily distilled to four: > > “It’s all Bush’s fault.” It looks like it’s going to take the country the best part of half a century to recover from the pro-growth business-friendly policies of George W Bush. We’d better hope that somebody who makes Bush look like Einstein doesn’t get elected till we manage to fix the disaster caused by the eight-year-long relentless shower of shyt we just endured. 🙂 [![](https://scavenging.wordpress.com/wp-content/uploads/2009/02/sarah-palin.jpg) ](https://scavenging.wordpress.com/wp-content/uploads/2009/02/sarah-palin.jpg) [Previous page](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928.md?page=2) [Next page](https://boards.straightdope.com/t/are-obamas-financial-policies-prolonging-this-recession/519928.md?page=4)