The deficit for this year is projected to be $748 billion. Revenue is projected to be about what it was in 2007, before the economic crisis started. Spending, on the other hand, is projected to be $650 billion higher in 2013 than 2007. So increased spending since the start of the economic crisis accounts for most of the deficit, while decreased revenue counts for none. It’s true that in the years 2008-12, revenue did drop from pre-recession levels, but those revenue drops were much smaller than the spending increases above pre-recession levels in the same years.
As for spending cuts being the “worst possible response” to the recession, there have been no serious proposals for spending cuts. As I mentioned at the start of the thread, federal spending is going up regardless of whether or not the sequester happens. According to the chart I just referenced, it’s projected to be above 22% of GDP for the next five years, as compared to below 20% prior to the recession. We’ve had federal spending galore, far more than at any time is history except during major wars. If federal spending was actually the key to getting out of a recession, we’d be having good times right now.
Sure, the fact that the debt ceiling would not have gotten raised without the sequester (where you claim 0 culpability) has nothing to do with the fact that the deal that was agreed to (by The Democrats) was to make budget cuts.
We have Rebublicans agreeing to an increase in tax revenue, The Democrats agreeing to cutting spending, the increase in tax revenue has been accepted, the cuts haven’t been
How you start blaming the failure to garner said cuts on the Republicans is just pure politics, it makes no reasonable sense. There were no serious talks about cuts, at all.
What makes no reasonable sense is the Republican refusal to pay the bills they had already rung up, by refusing to approve the debt ceiling bill. All the rest of this train wreck stems from that.
What also makes no reasonable sense is the Republican demand for budget cuts without specifying what they would be. Well, OK, there’s the demand to end Medicare as we know it, for one thing, but that also makes no reasonable sense.
The tu quoque game is just as tiresome as the false equivalence game.
It’s what they’ve got. The GOP went into the negotiation declaring the only things of value that they could compromise on “off the table.” Then they acted like spoiled children who if they didn’t get their way would pick up the ball and go home.
This is essentially how the GOP have behaved for 20 years, but for once the Dems said no and now the GOP is shocked, shocked do you hear!
Even if anybody from the right had wanted to negotiate in good faith, their base won’t let them, so their motivation is really a moot point. They had nothing to offer, so all they could do was obstruct. There is no way around this until they are simply overwhelmed by numbers somewhere down the line.
I think cuts should be made when the economy is back on sure footing, growing at our usual long-term GDP growth rate. They shouldn’t be made when the cuts themselves could cause the economy back into recession.
If making cuts now causes unemployment to rise (which will cause the gov’t to pay out unemployment benefits) and reduces demand, causing a recession, then the cuts will actually do harm to the ratio of debt/GDP. It’s completely senseless. Our debt will be higher because of the cuts if they cause us to slip back into recession, not lower.
If no one thinks the cuts are a good idea, then congress should get rid of them. When Boehner said that he wasn’t going to stop the cuts, he got applause from the GOP house members – so, at least they think it’s a good idea to let the cuts go through.
So, either the cuts are a good idea and they should applaud Obama for proposing it, or they think they are a bad idea and should blame Obama, while working with the senate to get rid of them.
Will we be growing again in two years? Five years? I don’t know, it partly depends on when the government starts being functional again. Having doomsday devices set to go off every month or two is not helping.
It’s both - they’re applauding themselves for enacting these cuts, since that’s what Teabagger ideology requires, but they’re blaming Obama for their effects, since he somehow made them do it.
Some would argue that economy cannot get back to sure footing BECAUSE cuts are not being made. I hope we can agree that the idea to spend your way out recession is just a theory and not an exact science.
Economy is about practical balance and not about infinite repetition of ideologically prescribed interventions.
Maybe – just maybe – it could be that it’s time to try something else?
Besides, $80B is what Feds infuse in economy of new money every month so all this talk about end of days sounds more like Mayan calendar superstition than serious calculation.
Those people are wrong. We see it happening in the UK right now – austerity and right back into recession. I agree it’s about a practical balance, but right now, we’re doing an infinite repetition of ideologically prescribed interventions – that is, austerity when you’re in a liquidity trap. It didn’t work during the Great Depression, it’s not working in the UK or Europe, and it’s not working here.
The Clinton surpluses did not cause the Clinton economic boom. They came *after *it. Then Bush turned them into deficits. The crash came after that.
The times may not be that simple, no, but your prescription is even simpler. And intensifying, and further simplifying, it after a decade of failure is hardly something that can be called reasonable.
Clinton wasn’t dealing with a liquidity trap. He could cut spending and the Fed could lower rates to help counter that. As we continue to cut government spending, the Fed is running out of things to help counter that. Short and long term rates are already super low.
Busted, I guess. It still doesn’t change my point, though – the Fed is running out of ammunition, so even the Fed, radical hippies that they have there, have asked for more, uh, fiscal stimulus (? is that the stuff that congress and the executive branch does? As opposed to, I guess, monetary stimulus, which the Fed does?).
So, Clinton declined to spend, but Greenspan had lots to work with.
Why are you citing stuff from.when he was a candidate? There’s a whole record of what he actually did as president, and what actually subsequently happened. Make your case on that if you have one.
I live in DC, and most everyone I know has a federal job. They have real jobs, doing the same stuff you’d do in the private sector. They manage budgets, train personnel, implement projects and provide services. None of them, as far as I know, suck any teats.
I want you to picture what is about to happen to this city. Now, my husband was just laid off and we’ve lost 40% of our household income. It’s a little more than 20%, but 20% is still a big chunk. Since the layoff, we no longer eat at the delicious Italian restaurant we used to go to once a week. I’m pregnant, and I will be getting maternity clothes from thrift stores rather than newly manufactured clothes from local stores. I will get books from the library rather than buying them. I will no longer be contributing to the local arts community by attending plays and concerts, but will instead spend more time at home cooking and maintaining the house. We will no longer be employing the housekeeper, a new citizen with a young family, to do our monthly deep cleaning.
In short, much of my money will leave the economy.
Now multiply this by the number of federal workers in this region, and what you have is an economic disaster. Our restaurants will close. Our entrepreneurs will fail. Our service workers will lose their jobs. The things that keep this city moving will stop working. We are smack in the middle of providing necessarily service to our aging Metro system, which carries millions of workers to their jobs every day, and these repairs will probably not be completed.
This is a bad thing for our economy. This is a bad, bad thing. This will retard our growth, retard the number of jobs that are being created, and while it will not ruin our economy, it will damn our workers for another half decade or so.
A friend of mine who is a government worker says each of her paychecks will go down by about $300 due to the sequester.
Now, I don’t know about you, but $300 for me would be my part of the rent in the apt I share with my mom. $300 is not chump change. Unless you are actively rolling in money, $300 is a big deal.
She’s not entirely sure what she’s going to do, BTW, though she says that her first step will be to stop whining about it.
She is partially disabled so she can’t “just go get” another job. She needs her benefits.
I think a lot more people are going to suffer over this than politicians (on BOTH sides) believe.
I get tired too of hearing people imply that all government employees are just useless fat cats raking in huge paychecks for little to no work. It gets old.
I can already see the effects of the sequester because a government job I had applied for was cancelled; they will not be filling the position.
