Obama says debt is unsustainable

[Kimstu]

@Magiver

I don’t know how you can support spending $400,000 to fly to Denver to sign a piece of paper. He spends a great deal of time (and money) flying to public events.

I don’t particularly support it, I just think it’s a comparatively trivial amount in the context of the massive sums we’re talking about. And I can’t figure out why you’re obsessing over a comparatively trivial amount. Did you experience comparable outrage about, say, Bush’s vacation travel after the financial crisis hit in late 2008? (Especially considering how much vacation he racked up during his Presidency?) Why weren’t you making a fuss about that? Why weren’t you vociferously demanding that he “stay home and do his job”?

I have never been an enthusiastic Obama partisan, and I think much of the love that he gets is simply an overreaction to the contrast of his common-sensical, pragmatic image (carefully polished with finely-honed PR) against the arrogance and stupidity of his predecessor’s administration. But I think you’re swinging way off to the other extreme with your hysterical denunciations of Obama for merely doing the same unremarkable rubber-chicken circuit that all his recent predecessors have done.

[Ravenman]

@Caldazar

We paid off some debt, but it wasn’t through increased taxes; it was through decreased government outlays. From 1947-1951…

Well, I’m talking about the 1990s. We can slice and dice the numbers a zillion different ways, but my way of thinking is this: from about 1993 to the 2001 tax cuts, revenues increased by roughly $100 billion a year, while spending increased by about $50 billion a year. My math tells me revenues were going up faster than spending, and spending was going up at about a 3% a year clip, and revenues about double that.

In any case, spending growth by 3% isn’t decreasing government outlays, as opposed to the blatantly obvious case of massive demilitarization of our economy in the six years after the biggest war mankind has known. Otherwise, you make a fine point.

[athelas]

Here’s a Real Clear Politics article that made essentially the same point I did upthread:

Except from crabby Republicans, these astonishing numbers have received little attention – a tribute to Obama’s Zen-like capacity to discourage serious criticism. Everyone’s fixated on the present economic crisis, which explains and justifies big deficits (lost revenue, anti-recession spending) for a few years. Hardly anyone notes that huge deficits continue indefinitely.

One reason Obama is so popular is that he has promised almost everyone lower taxes and higher spending. Beyond the undeserving who make more than $250,000, 95 percent of “working families” receive a tax cut. Obama would double federal spending for basic research in “key agencies.” He wants to build high-speed-rail networks that would require continuous subsidy. Obama can do all this and more by borrowing.

Consider the extra debt as a proxy for political evasion. The president doesn’t want to confront Americans with choices between lower spending and higher taxes – or, given the existing deficits, perhaps both less spending and more taxes. Except for talk, Obama hasn’t done anything to reduce the expense of retiring baby boomers. He claims to be containing overall health costs, but he’s actually proposing more government spending (see above).

Closing future deficits with either tax increases or spending cuts would require gigantic changes. Discounting the recession’s effect on the deficit, Marc Goldwein of the Committee for a Responsible Federal Budget puts the underlying “structural deficit” – the basic gap between the government’s spending commitments and its tax base – at 3 to 4 percent of GDP. In today’s dollars, that’s roughly $400 billion to $600 billion.

[Voyager]

@Caldazar

We paid off some debt, but it wasn’t through increased taxes; it was through decreased government outlays. From 1947-1951, we chopped the public debt by 11.4% on a dollar basis. From 1947-1950, tax receipts were flat on a dollar basis and declined slightly as a % of GDP. Tax receipts rose in 1951. From 1947-1949, outlays declined, resulting in significant surpluses. In 1950, outlays rose, and a deficit was registered. In 1951, outlays fell again, resulting in a decent surplus when combined with the increased tax receipts. Then for the next decade or so, federal budgets were largely balanced, debt on a dollar basis held fairly steady, and so debt/GDP ratios fell. If anything, this period shows that holding taxes steady and living within your means is solid way to maintain growth. Of course, there are substantial differences between the economic environment after WWII and today, so the situations are not analogous. But there are lessons to be learned from history.

However in the 1950s the top marginal tax rate was horrendously high by our standards - over 90% (cite). As you see, both the bottom and top rates increased around 1950. As I mentioned, much of the ability to do this came from our enviable competitive position, but to a certain extent tax increases did work to balance the budget and cut debt during prosperity. I’m definitely not saying we should hike up the highest marginal rates to 90% again, but tax increases no doubt helped pay off the debt.