He plans to do it through raising taxes on the wealthy and removing troops from Iraq.
First question for debate: is this realistic? I’m not enough of an economist to know, but I’m just barely enough to know that there’s very little in economics that’s universally accepted; I figure this will be a contentious point.
Second question for debate: will Republicans and fiscal conservatives (Venn diagram time) give him credit for this? I predict that the Republican party will in general pooh-pooh his proposal and call him a socialist tax-and-spender for daring to talk about raising taxes, as though taxes should perpetually decrease and never increase, and will fight him tooth and nail over this proposal out of fear of any Democratic success. I predict that principled fiscal conservatives will give him grudging or enthusiastic respect for this, even while decrying the tax increases.
Anything is possible; for what it’s worth Bush’s team was projecting the end of the budget deficit if “all his plans had gone correctly.” Now, I’m a Republican and I’m not advocating the economic acumen of Bush–but I’m sure some of his experts were at least agreeing with him, so some people with a bit more street cred than Bush thought this was possible at least in theory.
The truth of the matter is you can’t really predict what your spending is going to be, things come up. To take it to a very simplistic level, imagine that you have a decent chunk of credit card debt you’d like to have paid off by x date. You make a budget with regular payments as part of that budget.
Then your wife gets pregnant.
Suddenly your pre-planned budget is going to need changing.
It’s good that Obama wants to decrease the deficit over time, I hope it works. I’m sure that his plan will work if everything goes “according to plan.” But the reality is no one can say for sure what the government’s spending needs will be year to year let alone a long time into the future. We can make predictions about certain programs and how much money they will need based on various fairly predictable factors, but other government expenses come up for which we can’t really make predictions.
We should be spending less and less money on Iraq, since we’ve completed all of our goals there and there isn’t a need for a large commitment of forces in that country. But Obama is serious about Afghanistan, and if he wants to really get serious about it he’s going to have to devote more resources to that area than Bush did.
What if the current stimulus package fails abysmally? What if the economy goes further into the shitter? That’s going to lower government receipts and may even lead to further bail outs; that would definitely make it very difficult to decrease the budget deficit.
In any case, on the issue of taxes, do you think income taxes should “perpetually increase?” You do realize we’re taxed on percentage of income, not a flat amount? If your view is they should always increase then eventually some people will be paying 90%+ of their income.
Rather than giving you a direct answer to this question, I’m going to return with a question: are you kidding? That is, do you think that the only alternative to believing that taxes (yes, taxes as a percentage of income) should perpetually decrease is to believe that they should perpetually increase?
If you answer “no” and “yes,” respectively, then I’ll explain the flaw in that line of reasoning. But I’m guessing you’ll be able to figure out the answer to your question yourself.
The comment about unforeseen circumstances is certainly a good one.
I think its primarily more centrist outreach. Everybody loves balanced budget, most everybody loves pie. Speaking boldly in favor of a balanced budget ain’t exactly Profiles in Courage. Has there ever been a President who didn’t, at one time or another, speak favorably about a balanced budget?
Unforeseen circumstances aside, it is always nice to have a plan. My family has a budget. My wife might get pregnant and screw our plans up, but that’s no reason not to have a budget laid out right now.
I don’t think it is a bad idea, and it can’t hurt to try. As much as I hate taxes, I hate debt more, and spending beyond our means is a pretty horrible habit to keep up. And Clinton did it as recently as a decade ago, so it isn’t entirely unrealistic.
I’m with elucidator, though, I wouldn’t necessarily hold my breath.
You’d think anyone fortunate enough to be living in a country where they can make billions, without the state stepping in and taking over their business, would be happy to be taxed to the max when the country is strapped for cash.
You really can’t overestimate healthcare when it comes to budget deficits. Something like 60% of all healthcare spending is by the gov either in direct healthcare (SCHIP, medicare, medicaid, VA, CDC, etc) or buying healthcare for gov employees, or giving tax breaks to companies that purchase it for their employees. Plus of the 75+ trillion budget gap we are looking at for the next 70 years the majority of it goes to medicare deficits.
Since we spend 16% of GDP on healthcare and most other OECD nations spend about 10% (Britian, Italy, Taiwan and Japan only spend about 8%), that is a huge gap, roughly 3.6% of GDP going to government funds to pay for our more expensive healthcare system that we’d save if our healthcare were more efficient.
Wesley, while that sounds reasonable, I’m not convinced Obama’s (halfassed IMO) health care plan is going to result is huge savings. We need single-payer if we want real efficiencies, I think.
“For decades, we have piled deficit upon deficit, mortgaging our future and our children’s future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals.
You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we are not bound by that same limitation?” —Inaugural address, Jan. 20, 1981
Do you genuinely believe Republicans think taxes should perpetually decrease? You’re the one who threw the first bit of ridiculousness on tax policy out.
If Obama presses for too high taxes on investment income, he simply won’t get that revenue - money will be driven away from investment and into spending. It has happened time and again in country after country - we needn’t go down that road again. The taxes mentioned in the article simply are too high in this regard.
Also, I’m happy he’s intending to take on entitlement costs, but doing so without addressing the massive Social Security structural deficit would be lunacy.
Over the last fifteen years (timeframe chosen to be since Bush the Elder), I’ve not once heard a Republican advocate a tax increase, but I’ve heard them advocate tax cuts to solve every imaginable problem, from budget surpluses to budget deficits, from too-strong economies to too-weak economies, from gout to hair loss. I’ve heard Democrats advocate both tax increases and tax cuts. It’s not me throwing out the ridiculousness, it’s the last fifteen years of Republican doctrine.
If I’m wrong–if prominent Republicans have lately been advocating responsible tax increases where appropriate–I’m ready to be corrected.
He’s going to significantly raise taxes in the next four years? I guess you can kiss the economic recovery goodbye, then.
There’s some real sleight-of-hand going on here. When the stimulus package was being pushed, criticism of how long it would be before it took effect was answered by saying that the recession would probably be very long. But Obama’s deficit forecast suggests they believe it will be very short. if the recession is over within two years, then a ‘stimulus’ package which has spending going all the way out to 2019 is no stimulus at all.
Also, I assume that their forecast assumed they are going to get their 1.5 Keynesian multiplier out of the stimulus, and I’ll believe that when I see it.
I also wonder if they are factoring in Bernanke’s plan to contract the money supply rapidly as the economy picks up steam, to forestall massive inflation from all the injections of money the Fed has been doing? And if Bernanke can’t manage a ‘soft landing’ with respect to inflation, then as the economy comes back to life inflation will start to rise dramatically, which will require high interest rates to combat. That will depress the economy again.
I also think they are greatly over-estimating how much of the military budget they can cut back by withdrawing from Iraq. Obama just sent 17,000 more soldiers to Afghanistan, and won’t be able to pull more than 50-75,000 troops out of Iraq before the next election, IMO. And the military is heavily over-extended. The result of those soldiers coming home won’t be few soldiers in the military- it’ll be the same number, just not worked quite so hard. In economic terms, soldier productivity will go down.
Another factor - is anyone thinking about the cost overruns that are guaranteed to happen with all this hastily-assembled and budgeted infrastructure spending? The history of large government construction projects is not one of on-time, on-budget program management. Expect those costs on average to perhaps double.
There are more, of course - the Governator just recently raised taxes, as you know. I can come up with even more examples than this if pressed. But I’m sure you won’t press, and just admit your error.